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Easy Ways to Fix QuickBooks Not Calculating Unemployment Correctly

QuickBooks Not Calculating Unemployment Correctly

QuickBooks not calculating unemployment correctly or is showing incorrect withholding on SIT, users cannot file taxes properly. So they need to check their preferences before they begin the process once again. Before even moving to change preferences in QB, users should ensure that they have the latest updates for QuickBooks desktop and payroll installed on their system because outdated tax rates aren’t going to generate correct calculations.

Further, you need to verify the underlying cause of the error when QuickBooks does not calculate unemployment correctly. You’ll have to verify the State unemployment rate that is based directly on the laws set by your state. So if you’ve not selected the correct state, then you’ll get the wrong calculation. Further, you need to verify the state taxes settings available in the payroll service to ensure that there’s nothing wrong with the preferences.

In this post, you’ll learn what to do when QuickBooks does not calculate unemployment correctly.

Why is QuickBooks not calculating unemployment correctly?

QuickBooks relies on various services and updates to accurately calculate your unemployment and payroll. If the latest tax tables aren’t installed or user preferences are interfering with the calculation, then QuickBooks will calculate unemployment inaccurately. To get over this error, we need to install the latest tax tables and verify the preferences.

Note: Various limits are set by the user for the calculation of payroll. To edit those preferences, you need a user account that has the rights to make those changes in payroll. Further, the steps may differ on the basis of the payroll service that you’re using.

Solutions for QuickBooks not calculating unemployment correctly

We’ll resolve this issue and ensure that unemployment is correctly calculated by QuickBooks by installing the latest tax tables and verifying preferences set up for employees. Let’s get started.

Total Time: 21 minutes

Step 1: Update QuickBooks Desktop And Payroll

Update QuickBooks Desktop And Payroll

Updating both the desktop software and payroll ensures that you have the latest tax forms and tables so that QuickBooks can calculate taxes and unemployment on the basis of the latest rates for your state.

To update the QuickBooks desktop, follow these steps:

💠 Go to the Help menu.
💠 Click on Update QuickBooks Desktop.
💠 Go to the Get Updates tab.
💠 Click on Reset Updates.
💠 Click on Update QuickBooks.

Wait for the update files to download. Then exit QuickBooks and click on Yes to begin the installation of the update files.

To get the latest tax tables so that QuickBooks can correctly calculate unemployment, follow these steps:

💠 Go to the Employees menu.
💠 Choose Get Payroll Updates.
💠 Mark the checkbox for Download Entire Update.
💠 Click on Download Latest Update.

Go through the window that appears after the update is complete. You may get some useful information about the changes that have been introduced by your state or federal government in regard to tax calculation and filing.

Step 2: Verify State Unemployment Error

Verify State Unemployment Error

Let’s now try to figure out the underlying cause for the incorrect calculation of state unemployment.

Here are the steps to verify the error leading to QuickBooks not calculating unemployment correctly:

Verify state taxes for employees

Let’s see if you’ve got the correct state taxes set for your employee so that QuickBooks can calculate unemployment correctly:

💠 From the Employee’s center, choose the employee and double click on his or her name.
💠 Click on Payroll Info.
💠 Click on Taxes.
💠 From the State tab, go through the following items and their preferences:
+ State worked
+ State unemployment rate
+ State subject to Withholding
+ Filing status
+ Number of allowances
+ Extra withholding
💠 After verifying the preferences and making the necessary changes, click on Ok.

Check the State Unemployment Rate

The state unemployment rate, if incorrectly entered, is going to result in inaccurate calculation by the accounting software. Further, the steps to edit the state unemployment rate differ on the basis of the Intuit payroll service that you use with your desktop accounting software.

To verify the state unemployment rate in QuickBooks, follow these steps:

💠 Go to the Lists menu.
💠 Choose Payroll Item List.
💠 Click on State Unemployment.
💠 Click on Next, then Next again.

