[US] COVID-19: Bookkeeping your payroll tax credits and deferrals
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[US] COVID-19: Bookkeeping your payroll tax credits and deferrals
If you're claiming the Employee Retention Credit, Sick Leave Credit, Family and Medical Leave Credit, or deferring your payroll tax payments, here's how you can record it in Wave.
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This is not accurate. The article says "Wave will automatically generate the same journal transaction as usual. However, the Payroll Liabilities account will hold a credit balance for the amount of accumulated deferred taxes". I don't know about anyone else, but this is not happening in my books. Wave is not automatically generating the same journal. The journal changed once I elected to defer. The payroll liabilities account is not holding a credit balance for the deferred taxes. These taxes are not being accounted for in 2020, they are being ignored as if they are not related to 2020 payroll, which is incorrect.
Hey @DaveM , this definitely seems like unusual behaviour. I see that one of our support agents is looking into this for you. They should be reaching out soon with some more information, so thank you for your patience in the meantime!
If there is not enough tax withholdings to cover the Sick and Family Medical Leave Credit and a refund is owed, how is this recorded through the payroll journal transaction? Where is the offset for the credit to income reflected since there is no debit available for the taxes owed? I do not see an additional debit account.
Hey @NEWLLC !
After taking a closer look on the back end, I can see that one of our Payroll Specialists is assisting you with this at the moment. If you have any other questions for them, please don't hesitate to reach back out via your email exchange.
Hi. They are assisting with a separate issue in regard to COVID leave and submitting leave through timecards. I am still looking for clarity on my original question.
If there is not enough tax withholdings to cover the Sick and Family Medical Leave Credit and a refund is owed, how is this recorded through the payroll journal transaction? Where is the offset for the credit to income reflected since there is no debit available for the taxes owed? I do not see an additional debit account.
Hey @NEWLLC , the journal would only report the total that was claimed on that payroll and is bookkept as described in the Help Center article section Sick and Family Medical Leave Credit (as I'm sure you've already seen). If we request a sick and family medical leave refund, it’s done at quarter end on the 941 and the IRS will send a refund check some time after. When you receive the deposit, I believe that this should be the transaction that you're looking for.
Thanks, Alex. Can you confirm the correct entry for when the refund check is received is to DR cash and CR payroll liabilities?
Hey @NEWLLC , I can advise on how I think it should be recorded, but I will preface it by saying that I'd recommend reaching out to an accountant/CPA on exactly how to handle the refund correctly as I don't want to point you down a path that has negative consequences on your accounting. If I was to account for this though, I would say, that if the transaction is hitting your bank account and you're importing it into Wave, you can just categorize it as “Refund for Expense” so it doesn't show as income.