Troubleshooting QuickBooks Payroll Not Withholding Taxes

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QuickBooks Payroll Not Withholding Taxes Accounting
May 27, 2024

QuickBooks is a top-notch accounting application that offers comprehensive payroll management solutions. Despite being an outstanding software, users sometimes encounter issues like QuickBooks Payroll Not Withholding Taxes. Consequently, this issue can create significant business problems, leading to potential tax liabilities and compliance issues. This guide explains why QuickBooks Payroll might not withhold taxes and offers solutions to resolve these issues.

Is it becoming difficult to process the employee’s payroll due to QuickBooks Payroll not withholding taxes issue? In such circumstances, you must contact our QB professionals at 1-844-266-9345 immediately, and they will handle the situation better. 

Let’s Know the Details Regarding QuickBooks Payroll Withholding 

QuickBooks Payroll automatically computes and withholds federal, state, and local taxes from employees’ paychecks. It also ensures that the correct tax amount is deducted based on the latest tax tables and the information provided for each employee. So, it is mandatory to set up and maintain QuickBooks Payroll properly for the system to function correctly.

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Reasons Why Users End Up With QuickBooks Desktop Payroll Not Withholding Taxes

Whenever QuickBooks Desktop Payroll does not withhold taxes, the user’s first question might be about the root causes of this issue. Below, we have described all the causes that trigger this issue; check them out. 

Using the Outdated Payroll Subscription:- Accessing an inactive or expired QuickBooks Payroll subscription might prevent users from computing and withholding taxes, leading to the QuickBooks Desktop Payroll not withholding taxes issue. 

Entered the Incorrect Employee Details:-  Another reason is that you have entered inaccurate employee data, including Social Security numbers, tax filing status, or exemptions, which can result in improper tax withholding.

Inappropriate Setting Up of Payroll:- Problems encountered during the initial payroll setup can lead to incorrect tax withholding. This includes incorrect information in employee profiles, company settings, or payroll items.

Accessing the Older Version of Tax Tables:- The QuickBooks application entirely relies on the updated tax tables to compute the withholdings properly. However, if the tax tables are outdated, then QuickBooks software won’t be able to withhold the accurate amount of taxes. 

Manual Payroll Adjustments:- Sometimes, manual adjustments or overrides in the payroll process can affect tax calculations.

Problem While Setting Up Of Payroll Item:- In other instances, the issue may arise when payroll items related to taxes are inappropriately set up, which can cause withholding errors.

Exemptions and Deductions:- You may see this error when employees claim exemptions or directions are inappropriate. 

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Must-Know Tips Before Fixing QuickBooks Payroll is not taking out taxes Issue

Herein, we have listed some preventive measures you must consider before fixing the QuickBooks payroll is not taking out taxes issue. 

Timely Update Tax Table to the Latest Version:- Users must set reminders to update their payroll tax tables regularly. QuickBooks typically releases updates quarterly, but additional updates may occur if tax laws significantly change.

Update Tax Table to the Latest Version

Stay Informed on Tax Law Changes: – Another important thing is to keep updated with changes in tax laws that may affect payroll withholding. The QuickBooks Payroll will help you compute the employee’s payroll according to the latest taxation rules and regulations. 

Employee Information Must be Verified Periodically: – The users must check and verify the employee’s details periodically to ensure that the details remain updated. This includes checking for changes in filing status, exemptions, and any other personal details that might affect tax withholding.

Conduct the Payroll Audits:- Periodically audit your payroll to ensure that withholdings are accurate. This can involve comparing payroll reports with tax filings to identify any discrepancies.

Utilize the QuickBooks Payroll Reports:- It is mandatory to use the QuickBooks Payroll reports to verify and analyze the payroll data. The reports include Payroll Summary, Payroll Detail Review, and Tax Liability, which can help promptly identify and rectify any issues.

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What Should Be Done If QuickBooks Payroll is not taking out taxes? 

Once you know the reasons that might result in QuickBooks Payroll is not taking out taxes, the users can easily fix the issue using the corrective measures described below. 

Measure 1: Conduct the Accurate Setup of QuickBooks Payroll 

Verifying the payroll setup in QuickBooks is critical to ensure that all information is accurate and taxes are correctly withheld. An incorrect setup can lead to significant issues, such as QuickBooks Payroll not withholding taxes. 

  • In the initial stage, open the QuickBooks Desktop on your workstation and then navigate to Employees > Employee Center.
  • Afterwards, double-tap on the employee’s name to open their profile.
  • Once you are all sorted, check that the Social Security number (SSN) is entered correctly.
  • You must verify the tax filing status (e.g., Single, Married, etc.).
  • Thereon, you are supposed to review the W-4 information, including allowances and additional withholding amounts.
  • Proceed further my moving to the Edit > Preferences option. 
  • In the next step, select Payroll & Employees from the left-hand menu.
  • Subsequently, click on the Company Preferences tab.
  • Next, the users must verify that you have mentioned the accurate federal and state employer identification numbers (EINs) are entered.
  • Furthermore, ensure that you accurately set up the federal, state, and local taxes.
  • Moreover, you must also verify that the correct payroll schedules are assigned to employees accurately. 