If the state unemployment rate is incorrect, follow these steps to change the rate in QuickBooks Desktop Payroll:

💠 From the Lists menu, click on Payroll Item List.
💠 Find the abbreviation of your state and double click on Unemployment Company.
💠 Click on Next.
💠 When you reach the Company tax rates page, enter the correct state unemployment rate for each quarter of the financial period.
💠 Click on Next, then Finish.

Each employee in QuickBooks has his or her own unemployment wage base limit. Once this limit is reached, the calculations for unemployment can become incorrect in QuickBooks.

So let’s verify the wage base for employees:

💠 Go to the Reports menu.
💠 Choose Employees and Payroll.
💠 From the provided options, choose Payroll Summary Report.
💠 Enter the period of time for which you want to create the report. The recommended range is year-to-date.
💠 Go to the Employee’s state unemployment rate and double click on the amount.
💠 View the Transactions by Payroll Item report.
💠 Click on the Wage Base column, then verify that the employee hasn’t actually reached the unemployment wage bases limit.

QuickBooks stops calculating SUI for any employee who’s reached the wage base limit for the current fiscal year. After calculating the cap on the earnings for each employee, QuickBooks sets the wage base limit for each employee. When the cap reaches, QuickBooks stops or increases the tax depending on the preferences set by the user. However, if the wage base rate was recently changed by your state or the federal government, then the calculation of the SUI will start once again when you install the latest tax tables.

Here are some points that you should note if you’ve already issued the check:

💠 Modify the SIT value on the individual’s following payment once extra or under-collected.
💠 Whenever you generate a fresh salary, you may modify the SIT value (to lower or raise) in the Sample Paycheck screen.
💠 Do not alter the number on the check if the SUI was already over or under-collected.
💠 You should discover the differences in SUI computations in order to try to seek and repair them.
💠 You may use a salary check as a quick solution to checking expense reports to discover irregularities.
💠 It’s critical to generate a second copy of your data source before running a paycheck inspection to secure your information in the event of an accident.

Conclusion

When QuickBooks payroll doesn’t calculate unemployment correctly, you need to check if you have got the latest tax tables available. The next problem is often the incorrect preferences and limits set on an employee. So once you alter those values, QuickBooks will calculate unemployment and payroll correctly.

FAQs

  1. What is Unemployment in QuickBooks and how is it useful?

    A. The unemployment rate is a percentage of the labor force that is unemployed and actively looking for work. 

    The Bureau of Labor Statistics (BLS) tracks unemployment rates by state and metropolitan area. 

    There are several factors that can affect the unemployment rate including: 

    💠 The number of people who are unemployed
    💠 The number of jobs available 
    💠 The willingness of employers to hire new employees

    The BLS also releases estimates for regional unemployment rates.
     
    When calculating your payroll, you need to understand how to calculate your unemployment taxes. 

  2. What information is required for correctly calculating state unemployment in QuickBooks desktop payroll?

    To calculate your payroll taxes, you first need to figure out how much money you earned from wages during the period that you were unemployed. This includes any wages that you earned while you were looking for a job as well as any wages that you received while you were on leave from your job because of illness or injury. You should also include any bonuses or other income that you received during this time. Next, add this total amount to the amount of money that you would have been charged.

  3. Apart from unemployment, what is the process of correctly calculating payroll in QuickBooks desktop payroll?

    A. When you have employees, one of the first things you need to do is calculate their wages and deductions. This process is referred to as payroll. There are a few different ways to do this in QuickBooks, but we’ll explain how to do it using QuickBooks’ Unemployment feature.

    💠 Open the Payroll window in QuickBooks and click on the Employees tab. 
    💠 In the Employees area, select the employee you want to work with. If you don’t have any employees yet, this will be the first time you’ll use this feature. 
    💠 On the Edit Employee window, under Wages & Deductions, click on Unemployment.
    💠 In the Unemployment dialog box, enter the dates of your unemployment period and click on Calculate.

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