Employee Paycheck Taxes?

Question

In Out corporation we get paid different amount every week, now when you write yourself a check through quickbooks it calculates your taxes withdrawn based on the amount paid [and how much it would be if the same amount is paid throught the year]
Is there something that i need to do in quickbooks in order to make sure that the amount that quickbooks leaves out of the check for taxes is correct every week?

Answer 1

It should be fine, the employee chooses what to put on the W-4 and you just obey the rules. If they owe at year end that is something for them to keep an eye on.
To check the math in your software you would need to manually compute the taxes. It can get complicated if you have cafeteria plans, EITC, 401K or meals and tips to deal with. Basically you take the gross for the week and convert it to an annual amount then reduce the annual amount by personal exemption amounts and look it up on the annual tax table then divide that by 52 also take out 6.2% for FICA and 1.45 for Medicare. If you have a state tax you would need to compute that also and any garnishments or other deductions.
Just trust the software it is probably right.
I used to develop test and support payroll software and if the software was written correctly you aren't likely to find a bug.

Answer 2

The only thing I can think of that you need to do with regards to quickbooks is to make sure that your state unemployment rate in your quickbooks is the correct rate. Massachusetts unemployment rates change from year to year for a company, so you want to make sure that you are using the right rate.

As far as other things (changes to taxable limit of social security, other changes) just make sure that you are paying your quickbooks fee to get any payroll updates. I'm a CPA/Tax Preparer, and we've had some clients who stopped paying so they didn't get updates for their payroll on quickbooks, and were not paying the right amount of taxes.

Answer 3

That IS the correct way to calculate withholding. If you get paid a different gross each week, the taxes would be different each week also. Social security and medicare is a flat rate, but income tax is calculated for each pay as if that amount was made each pay period all year.