Fixing Employer Tax Errors

What do I do if I calculate the wrong employer tax amount?

If you accidentally use the wrong amount for an employer tax such as the employer portion of FICA, you have two options for correcting it.

In this US, this case applies to the employer portion of Social Security and Medicare, FUTA, SUTA, and any other taxes that are charged directly to the employer, with no deduction from the employee's wages.

NOTE-- Click one of the links here if you made an error in employee tax witholding or a fixed-payment employee deduction such as FICA or union dues.

Fixing Tax Payments

The easiest way to fix an error in employer tax calculations, is to just wait until you make the payment to the tax agency.

First, use the Pay Bills command to pay the tax agency, using the calculated amounts.

For a small error, you can type a correction into the Adjust column, for one of the line items in the Other Cost record created from Pay Bills.

For a large error, follow these steps:

  1. Choose Other Costs from the Costs menu.
  2. Click the New button.
  3. Enter the tax agency into the Supplier field.
  4. Enter the amount of the adjustment into the Amount field.
  5. If the adjustment is a credit, enter Credit into the Apply To popup field.
  6. Enter job cost info for the expense, if you want to track it.
  7. Hit the Enter key to save the record.
  8. The adjustment will be included, when you use Pay Bills to pay the agency for all items.

Fixing Payroll Records

If you want to track payroll burden very accurately, you can also adjust the employer tax amounts in future pay periods. It will take more time, but will give you a better report for the tax payment, and will cover job costs better.

To adjust payroll records, follow these steps:

  1. Decide on how quickly you want to correct the error, by adjusting employer taxes in future payroll.
  2. Choose Preferences from the Options menu, and choose Expenses from the submenu.
  3. Turn on the checkbox for Allow Payroll Deduction Changes.
  4. Click OK.
  5. When you write payroll each week, double-click in the Employer Tax column for each employee.
  6. Add to the calculated amount if you underpaid, or reduce it if you overpaid in the previous periods.
  7. Click OK.
  8. Repeat steps 6 to 8 for each pay period, until you have sufficiently corrected the error.

HINT-- You may want to write down the adjustment plan, or set up a spreadsheet to track the adjustments.

Click here for more about payroll in the Getting Started manual.
Click here for more about payroll in the Reference manual.

Click here to return to payroll topics.
Click here for general information about Goldenseal payroll software.