I'm new to using QuickBooks Enterprise with Enhanced Payroll. When I went to the Pay Payroll Liabilities feature to pay our quarterly state unemployment the pay payroll liabilities screen, shows that we underpaid $168.77 to state unemployment in the prior quarter.
This is not the actual inquiry but a reproduction using a QuickBooks Sample File to protect identities.
Payroll Liability Error
I went to the actual check we created to pay this liability (using the pay payroll liabilities feature), and the amount seems to be correct because it matches what state unemployment shows that we owe (it isn't short the $168.77 that QuickBooks is reporting). Therefore, it seems that we did not underpay, but QuickBooks is reporting that we did. I can't figure out is how to fix it, can you help?. I don't know how to track down the details or to correct it. Thanks in advance for your assistance.
There are a few different possibilities causing your problem.
First, It could be that the last, or a prior liability payment check was issued with the wrong ‘liability period dates’, when this happens QuickBooks may show that you have overpaid one liability period and underpaid another liability period.
The best way to track this down is to match the payroll liability report for each reporting period with the payments to ensure that each period was paid with the appropriate dates and amounts.
The second possibility is every similar, and it could have been going on for some time. It may be possible that the liability was underpaid in some ‘long ago’ liability period and that it has been being carried through because someone didn’t know how to take care of it properly.
In other words, the prior $168.77 from say the 2nd quarter of 2016 was not paid when it came due, but it was paid with the 3rd quarter of 2016; however, the actual 3rd quarter liability payment was reduced by the same $168.77, which then carries the underpayment into the 3rd quarter, and so on until you got on the scene.
In fact the underpayment amount could actually be made up of several smaller amounts that have been being carried over for some time, obviously this makes tracking down the culprit(s) even more difficult.
Liability Report
You are still going to need to research out each of the payroll liability periods and payments in order to track down the exact situation. If you find out that you owe the liability then you are going to need to make a payment and correct the reporting period that is applicable.
Third, a common cause for QuickBooks thinking you owe more than you do is that you have actually underpaid what QuickBooks computed, but the amount QuickBooks computed was in excess of what you actually owed because someone didn't change the withholding amount.
State Payroll Item
Most state unemployment is not 'set' by the tax tables that QuickBooks Payroll uses for other taxes. This is because every employer may have a different rate based upon their unemployment experience factor. If you fail to adjust the amount of the Unemployment Tax Payroll Item, you could be computing your liability at a higher rate with each payroll then what is due when the quarterly time to remit rolls around.
If you find that you don’t owe the liability then you need to make a payroll liability adjustment to the state unemployment item(s), and adjust that against either the employer’s liability expense or the employee.
Adjust payroll liabilities
If you find that the error is due to one or more employee’s over-withholding then you are going to owe them a reimbursement. Note, very few states require employees to contribute toward unemployment; therefore check your state's requirements prior to making any such adjustment and/or reimbursement.
Editor's Note: Because we used a QuickBooks Sample File for purposes of illustration, the dates involved are associated with years 2021 and 2022. These dates are not reflective of the actual inquiry made by the reader who wrote in for help.