Measure 2: Get Ready By Installing the Latest Payroll Tax Tables 

QuickBooks relies on accurate tax tables to calculate and withhold taxes. However if you access outdated tax tables, this might result in incorrect withholding. Also, it might give rise to the QuickBooks is not calculating payroll taxes issue. So, installing the updated payroll tax table updates is necessary by performing the steps outlined below. 

  1. In the first place, launch the QuickBooks Desktop and then click the Employees > Get Payroll Updates. 
 Get payroll updates
  1. After this, select the “Download Entire Update” checkbox and hit the Update option to get the latest tax table. 
  2. Once you are all sorted installing the updates, restart QuickBooks to ensure the changes take effect.

Measure 3: Cross-check the Payroll Subscription Status

Using an inactive or expired payroll subscription might interrupt the users’ ability to compute the taxes accurately. So, to fix the issue, it is necessary to verify that the payroll subscription is updated. 

  1. In the beginning, open the QuickBooks application and then move to the Employees menu in the top menu bar.
  2. Afterwards, select My Payroll Service by clicking on the drop-down menu. 
  3. You must navigate to the Account/Billing Information. 
  4. As a result, it will see a new window that will ask you to sign in to your Intuit account.
  5. Thereon, you must mention your Intuit account credentials (user ID and password) to log in.
  6. If you have multiple accounts, ensure you select the account associated with your QuickBooks Payroll service.
  7. Once you log into the account, you will be directed to the Payroll Account Maintenance page.
  8. After that, you will see the details of your QuickBooks Payroll subscription, including the status, renewal date, and any pending actions.
  9. You are supposed to verify whether the QuickBooks Payroll subscription is marked Active. However, your payroll services may be disrupted if you find out that the status is inactive, expired, or suspended.
  10. In the end, if the subscription is inactive, you must follow the prompts to renew it. 

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Measure 4: Make Use of the QuickBooks Install Diagnostic Tool 

Use of the QuickBooks Install Diagnostic Tool 

By running the QuickBooks Install Diagnostic tool, you can recover the issues you encountered while installing the application. It also helps rectify QuickBooks payroll’s error of not withholding taxes. 

  1. Begin the process by downloading the latest version of QuickBooks Tool Hub from the official Intuit website. 
  2. After that, navigate to the Download section and open the downloaded file (QuickBooksToolHub.exe).
  3. In the next step, go through the instructions given on the screen to complete the installation.
  4. After installing the QB Tool Hub, open the QuickBooks Tool Hub.
  5. Thereon, you must double-tap the QuickBooks Tool Hub icon on your desktop to open it.
  6. Next, launch the QuickBooks Tool Hub and select the “Installation Issues” tab from the left-hand menu.
  7. Furthermore, the users must click “QuickBooks Install Diagnostic Tool” in the “Installation Issues” tab. 
  8. After this, you will observe that the QuickBooks Install Diagnostic Tool starts scanning your system for issues related to the QuickBooks installation.
  9. Afterwards, it is advised to wait patiently as this process may take some time (up to 20 minutes), depending on your computer’s performance and the extent of the issues.
  10. Once the tool finishes scanning and repairing your computer, you will be prompted to restart it. You must confirm that you won’t let any work open without saving it and then restart your computer.

Measure 5: Payroll Calculations Must be Adjusted Carefully 

You must perform the steps to manually adjust the payroll calculations to rectify the issue. 

  1. In the beginning, move to the QuickBooks Employees menu and then the Payroll Center. 
  2. Afterwards, click on the employee’s name and then the Paycheck Details option. 
  3. You must make the necessary changes to the tax amounts according to your preference. 
  4. End the procedure to verify whether the issue is resolved. 

Summarizing the Above!!

We hope this post helps you rectify the QuickBooks Payroll Not Withholding Taxes issue easily. If you still need help, we suggest you connect with our highly certified QB experts for quick resolution. 

Frequently Asked Questions (FAQ’s)

If the issue persists after doing the corrections, then you must consider running the Payroll Checkup tool. Go to the Employees > My Payroll Service > Run Payroll Checkup. This tool helps identify and resolve common payroll issues.

Yes, you can manually adjust tax withholdings. When processing payroll, you can enter the correct withholding amounts for each employee on the paycheck detail screen.

It’s recommended that you review and update your payroll tax settings at least quarterly or whenever there are changes in tax laws or employee information.

There could be several reasons why taxes are not being withheld in QuickBooks Payroll, including incorrect payroll settings, employee setup errors, or outdated tax tables. Ensure all payroll settings are correctly configured, and the latest tax table updates are installed.

If you need additional assistance, you can contact QuickBooks support by visiting the Help menu within QuickBooks and selecting Contact Us or by visiting the QuickBooks support website for more contact options.

For Immediate Help +1-844-266-9345