Problem

Read below for instructions on how to correct a payroll item set up when a payroll item on a paycheck is not calculating or is calculating incorrectly.

Make sure you are on the latest version of QuickBooks Desktop and tax tables (US or Canada).

Details

There are several reasons why a payroll item doesn't calculate or calculates incorrectly on a paycheck. Use the following suggestions to determine what is causing the inconsistency in your situation.

Verify whether or not a deduction payroll item is set to calculate based on Net or Gross:

The choice selected can change the calculation. To verify how an item is set to calculate:

  1. In the top menu bar, choose Lists > Payroll Item List.
  2. Right-click the deduction you want to verify and select Edit Payroll Item.
  3. Click Next until the Gross vs. Net screen.
  4. Verify the selection is correct.
  5. Click Next until you can click Finish.
  6. Click Finish.

Note: Some garnishments and other types of deductions will vary based on the requirement of the liability agency. For more information on how this particular deduction should calculate, refer to the requirements of the agency.

Check the order of the payroll items to determine if it is affecting the calculation.

Payroll items calculate based on the order listed in the Other Payroll Items section of the paycheck.

For example: If you have a garnishment deduction item set to calculate based on gross pay and this item is listed under Other Payroll items second to an Advance addition item; the advance item would calulate first and the deduction would be calculated on the combination of gross earnings items plus the Advance.

Check the order of the payroll items on the paycheck to determine if payroll item order is affecting the calculation.

  • If you want the payroll item to calculate based only on the Earnings of the employee, it should be the first item in the Other Payroll Items section of the paycheck.
  • If you want to include certain additions and deductions in the computation, add the payroll item after those items.

Verify whether the payroll item is set to calculate based on quantity, hours, or neither.

Payroll items can be set up to calculate based on quantity, hours, or neither. If a payroll item is set to calculate based on quantity or hours, you must manually enter the quantity or number of hours in the Quantity column in the Preview Paycheck window.

To change the calculation settings of the payroll item:

  1. In the top menu bar, choose Lists > Payroll Item List.
  2. Right-click the payroll item you want to change and select Edit Payroll Item.
  3. Click Next until the Calculate Based on Quantity screen.
  4. Change the setting to Neither if this item does not require hours or quantity to calculate.
  5. Click Next until you can click Finish.
  6. Click Finish.

Verify if the annual limit has been set or reached.

If a payroll item has been calculating correctly in the past and stops calculating on a paycheck there could be a check mark in the This is an annual limit checkbox and a default limit set which the employee has reached. To verify the set up of the item:

  1. In the top menu bar, choose Lists > Payroll Item List.
  2. Right-click the payroll item you want to change and select Edit Payroll Item.
  3. Click Next until the Limit Type screen.
  4. Verify the limit in the bottom box is accurate.
    • If the limit is correct the employee's payroll item should stop calculating at this limit.
    • If the limit is incorrect, update the amount.
  5. Under Limit Type, verify whether if the correct option is chosen.
    • Annual - Restart each year
    • Monthly - Restart each month
    • One-time limit
  6. Change the default limit and/or Limit Type selection accordingly.
  7. Click Finish.

Note: Certain deferred compensation items have set annual limits. See Deferred compensation limits for more information.