For many taxes, QuickBooks determines the maximum tax amount by multiplying
the maximum wage base
(supplied by the tax table) by the percentage rate.
For example, if the maximum gross wages are $7,000.00 and the percentage
rate is .8%, then the maximum tax should be $56.00 (since $7000 x 0.008 =
To view the current wage base limit for a tax, create a
payroll item listing report and look at the
Annual Limit column.
The total year-to-date gross wages for a tax never exceed the wage base
limit for that tax. However, if the gross wages reach the wage base limit, the
tax still continues to calculate if the tax limit has not been met.
For example, QuickBooks calculates federal unemployment (FUTA) on paychecks
until the year-to-date amount equals $56.00, even if the gross wages have
reached or exceeded $7,000.00. You may be in this situation if you withheld too
little tax on previously recorded transactions, or if the tax rate increases
mid-year but the wage base limit does not increase accordingly.
Similarly, the wage base (but not the tax) will continue to increase if the
tax limit has been reached but the wage base limit has not.