QuickBooks Payroll somehow simplifies it by facilitating its users to calculate and file (both state and federal)taxes and other company payroll things. However, sometimes, QuickBooks payroll does not withhold taxes from the employee's salary. This generally happens when the "QuickBooks Payroll Not Withholding Taxes" error occurs. If you are too facing this issue and are looking for trustworthy solutions to fix the issue immediately, then go through this blog till the end. This blog talks about the error, its root causes, warning signs, and effective troubleshooting methods.
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Why Does QuickBooks Desktop Payroll Not Withholding Taxes?
As per the law, it is mandatory for the organization to pay accurate taxes on employees' behalf. The exact payroll amount contains the withheld taxes, health insurance premiums, union dues, child support, 401 (k) contributors, and more. To ensure that the correct withheld amount, employees need to submit form W 4. But, while calculating the withheld amount, users might encounter the QuickBooks Payroll Not Withholding Taxes error. The root causes for triggering QuickBooks Desktop Payroll Not Withholding Taxes error are:
Your annual salary exceeds the salary limit.
The payroll tax table is outdated, or the payroll update is not installed properly.
The last payroll taxes of employees are too low.
QuickBooks application is outdated, or the version is discontinued.
Employees have choosen the "DO Not Withhold" status and the filling status is false, for both the state and federal taxes.
Symptoms to Identify QuickBooks Desktop Payroll not Withholding Taxes Issue
You can identify the issue with the help of its signs/symptoms. The following symptoms are thrown at the time of occurring the error.
You are unable to use the payroll function of QuickBooks.
The active window crashes, or the system hangs when you try to calculate taxes.
QuickBooks payroll do not withhold taxes accurately.
The application freezes or stops responding to your commands.
Practical Troubleshooting Methods to Fix QuickBooks Payroll Not Withholding Taxes Issue
Dealing with the payroll issues in QuickBooks is easy as they have the set solutions. Below, we have explained the most practical solutions of QuickBooks Payroll Not Withholding Taxes Issue.
Solution 1: Check the Annual Limit
If the payroll has stopped calculating the withheld taxes, there might be the possibility that the employee has reached its annual limit. Follow the below-cited steps to verify the setup of the item:
Open your QuickBooks payroll and click on the lists menu.
After that, select the payroll item list from the drop-down menu.
Further, right-click on the payroll item that you wish to modify and select edit payroll items.
Scroll down until you reach the limit type screen.
Verify the employee's payroll limit. Also, make sure that you have picked the correct option.
You can change the limit type that best suits your needs.
Lastly, press the finish button to end the process.
Solution 2: Update QuickBooks payroll Tax table to its latest release
Having the outdated QuickBooks payroll tax table will results into the QuickBooks Payroll Not Withholding Taxes error. You can easily download and install the latest payroll tax table by following the steps below.
As a first step, sign into QuickBooks desktop using your admin credentials.
After that, click on the employees and then choose Get Payroll updates option.
Further, click on download entire update option to download the update.
An informational window will appear on your screen when the download is over.
Solution 3: Examine the Employee's Withholding Report
The incorrect year to date and quarter to date wages will results into this error. If you have discovered that QuickBooks is not calculating the taxes, you can follow the below-cited steps to resolve the issue.
Sign into the QuickBooks payroll and choose reports followed by picking employees and payroll section.
Further, choose the employee withholdings option and choose the columns that meets your needs by clicking on customize reports option.
In the display list section, select the items that you wish to appear on your reports.
Press the OK button and make sure that the state and federal taxes are set up correctly.
In the employee info window, click on the employee name to open the updated information window.
Choose payroll info to access the state and federal taxes, and then choose the taxes tab.
Here, make sure that the employee is accurately taxed.
Solution 4: Verify the QuickBooks payroll Subscription
QuickBooks will not compute the accurate taxes if the payroll subscription is not active. Follow the steps below to revalidate the QuickBooks payroll subscription.
Log into QuickBooks using your admin credentials.
After that, click on the employee's menu and choose the My Payroll Services option.
Now, choose account/billing information, and under the status, click on the resubscribe option.
Complete the on-screen steps to reactivate the QuickBooks payroll subscription.
Solution 5: Revert the Paycheck
Revert the QuickBooks paycheck to refresh the payroll information to calculate the taxes on transactions. The steps that will guide you in reverting the paycheck information are mentioned as follows:
You need to open the employee's payroll information window in QuickBooks.
Now, right-click on the names of employees, which are highlighted in yellow color.
Thereafter, click on the Revert Paycheck button.
Solution 6: Examine the Employee's tax Setup and Filing Status
QuickBooks payroll do not withhold taxes if the filing status on the federal form W 4 is set as exempt or do not withhold. Follow the steps below to check the file status and resolve the problem.
Open QuickBooks and click on the employee tab. Further, choose the employee center option and double-click on the employee's name one by one.
Now, select the payroll info tab available on the left and verify that the pay frequency is accurately set.
Further, select the federal tab and look for the allowance and filing status columns.
Click on the tax button and make the required adjustments.
Press the OK button twice if the filing status is shown as Exempt or Do not Withhold.
Final Words
QuickBooks Payroll Not Withholding Taxes is an uncommon error that frustrates the users as they are unable to tackle it on their own. However, with the proper guidance, you can easily resolve the issue. Hopefully, the methods explained in this blog will help you in fixing the error easily. All the prescribed methods are verified by the experts. You can call us at any time if the error still persists or if you need further assistance.
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