How to Adjust Payroll Liabilities in quickbooks Desktop

November 7, 2022
Quickbooks

Noticed some In-correction in the QuickBooks Payroll Liabilities reports? Learn How to adjust payroll liabilities in QuickBooks Desktop. Just Read this Article till the very end and follow all the steps carefully to learn how you can get your issue Resolved.

Many businesses in the US alone Overpay their taxes due to some mistake in the payment reports calculation due to the fear of penalties from the IRS. If the Employer overpays the Payroll liabilities in QuickBooks desktop, Then the Employee might also get the overpaid amount credited into his payroll liabilities tax and has to get this overpayment adjusted in the Company File of quickbooks.

What are the Payroll liabilities in QB Desktop?

It is the amount of the payroll items that the companies had not paid yet. This list may contain the amount of payroll liabilities that comes under the contribution item such as 401(k) plan, Child support plan, Health Service insurance, etc., or the other payroll taxes that your company has to pay to other payroll processes.

Reasons for that you may need to adjust payroll liabilities in quickbooks Desktop

  • You are required to make some changes in the Health Saving account or 401(k) Company Match File that falls under the Company Contribution items.
  • You may need to Adjust the payroll liabilities if you have made some mistakes while Setting up the tax tracking of Health Insurance Company Contribution.
  • Adjusting Payroll Liabilities can help you to make changes in the year-to-date wages, Changes in Deduction, and addition. For example; If an employee is not working in your company anymore.

What Could be the reason for the wrong quickbooks Payroll Liabilities:

  • Your Liabilities accounts could be inactive.
  • If there is a missing check payroll from the assisted payroll. It will create a positive balance for the taxes that are paid using the quickbooks Desktop.
  • A damaged Date in the Company File can Also lead you to Adjust the payroll liabilities.
  • If there exists another liability check the amount could be missing in the liabilities.
  • There could be some mistake in the amounts while you were upgrading the company file from an old version to the latest one.

Now let’s Discuss How to make changes in the Payroll liabilities of quickbooks

Step 1:

  • Run the Payroll checkup tool. This will help you to know the problem that is Affecting the Payroll Liabilities.
    • Scan the entire payroll and give you information about the missing information in the discrepancies
    • Review all the items such as wages, payroll setup, Employee records, and tax amount and make sure all these items are correct
    • Now identify the difference between tax amount and tax rate.
  • After the completion of the Payroll Checkup, Run the Payroll Summary Report for the Quarter you need to adjust. Make Sure to Note Down the original amount of the item and the payroll amount of the item.

Step 2:

  • Select Payroll Taxes and liabilities in the employee menu of quickbooks Desktop.
  • In the Adjustment is for Tab Select the Employee option.
    • Now from the Drop-Down Menu for item list Select the appropriate employee for which you have to make the adjustment.
    • Select the Effective date Which is used for calculation amount on the 940 and 941 form. And also Payroll liabilities Balance Report.

For Adjusting Payroll liabilities for the company in quickbooks Desktop

  •  In The dashboard click on the employee and tap on Payroll.
  • Click on Adjust payroll Liabilities and then you can select the date for which you want to make the adjustments too.
  • In the Adjustment is for Tab Select the Company option.
  • Now from the Drop-Down Menu for item list Select the appropriate item for which you have to make the adjustment.
  • Type the Negative amount for the Adjustment and in the memo section add the reason why you are making these adjustments.
  • Click on the Accounts Affected Button and tap on Do if you do not want to affect the accounts otherwise you can click on Affect Liability and Expense Accounts.
  • Click OK on the Affect Account Screen and again click OK to save it.

For Adjusting Payroll liabilities for the Employees in quickbooks Desktop

  • In The dashboard click on the employee and tap on Payroll.
  • Click on Adjust payroll Liabilities and then you can select the date for which you want to make the adjustments too.
  • In the Adjustment is for Tab Select the Employee option.
  • Now from the Drop-Down Menu for item list Select the appropriate employee for which you have to make the adjustment.
  • Select the Payroll item in the tax and liabilities Tab.
  • Type the Negative amount for the Adjustment and in the memo section add the reason why you are making these adjustments.
  • Click on the Accounts Affected Button and tap on Do if you do not want to affect the accounts otherwise you can click on Affect Liability and Expense Accounts.
  • Click OK on the Affect Account Screen and again click OK to save it.

Step 3 

  • Ensure that all the liabilities adjustments are updated.
    • To do so Run the payroll summary Reports again and make sure that every information is correct in the report.

Step 4

Now Correct the payroll liability check. This step is totally optional only to perform when you find a mistake in Step. and should be done before paying the liability.

  • Click on Use register in the Banking Menu Of quickbooks Desktop.
  • Click OK after you select the Register you want to use for the payroll.
  • Right, Click on the Liability Check option and Select Edit Liability Check Option.
  • Head to the Payroll liabilities section and update it with the new changes and then match them to confirm.
  • Tap on Save and Close option and a pop-up will appear to click Yes.

If you want to Recreate a Deleted check in quickbooks Desktop

If you void a check that you have already paid for payroll liability then you can notice a negative amount in the payroll liability balance sheet. to fix this you just need to recreate the voided or deleted check. When you are recreating the deleted check enter the negative amount in the paycheck which should be equal to the amount of the deleted paycheck. By Doing so the net amount of payroll liability will become zero and your payroll liability is adjusted.

If All the Above methods don’t work check the version of your quickbooks Desktop and Update it to the latest version if you are not already using the latest version of quickbooks. This can also help to fix the payroll liability issue.

Conclusion:

In the above article we discussed every detail you need to know on How to adjust payroll liabilities in quickbooks Desktop. By reading this article you should be able to adjust the payroll liability.

While Performing these steps to adjust the payroll liability if you face any issue you can contact Our QuickBooks Proadvisor for help.

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