How to adjust a payroll liability in QuickBooks?


If you find that your payroll liabilities are inappropriate, you can make use of a liability alteration to fix them. To correct year-to-date (YTD) wages, inferences, or additions for a worker or member who will not be getting any further paychecks, you can adjust your payroll liability. 

Apart from this, there are plenty of uses of payroll liability adjustment. In this article, we are going to cover all the necessary steps to help you in adjusting a payroll liability.

The steps to make a workforce liability alteration:

Adjusting the payroll liabilities can be a bit tricky. Thus, to complete it smoothly, opt for QuickBooks Services, and follow the given below steps:

Step 1: Search for the payroll inconsistencies. This will get you the information you need for adjusting.

  • First of all, you will need to run a “Payroll Checkup.” This particular tool will help you to detect the problems that are affecting all of your liabilities. The tool will thoroughly scan your payroll data for the verification of your current setup. It will help you identify the missing information and discrepancies. It will also review payroll item setup, employee records, and tax and wage amounts. Right from identifying tax amounts on flat-tax discrepancies rate to suggestions on how to quick-fix an error or fault, this tool serves greatly.
  • For adjusting the quarter that you want, you need to run a “Payroll Summary report.” The Payroll Item or items’ amount that requires adjusting needs to be noted down.

Step 2: Now, you will need to adjust your payroll liabilities.

  • Locate the “Employees” menu, and click on it. 
  • Then you will see “Payroll Taxes and Liabilities.” You need to click on it.
  • Now, to proceed further, you need to select “Adjust Payroll Liabilities.”
  • Now, you will need to complete the empty fields. Input the same date as the last paycheck of the affected quarter. If you are working on the current quarter, put down today’s date. The “Effective Date” can be used to calculate the amounts on your form 940 and 941, and also the Payroll Liability Balances Report.

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If the adjustment is performed for the company or an employee, you will need to select “Employee Adjustment” for such a company-paid item. It will update the YTD information reported on the employee W-2 form. Then, locate “Company Adjustment” and click on it if you want to remove the balance from the Payroll Liability Balances Report.

    1. Now, select the employee according to the need.
  • Then, fill up the Taxes and Liabilities fields. Choose the “Item Name” that you would like to adjust. The “Amount” of the adjustment needs to be entered. To increase the amount, you may make use of a positive number, and to decrease the amount, you may use a negative number. “Wage Base” is a rarely needed field, even when one overrides a tax amount on a paycheck. While making a wage base adjustment, you can only use “Income Subject to Tax.” For future reference, you can enter a note about the adjustment you are making in the “Memo” field. 
  • Then click on “Accounts Affected,” and then tap on “OK.” For the liability and expense accounts, if you want to leave the balances unchanged, you need to select “Do not affect accounts.” The year-to-date amounts on your reports payroll reports will only be changed by the adjustment. To input an adjusting transaction in the liability and expense accounts, you will need to select affect obligation and expense accounts.
  1. You may repeat the same for other employees based on your need and then click on “OK.”

Step 3: You need to make sure that your liabilities are properly updated. Thus, you must run the “Payroll Summary report” once more to make sure that everything is looking right.

Step 4: It is an optional step, and you need to perform it if you want to correct a check for payroll liability. If you have paid the liability already, you must correct QuickBooks Hub’ liability check. To do so, follow the given below steps:

  • Locate the “Banking” option, and then tap on “Use Register.”
  • Find the record you use for payroll, and click on it.
  • Then, click on “OK.”
  • On the “Liability Check,” you need to make a right-click.
  • Over there, you need to select “Edit Liability Check.”
  • To match your changes, go to Payroll Liabilities, and update them accordingly.
  • Now, finally, click on “Save & Close,” and then tap on “Yes.”


Making the adjustments in payroll liabilities may not be for you if you are not familiar with all these accounting kinds of stuff. Only use them on the advice of your accountant, and only if you have proper understandings of accounting. If you are unable to do it on your own, it is better to hire an accountant.