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Quickbooks Payroll Taxes Not Being Deducted

Quickbooks Payroll Taxes Not Being Deducted - message causes & solutions

Is QuickBooks payroll not deducting payroll taxes from your paychecks? This is quite a rare error that occurs in a few scenarios. When you’ve set the annual salary to not exceed a particular limit, the deduction won’t take place automatically. Further, the wages of the employee can’t be too low based on the last payroll for the same employee. And you must also have the latest payroll updates installed on your system to avoid this error. Users who haven’t installed the latest updates and tax tables have encountered this problem often.

In this blog, we discussed how to fix payroll errors in QuickBooks Desktop. By following the steps provided, you can quickly and easily correct any errors that may have occurred during your payroll processing.

Why is QuickBooks not Deducting Payroll Taxes Accurately?

When you use QuickBooks Desktop to handle your payroll, you have to make sure that every employee has proper information, including their tax withholding and social security number. One way to do this is by manually updating the withholding and Social Security Numbers for each employee in the customer file. Another way is through a feature called Custom Payroll Tax Codes that are stored in the customer file.

Once you run payroll updates and view the preferences and limits set for each employee, you’ll be able to fix this error. Until then, QuickBooks payroll won’t deduct taxes from the payroll check.

What are the Causes of QuickBooks Payroll Tax Deduction Errors?

Once you run payroll updates and view the preferences and limits set for each employee, you’ll be able to fix this error. Until then, QuickBooks payroll won’t deduct taxes from the payroll check.

Here are the main causes for incorrect deductions in QuickBooks Payroll Taxes:

  • QuickBooks Tax tables aren’t up to date
  • The payroll software has incorrect tax data
  • State tax rates haven’t been updated manually
  • Employee information isn’t correct
  • Limit restrictions aren’t being met

Process To Fix Quickbooks Payroll Taxes Not Being Deducted Problem

There are multiple ways to rectify the Quickbooks payroll taxes not being deducted problem, all of them are listed below. Just follow each step solution to overcome this problem.

💠 Get the latest payroll updates
💠 Payroll items not correctly calculated
💠 Wages of Taxes not calculated correctly

Total Time: 19 minutes

Step 1: Get the latest payroll updates

Get the latest payroll updates and ensure QuickBooks deducts payroll taxes by following these steps:

💠 Go to the Employees menu.
💠 Click on Get Payroll Updates.
💠 Click on the Download Entire Update checkbox.
💠 Click on Download Latest Updates.
💠 Click on Ok when you get the confirmation message.

Note: You can only install the latest payroll updates by downloading the files from the internet. The tax tables CD is no longer a viable option for installing such updates in QuickBooks desktop.

To further ensure that your payroll updates work smoothly, Intuit recommends that you install the latest QuickBooks Desktop updates on your system.

To get the latest QuickBooks desktop updates, follow these steps:

💠 Choose the Help menu.
💠 Click on Update QuickBooks Desktop.
💠 From the Update Now tab, choose the option Reset Updates to delete all the previous update downloads.
💠 Click on Get Updates.
💠 After the update files are downloaded, exit QuickBooks Desktop.
💠 When the prompt for installing the updates appear, click ok Yes so that QuickBooks can begin installing the updates that were recently downloaded.
💠 Launch QuickBooks Desktop.

Note: You may still have to manually update a few rates such as the State Unemployment Insurance rate. New state taxes are generally released at the start of a new calendar year, so you’ll have to update your tax tables accordingly. And since these taxes are updated by the state, they may not show up in QuickBooks payroll until you enter them manually.

Step 2: Payroll Items Incorrectly Calculated

Many underlying issues can result in QuickBooks calculating paycheck amounts incorrectly. We’ve provided a few methods that you can use to find the underlying problem and fix it; otherwise, Quickbooks payroll taxes will not be deducted properly.

To check the Net or the Gross value used for deduction of payroll item, follow these steps:

💠 Launch QuickBooks.
💠 From the top menu bar, choose the Lists option.
💠 Click on the Payroll Item list.
💠 From the available deductions, right click on the one that you want to verify.
💠 Choose Edit Payroll Item.
💠 Click on Next.
💠 On the Gross vs. Net screen, verify the selected preference for the particular item.
💠 Click on Next, then Finish.
💠 Click on Finish again

Based on your preferences, you may also have to check the time basis on which the payroll item is calculated. A particular item can be calculated on the basis of both quantity and hours. Further, you can select neither as the option for some payroll items.

