The Company Summary shows company-paid payroll taxes and other items used to determine the employee's net pay and the information on your payroll tax forms. The information in this table is only for your reference and does not appear on the employee's pay stub.
Sometimes, the amounts on the paycheck might be different than expected. For example, QuickBooks may adjust Social Security or Medicare calculations by a penny or stop calculating FUTA for the employee.
For general information on Payroll taxes and detailed information on payroll taxes and fees go to the Payroll Tax Compliance page.
How does QuickBooks calculate amounts on a paycheck?
QuickBooks uses the installed tax table (provided with the payroll update), the payroll item setup, and the employee's setup to calculate paycheck amounts. So, the amounts should be correct if you have the most recent tax table and you set up your payroll and employees correctly.
Many taxes seem too high/low.
Check any payroll items you added recently to be sure they were set up correctly. For example, if a new deduction is fully taxable, it reduces the amount on which the taxes are calculated. Similarly, if a new addition is taxable, it increases taxes because it raises the dollars on which taxes are calculated. How do I check the tax setup on a payroll item?
To check the tax setup of a payroll item:
Go to the Lists menu and click Payroll Item List.
Select the payroll item you want to check.
Click the Payroll Item button and then click Edit Payroll Item.
Click Next in the Edit Payroll Item wizard until you open the Taxable compensation window.
Review the settings; the settings in this window affect the tax amounts QuickBooks calculates on paychecks.
To see the default tax setup for this item, click Default. Any differences may be causing a calculation issue on the employee paycheck.
Can I add/remove a payroll tax from the paycheck?
You can't add or remove taxes directly on the paycheck. If a payroll tax or item is missing or unexpectedly added to a paycheck, check the employee's record to see if the correct taxes are selected. This is the only way to include most taxes on a paycheck (except for custom taxes). How do I review the employee's record?
To review the employee record before you create the paycheck:
Click Cancel to close the Preview Paycheck window.
In the Enter Payroll Information window, right-click the employee name, and then click Edit Employee.
In the Edit Employee window, go to the Change tabs list and click Payroll and Compensation Info.
Verify the employee's federal and state filing status and allowances and make any necessary adjustments.
Close the Edit Employee window. Any changes you make on the employee record will be reflected on the paycheck.
How does QuickBooks calculate Social Security and Medicare?
QuickBooks calculates these flat-rate taxes on the year-to-date (YTD) amount instead
of per transaction.
Why do Social Security and Medicare amounts vary by pennies?
QuickBooks calculates your flat-rate taxes on the year-to-date (YTD) amount instead
of per transaction. This method will sometimes result in variance from check to check, keeping your total deduction within a fraction of a cent.
Example of the calculation method:
Medicare tax for current pay period
Medicare tax for next pay period
$ 1217.5 x 1.45% =
$ 17.65375 rounded to
$ 1217.5 (previous wages) +
$ 1217.5 (current wages) =
$ 2435 x 1.45% = $ 35.3075
rounded to $ 35.31 (total tax) -
$ 17.65 (previous tax) =
What if Social Security and Medicare amounts vary by a significant amount?
If the tax is off by a significant amount, there are a few possibilities:
The wages used to calculate the tax (known as Income Subject to Tax) are wrong because one or more payroll items are set up with the wrong taxability.
The previous YTD amount is "out of balance" where the YTD wage base multiplied by the tax rate doesn't result in the YTD Tax deduction in QuickBooks. (Run the Payroll Detail Review report to see the numbers used to calculate the tax amounts.) Typically, QuickBooks is correctly attempting to catch up, and the tax look too low or too high. The next paycheck for this employee should look normal.
The amount is actually correct, but doesn't meet your expectations. Be careful when adjusting the amount as you may be perpetuating a previous payroll setup or YTD data error.
Why is my Social Security, FUTA, or SUI amount zero ($0.00)?
Social Security, FUTA (federal unemployment), and SUI (state unemployment) have different wage limits that determine the maximum wage that is subject to be taxed for the year. If Social Security, FUTA, or SUI stops calculating and displays zero ($0.00) on the paycheck, the following may have occurred:
The tax has met the wage base limit for the year. For example, if FUTA stops calculating after the first $7,000 paid in wages to the employee during a calendar year, then the wage base limit has been met. Current wage base limits
The state unemployment insurance (SUI) rate may have changed. If your SUI rate changes, you need to enter the new rate at the beginning of the period by editing the appropriate payroll item. If you enter it later in the period, the tax may self-adjust. How do I change the tax rate?
Why does QuickBooks calculate a tax after the wage base limit has been met?
Certain taxes have different wage base limits that determine the maximum wage that is subject to be taxed for the year. For example, the wage base limit for Social Security is $106,800 (2009 tax year). Once the employee's wages reach the limit, neither the employee nor the employer owes any Social Security for the employee for the rest of the tax year. Determine the current wage base limit for a payroll tax
QuickBooks typically stops calculating when the employee wage reaches the wage base limit. However, in certain instances, QuickBooks still calculates tax on paychecks even after the gross wage limit for that tax has been met.
Many times, you can resolve issues in the Company Summary section of the paycheck by reviewing and resolving issues in your payroll data.
You can review and resolve many issues in an employee's record before you finish creating the paycheck. How?
Click Cancel to close the Preview Paycheck window.
Troubleshoot paycheck calculations
Ask other QuickBooks users about paycheck calculations
Ask a payroll support specialist about paycheck calculations