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QuickBooks accounting software is often used by business persons to calculate the federal income tax and federal withholding. Calculating the taxes through QuickBooks helps in saving time and avoiding the tedious tasks. But, sometimes the problem occurs when QuickBooks payroll not calculating federal withholding or the QuickBooks software calculates the incorrect taxes.

To eliminate such problems and to provide you an error-free experience, we have covered the causes and their useful fixes. By following all the steps, you will resolve the issue by yourself. Let’s start with the reasons first.

QuickBooks-Payroll-not-Calculating-Federal-Withholding

Reasons for QuickBooks payroll not calculating federal withholding

There could be multiple reasons for QuickBooks payroll unable to calculate the federal withholding. A few of the causes are given as under:

  1. The employee’s annual salary is exceeding the maximum salary limit.
  2. Another reason is too low gross wages in the employee’s last payroll.
  3. You have not updated the tax table as per the latest slab.
  4. The employee might have requested the tax exemption.
  5. The QB software not calculating the federal withholding can also occur due to incorrect payroll setup.
  6. Sometimes, an outdated QuickBooks payroll also results in the federal withholding calculation error.
  7. Lastly, you have not updated the QuickBooks software as per the latest version creating trouble in running the program.

How to fix QB payroll not calculating the federal withholding problem?

Here are the best possible fixes to resolve the QB not calculating the federal withholding error.

Method 1: Check the Employee Profile to review the Federal settings

The QB payroll software calculates the federal withholding by considering a few factors taxable wages, several dependents, pay frequency, and filing status. Follow the steps below to check the profile.

  1. Open the QuickBooks software on your PC.
  2. Now click the Employee
  3. Choose the option Employee Center.
  4. Further, you will need to double-click on the employee’s name that is facing the trouble.
  5. Click on PayrollInfo.
  6. Next, you need to check that you have entered the correct details in Pay Frequency.
  7. Now select the Taxes
  8. Click over the Federal
  9. Now verify the details under Filing Status and Allowance. Make sure the details are correct.
  10. Click Ok and close all windows.

Method 2: Check if an employee has requested an exemption from federal withholding

  1. Firstly, you need to open the QuickBooks
  2. Now choose the Employee
  3. Click over the Employee’s (One employee at one time)
  4. Click on the Edit (Displayed with pencil or pen symbol)
  5. Now verify whether Do Not Withhold status is selected.

Method 3: Correctly Setup the Payroll Taxes

  1. Open the Intuit QB software.
  2. Click the menu icon on the top-left corner.
  3. Now select the Taxes
  4. On the next window, click Payroll Tax.
  5. Next, you will see the Payroll Tax Setup and Compliance
  6. Here you need to verify the employee date of birth, hiring date, and W4 form details.
  7. To check the federal withholding details, you can go through the W4 form.
  8. Further, you will need to enter the Business Name (Same as while filing the tax).
  9. Now enter the Business Address. By clicking over the checkbox for Same as Business Address will automatically pick up the address that you have used during payroll setup. Else, you can enter the details manually as well.
  10. Enter the Hiring Date of Employee in the last six months: Choose the option YES or NO.
  11. Enter the date to start the QuickBooks online payroll: You can choose the option to start the payroll before, on, or after the current month or year.
  12. Now you need to fill in the Federal Tax details and ID and if you do not have it, then click No.
  13. You must apply for the federal employer identification number (FEIN) if you do not have it.
  14. Fill the Payroll Tax Form by selecting either Form 941(quarterly filing) or Form 944 (annual filing).
  15. Check the Federal tax payment option by selecting the frequency.
  16. Choose a non-profit business status as yes or no.

Method 4: Update the Payroll tax table 

An outdated payroll tax slab will miscalculate the federal withholding. Follow the steps below to stay up to date with the latest tax table. Also, you should update the tax table every time you pay a salary to your employees.

Online tax table update  

  1. Login to your QuickBooks account.
  2. Click the Employees
  3. Now you need to click Get Payroll Updates.
  4. Click the checkbox for Download Entire Update.
  5. Lastly, you need to choose the Download Latest Update
  6. Wait until the download completes.

Update the tax table via CD

  1. Open the QB Intuit account.
  2. Insert the Payroll updated CD into your PC or laptop.
  3. Click one the Employee
  4. Now choose the option Get Payroll Updates.
  5. Click the option Install Update fromDisk.
  6. Again click Install and wait for the process to complete.

Method 5: Revert the Paycheck after updating the Tax Table 

This process will refresh the data and recalculate the taxes.

  1. Firstly, you need to open the Employee’s PayrollInformation in QB software.
  2. Not right-click over the Employee’s
  3. Choose the option Revert Paycheck.

Method 6: Update the QuickBooks to the Latest Version 

Manual Update

  1. Make sure to save all QuickBooks company files.
  2. Close the QuickBooks software.
  3. Now click the Start
  4. Look for the QuickBooks
  5. Right-click over the icon and choose to Run as Administrator.
  6. Now click over the Help tab and choose Update QuickBooks desktop.
  7. Click Options, choose Mark All.
  8. Click Save.
  9. Now head over to the Update Now menu and choose the option Reset Update.
  10. In the end, select the Get Updates

Automatic update

  1. On the QuickBooks application, click the Help
  2. Choose Update QuickBooks Desktop.
  3. Head over to the Update Now
  4. Click Get Updates and start the downloading process.

Get in touch with Payroll experts to fix Federal Withholding issues

These six steps are highly useful to resolve the issues in federal withholding. Whether the problem is affecting a single employee or it’s happening with multiple employees, you can fix the issue by following the steps as mentioned above. You can also get in touch with the QuickBooks Help if you cannot understand any point or could not get the desired results. Our experts will help you with some advanced troubleshooting and fixes.