To verify that the payroll limit hasn’t been reached for a particular payroll item, follow the steps below:

💠 From the top menu bar, click on Lists.
💠 Choose Payroll Item List.
💠 From the provided list, right-click on the item that you want to check the limit for.
💠 Choose Edit Payroll Item, then Next.
💠 When the Limit Type screen appears, verify the limit mentioned in the bottom box.
💠 You’ll get two options:
1. The limit for the payroll item is correct: this will cause the calculation at the limit.
2. The limit for the payroll item is incorrect: you’ll have to update the amount to be set as a limit to resolve the error.
💠 Go to the Limit Type option.
💠 Select the correct option from the following available preferences:
1. Annual – the calculation restarts each year
2. Monthly – the calculation restarts each month
3. One-time limit – the limit is set once
💠 Change the default limit and period according to your preference.
💠 Click on Finish.

You’ve successfully updated the settings. At this point, QuickBooks Payroll Taxes should be properly deducted from the paycheck. However, if Quickbooks Payroll Taxes are not being deducted, then move to the next method.

Step 3: Wages Or Taxes Incorrectly Calculated

QuickBooks Desktop payroll has the ability to calculate percent-based taxes and apply the amounts to the paycheck automatically. But when these deductions aren’t calculated properly, QuickBooks cannot deduce the payroll taxes from the paycheck. When amounts on all the paychecks are incorrect, it basically means that you don’t have the latest updates installed.

If there’s a tax calculation error on a specific paycheck, then you’ll have to revert a paycheck, update the tax tables, then create the payroll to ensure that the deductions show up accurately.

To revert the paycheck and show deductions on QuickBooks payroll paycheck properly, follow these steps:

💠 Go to the Payroll Information for the particular employee.
💠 Right-click on the name of the Employee that has incorrect deductions.
💠 Click on Revert Paycheck.

Once you’ve reverted the paycheck, you’ve successfully refreshed the payroll information so that QuickBooks payroll can now accurately calculate taxes on the payroll amount.

Conclusion

When QuickBooks Payroll Taxes aren’t being deducted properly, the aforementioned scenarios often cause the problem. Updating the software, then the payroll tax tables is necessary to move forward for correct deductions to be entered on the payroll paycheck. Further, you can refresh the payroll information by reverting the paycheck that you created using the old information.

Frequently Asked Questions

  1. What should I do if QuickBooks isn’t deducting payroll taxes properly because of missing or incorrect information?

    Missing or incorrect payments can have a significant impact on your business. If you’re not getting the payments you’re owed, there are a few things you can do to fix the problem:

    💠 Check for duplicate payments. Sometimes, multiple payments are processed for the same transaction, causing the data to get confused and the payment to go missing. To check for duplicate payments, open your transactions report and sort by date. If you see any duplicates, you’ll need to figure out which of the payments was actually made and remove it from your bank account.
    💠 Check for incorrect addresses. Sometimes, the wrong address is entered into QuickBooks, preventing payments from going through. To check for incorrect addresses, open your customer list and select a customer. Under “Details,” look for the “Payment Method” field and make sure that the address is correct. If it isn’t, you’ll need to enter the correct address into QuickBooks and re-process your transactions.
    💠 Check for unprocessed transactions. Sometimes, transactions get stuck in QuickBooks because they haven’t been processed yet.

  2. What should I do for correct deductions when I have unauthorized returns?

    If you have received an unauthorized return from your employee in QuickBooks Desktop, there are a few things you can do to correct the issue. First, review your employee’s transactions and account balances to make sure that all authorized transactions were recorded correctly. If not, add any missing transactions to your employee’s accounts and reconcile their bank accounts accordingly. Finally, file an unauthorized return report with QuickBooks Support so that we can investigate and prevent future incidents.

  3. What to do for unavailable paychecks and QuickBooks payroll taxes not being deducted?

    When employees don’t get paid, the consequences can be serious. In fact, payroll errors can lead to financial ruin for businesses. That’s why it’s important to take steps to prevent these errors from happening in the first place. Here are a few tips for fixing payroll errors in QuickBooks Desktop:

    💠 Verify employee hours and wages accurately

    Make sure you’re tracking employee hours and wages correctly in QuickBooks Desktop. This information is essential for ensuring that employees are being paid what they’re owed. If you don’t have this information, you can manually enter it into your records or use an online payroll calculator.

    💠 Check for errors in deductions and credits.

    Make sure all deductions and credits are accurate in your QuickBooks Desktop account. This includes income tax withholdings, employee benefits, and other miscellaneous expenses. If there are any discrepancies, correct them as soon as possible. This will help ensure that employees are being paid what they’re owed and that your business is receiving the correct amount of tax revenue.

    💠 Check for mistakes in payments.

    Make sure all payments are accurate in your QuickBooks Desktop account. This includes salaries, commissions, overtime pay, and other payments

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