Why is the Simple IRA deduction calculating incorrectly when there is a section 125 health insurance deduction present? Should be gross - section125 x Simple %

Instead Quickbooks is calculating the gross x the Simple % without deducting the section 125 first.


Hello there, mrodgers,

In QuickBooks Desktop, the calculation of deductions is based on their sequence on the employee's payroll information. If you've assigned Section 125 Health Insurance after Simple IRA on the Additions, Deductions and Company Contribution section, the system will calculate Simple IRA first.

Let's correct this by interchanging the deductions position in the employee's setup. Here's how:

  1. Go to the Employees menu, then select Employee Center.
  2. Double-click the name of the employee.
  3. Select the Payroll Info tab.
  4. Under the Additions, Deductions and Company Contribution section, interchange the deduction's sequence under the Item Name column. (Ex. Section 125 Health Insurance first, then Simple IRA second)
  5. Click OK.

I've attached screenshots below for your reference.

To be more familiar with how QuickBooks calculates your payroll taxes, kindly refer to this article: How QuickBooks Calculates Payroll Taxes. It discusses the systems method and explains how we determine federal and state income taxes.

Please let me know if you have other payroll concerns. I'm always here to help.

Was this answer helpful? Yes No
IntuitRea , Community Support Specialist
Employee SuperUser

No answers have been posted

More Actions

People come to QuickBooks Learn & Support for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

  1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
  2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
  3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
  4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
  5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.

Select a file to attach:

Qb community
Looking for advice from other business owners?

Visit our QuickBooks Community site.