Now is when we start discovering that a payroll error resulting from improper set-up has plagued us 'all year long', or perhaps in just a few recent pay periods if it is a new employee.
Payroll Check Error:
In this scenario one of your employees' paycheck(s) show incorrect amounts for state unemployment or state withholding. Errors of this type usually are the result of incorrect employee State Unemployment or State Tax set-up, or improperly configured payroll items for such.
There are several potential solutions, it is suggested that you go through these solutions in numeric order, skipping a solution only if an earlier solution advises you to skip to a specific solution to conti8nue resolution.
Solution 1 - Update QuickBooks to the latest release and then update your payroll subscription to the latest payroll release.
(Illustration: Left-side: Update your QuickBooks Release - Right-side: Update QuickBooks Payroll Subscription)
Solution 2 - Verify State Taxes are set-up in the Employees' Profile
A. Go to the Employee Center.
B. Double-click the employee's name (if the error exists with more than one employee you will need to proceed thru these steps one employee at a time).
C. Click the Payroll Info button.
D. Click the Taxes button.
E. Click the State tab.
F. Verify that the following items are set-up correctly:
- State Worked / State Subject to Withholding
- SUI is appropriately marked
- Extra Withholding (adding extra withholding will increase the amount collected for SIT)
- Filing status
- Number of allowances
G. Before creating a new paycheck, make all necessary changes to the set-up.
H. Click OK to save and close.
(Note: An employee may have zero state withholding and still be correct. If the employee wages are not high enough to meet the threshold based on their allowances, filing status, and pay period, then QuickBooks will not withhold state income tax.)
Solution 2 - Verify your State SUI Rate
A. Create a Payroll Item List: From the menu select Lists > Payroll Item List
B. Double-click on State Unemployment item (typically named state abbreviation Unemployment Company)
C. Click Next > Next to view the rate.
D. Review the rate for accuracy, if in error, modify the rate.
- Modify the rate: enter the correct rates for each Quarter shown for the item.
- After you enter the correct rates, you may get a popup message for Payroll Tax Rate Change Warning, click Continue. Your SUI rates are updated.
E. Click Next
(Note: By default, QuickBooks marks payroll items subject to and exempt from SUI, according to your state's guidelines.)
F. Click Next
G. Click Finish
Solution 3 - Verify if the Employee has reached the SUI wage base limit
A. Create a Payroll Summary Report: select Reports > Employees and Payroll > Payroll Summary Report
B. Enter this calendar year-to-date.
C. Locate your employee's SUI and double click the accrued amount. This will open a Transactions by Payroll Item report.
D. Under the Wage Base column, verify from the wage base total if your employee had reached the limit.
(Note: If the employee had already reached the annual wage base limit, QuickBooks will stop calculating SUI on paycheck.)
Solution 4 - Verify the set-up for payroll items used on paychecks
A. From the top menu bar, choose Lists > Payroll Item List.
B. Double-click the payroll items used on paychecks: deductions, additions, and company contribution.
C. Click Next until you get to Tax Tracking Type window. (Tax Tracking type determines the taxability of payroll item and how it reports on your tax filings.)
D. Read the description to see if the type selected meets your needs.(If you are unsure what tax tracking type to use, consult your accountant or tax advisor.)
E. Edit the payroll item with the incorrect tax tracking type to make it Inactive.
F. Create a new payroll item with the correct tax tracking type and use it on any new paychecks.
G. If the employee was previously paid with a check that used the wrong tax tracking type, you will need to adjust their year-to-date totals.
Solution 5 - Fix paycheck with wrong amount(s) when you have not issued the paycheck
A. Void the paycheck
B. Create a new 'replacement' paycheck
Solution 6 - Fix wrong amounts on a future paycheck if the amounts due were over- or under- stated/collected.
A. Adjust the amounts on the employee's next paycheck.
- Manually edit the amount (increase or decrease it) to match the required total contributions in the Preview Paycheck window.
- To correct an employee's quarterly amount or year-to-date wage base and tax amounts, perform a manual liability adjustment.