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Correct employee payroll tax withholding by entering a "gross-up"

Note for QuickBooks Basic, Standard and Enhanced Payroll customers

Important: Intuit no longer accepts new subscriptions for Standard Payroll, but continues to support existing users of this service plan. Standard Payroll subscribers may want to Go onlineexplore other payroll service plans designed for QuickBooks users.

Note for QuickBooks Assisted Payroll customers

If you have underwithheld employee-paid taxes, you may decide to pay the underwithheld taxes on your employees' behalf. This is called "grossing-up." When you pay taxes for your employees, it is considered taxable compensation and subject to federal and state taxes. Refer to IRS Publication 15, Circular E, Employer's Tax Guide for more information.

To do this task

  1. On a piece of paper, write down all employee-paid taxes that were underwithheld. Calculate the total of the underwithheld taxes for each employee.

  2. Create a wage payroll item named "gross up."

  3. Go to the Employees menu, click Pay Employees (if you haven't set up payroll schedules) or click Pay Employees and then click Unscheduled Payroll (if you have payroll schedules set up).

    Fix the tax discrepancy by creating paychecks using Unscheduled Payroll.

  4. In the Pay Period Ends field, enter the last day of the quarter in which the tax discrepancy occurred.

  5. Select the employee for whom you want to create a gross-up and then click the employee's name.

  6. In the Earnings section of the Preview Paycheck window, enter the total amount of the tax discrepancy using the wage payroll item you created. Keep increasing the amount until the net check amount equals the total amount of the taxes you underwithheld for this employee.

  7. In the Employee Summary section, add the amount owed to each tax. The amount you are adding is the amount that was underwithheld on previous paychecks. When you have finished increasing all the employees taxes by the amount owed, the resulting net check is 0.00.

    For example, if you underwithheld Social Security and Medicare each by $250.00, you would add an additional 250.00 to the amounts already withheld from this paycheck for Social Security and Medicare.

  8. Click Save & Close.

  9. Click Continue and then click Create Paychecks.

If you do not want to enter a gross-up, you can fix the underwithheld taxes by collecting them from your employee instead.

11/18/2017 12:41:30 AM
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