You may have received a letter indicating that owing to unpaid tax debts, and you may subtract an extra tax amount from an employee’s paycheck. The Wage Garnishment Order will provide instructions on how to post the money, such as the account or case number. If you have several workers who are being garnished, you can build a new payroll item for each of them. The employee’s initials may be used in the name of the payroll object. The employee’s initials may be used; for example, TAX LEVY-AKA.

Attachments are generally honoured/paid in the order listed below (exceptions can apply).

The American Payroll Association is a non-profit organisation that promotes:

  • Orders for child support
  • Orders under Chapter XIII of the Bankruptcy Code
  • taxes levied by the federal government
  • Garnishments by federal agencies
  • Taxes levied by states
  • Taxes levied locally
  • Garnishments against creditors
  • Garnishment of student loans

Why you need to adjust payroll liabilities

  • To correct a Health Insurance Company Contribution that had the incorrect tax monitoring form set up.
  • For an employee who will not be getting any other paychecks, correct YTD salaries, deductions, or additions.
  • To adjust the sum for things like the Health Savings Account (HSA) or the 401(k) Business Match.

How to adjust payroll liabilities for 401k payments in QuickBooks

A liability adjustment may be used to correct payroll liabilities that are inaccurate.

Payroll liabilities can be difficult to modify. Use them only if you understand accounting or if your accountant advises you to. If you need an accountant, you can locate one. Contact us at QuickBooks Desktop Error Support to make the changes if you use Assisted Payroll. You won’t be able to make improvements to your liabilities by yourself. You can use these steps whether you have Basic, Standard, or Enhanced Payroll version of the QuickBooks Desktop software: 

Perform a Payroll Audit. This method assists in the identification of issues that concern your liabilities. 

  • Verify your current setup by checking your payroll data for missing information and inconsistencies.
  • Examine the payroll item setup, as well as the salary and tax amounts for each employee.
  • Determine if there are any tax sum anomalies on a flat-rate tax. The tool will make recommendations on how to address the problem.

Run a Payroll Summary report for the quarter in which you need to make changes. Make a note of the number on the Payroll Item or any other things that need to be changed.

Select Adjust Payroll Liabilities from the Employees menu, then Payroll Taxes and Liabilities.

Use these hints to assist you in filling out the fields: 

  • Use the same date as the affected quarter’s last paycheck. If you’re focused on the current quarter, use today’s date.
  • The Effective Date is used to measure amounts on your 940, 941, and Payroll Liability Balances Report.
  • If the thing you’re modifying is a company-paid item, choose Employee Adjustment. It corrects the YTD data on the employee’s W-2 form.
  • If you want the balance to be deducted from the Payroll Liability Balances Report, choose Company Adjustment.

Choose an employee.

Fill in the Taxes and Liabilities parts.

  • Choose the Item Name you’d like to change.
  • Enter the adjustment’s dollar number. To increase or decrease the volume, use a positive or negative number.
  • And when you override a tax sum on a paycheck, a Wage Base is seldom needed.
  • When adjusting your pay base, you only use Income Subject to Tax.
  • You should make a note about the change in the Memo area for future reference.

Select Affected Accounts and then OK.

  • Choose to Keep the liability and cost accounts’ balances unchanged by not affecting them. Only the year-to-date amounts on the payroll records will be affected by the modification.
  • To enter an adjusting transaction in the liability and expense accounts, select Affect liability and expense accounts.

If required, repeat for additional workers, then pick OK.

Rerun the Payroll Overview report to ensure that all is in order.

Make a payroll liability check a correction.

Have you already paid the liability? In QuickBooks, you’ll need to correct the liability search.

  • Select Use Register from the Banking section.
  • Select the payroll register, then click OK.
  • Pick Edit Liability Check from the context menu when you right-click the Liability Check.
  • Adjust your Payroll Liabilities to reflect your changes.
  • Choose Yes, then Save & Close.

To End With

In conclusion, QuickBooks Desktop software helps you understand and manage different things related to a particular organisation’s finances. It is one of the many reasons behind this software all being on top. This blog’s whole idea is to give you a perspective about how can you adjust payroll liabilities in QuickBooks Desktop software. I hope reading this blog helped you and was worth your time. 

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