940 Quickbooks Annual Payment

I have run across this problem this year and last, so I though a post would be nice, since I could not find help anywhere in QuickBooks support.  Also I was on hold with QuickBooks for 46 minutes to get an answer.

The problem was that the Federal Unemployment is withheld for each quarter, but the payment is only due once per year.  I wanted to combine those payments into one, but there was another problem.  My state has borrowed money from the federal government in order to pay their unemployment.  So when I printed out my annual 940 form there was an adjustment for “credit reduction”.

That sounded like a good thing to me, a Credit Reduction.  But in fact it is an additional charge.

So I go into QuickBooks to print the check for the year, except it only lets me print the four checks one at a time, and the total amount does not reflect the “credit reduction”.

So after waiting 46 minutes on hold, I got the answer.  First I need to make the adjustment for my state being fiscally irresponsible, and borrowing money it hasn’t repaid.  (By the way, I asked the IRS if I would get this money back, once the state repaid the loan.  They said no.)  Big surprise.

So to make the adjustment do these steps.

  • Click on employees, payroll taxes and liabilities, adjust payroll liabilities
  • Put in the date for 12/31/__
  • This will be a company adjustment and the item name will be “federal unemployment”
  • Enter the amount for the credit reduction
  • In the memo field, enter “credit reduction”
  • Click “Ok”

That takes care of step number one.  Now we need to combine the payments into one check.  This is how you do that:

  • Now click on “related payment activities” in the employee payroll center.
  • Then click on “create custom liability payments”
  • Make sure the dates are from January 1st to December 31st of the reporting year
  • Then Click “Ok”
  • Put a check mark on “federal unemployment”
  • Now you should be able to print and create one check for the proper amount.

Thanks QuickBooks and the IRS for this information.  It only took 2 hours to get.

I hope this helps at least one person.  Good Luck!!

940 Quickbooks


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