Overview

This article explains how to use a liability adjustment to correct an employee's year to date (ytd) information contained in payroll items such as company contributions, employee addition and deduction payroll items. Below is a list of common scenarios that can be corrected by doing a liability adjustment.

  • You set up Health Insurance Company Contribution with the wrong tax tracking type and need to correct the liability amount after creating a new payroll company contribution item with the correct tax tracking type.
  • You need to adjust year to date (ytd) wages, deduction or addition payroll items for an employee who will not be receiving any more future paychecks (i.e.: terminated employee)
  • You need to increase or decrease amount for company contribution items such as Health Savings Account (HSA), Simple IRA company match or 401(k) company match.
If the adjustment will impact or change the data on your quarterly return, you might consider doing a quarter to date (qtd) adjustment instead of a year to date (ytd) adjustment.

 

Note:

  • If you are a Basic, Standard, or Enhanced customer, run the Payroll Checkup.
  • If you are an Assisted Payroll customer, please contact us to complete these corrections or if you need to do an adjustment for payroll liabilities that affects payroll taxes.
    • Assisted Payroll customers cannot adjust payroll liabilities paid by their payroll service.  Liability adjustments for company contributions, per employee, can cause errors to employee records if the adjustments are performed outside the quarter in which they occurred. (For example, for a March 15 paycheck with an effective date of June 15, you must change the effective date to March 31 of that year.)

 

Details

  1. Choose Employees > Payroll Taxes and Liabilities > Adjust Payroll Liabilities.
  2. Select the correct Effective Date.
    • Assisted Payroll:  
      • For a previous quarter use the last day of the affected quarter.  
      • For the current quarter use the same date as the last paycheck.
    • Basic, Standard or Enhanced Payroll: It should be the same date as the last paycheck of the affected quarter or today's date if doing an adjustment that affects current quarter only.
  3. In the Taxes and Liabilities section, click the Payroll Item column and select the correct payroll item.
  4. Insert the amount of the adjustment in the corresponding field (negative to decrease the amount of the liability and positive to increase the amount of the liability).
  5. Use the Memo column to note what the adjustment is for, for future reference.
  6. If you have additional employees, click Next Adjustment and repeat the steps for each affected employee. (Be sure to change the Date and Effective Date and Employee Name fields.)
  7. If there are no additional employees, click OK to save your entries.
  8. Review the Payroll Summary Report to verify that the totals are now correct.
    Payroll Summary Report
    • If you are a Basic, Standard, or Enhanced customer, run the Payroll Checkup.
    • If you are an Assisted Payroll customer, please contact us to complete these corrections or if you need to do an adjustment for payroll liabilities that affects payroll taxes.
  9. If you have Assisted Payroll, send a zero payroll to transmit your changes to the payroll service.
    Send a zero payroll

Note: Company-side adjustments (not the same as company-paid items) lower the liabilities on the Payroll Liabilities Balances report, but they do not affect the Payroll Summary Report.

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