Some adjustments require you to adjust for the company as a whole. Others
require you to associate an employee with the adjustment.
The most common reason to use a company adjustment is when there is a minor
discrepancy (due to rounding) between liability calculations on a tax form and
the sum of the liabilities for each employee.
If there is a significant discrepancy between what QuickBooks shows you owe
and what you think you owe, you should determine
what is causing the problem and use an appropriate solution.
Company adjustments may affect 940 and 941 forms. They do not affect W-2 or
Important: The totals on your W-3 form should match the cumulative
totals you reported to the IRS on your quarterly 941 forms for income tax
withholding, social security wages, social security tips, Medicare wages and
tips, and the Advance EIC. These 941 totals are matched against your W-3 data
during W-2/W-3 processing. If the totals don't match, either the IRS or
Social Security Administration will notify you of the out-of-balance situation.
You'll have to research your payroll records and provide additional
Note: Effective January 1, 2011, the option for advance EIC payments has been eliminated. Individuals eligible for the EIC may still claim it on their personal income tax returns, but employers may no longer advance a portion of the credit with each paycheck.
Associate the adjustment with a specific employee when the employee's
calendar-year totals for a deduction or company-paid tax or benefit are
Employee adjustments may affect 940 and 941 forms. They may also affect W-2
and W-3 forms.
You don't need to make any adjustment if the total is too low and is for
a flat-rate tax that is auto-correcting. (Unless the tax amount is for a prior
quarter, QuickBooks increases the tax on the next paycheck to make up for the
Important: View the employee's totals on a
payroll summary report that
covers the entire calendar year, not on a paycheck voucher or paystub.
You used the higher rate for federal unemployment (FUTA) and realize you
should have used the lower rate. The employee's total for the year exceeds
the maximum tax at the lower rate.
You have been using an Other tax payroll item for a local tax not supported
by the payroll update, and realize that you set it up incorrectly.
When should the amount be positive and
when should it be negative?