BAS W2 figures are incorrect

Legacy KB ID: 4308

Question

Why is the W2 field reporting incorrectly?

Answer

The W2 field on the BAS Lodgement form is for reporting PAYG withheld from your employees to the ATO.  You must link this field to the account or sub-account that your PAYG withheld is assigned. 

W2 will report the balance of the account less any Liability Cheque payments. 

 

Liability Cheque payments are payments initiated from the Employees > Payroll Taxes and Liabilities > Create Custom  Liability Payments.

You can view the account PAYG withheld is assigned to by viewing the PAYG Payroll Item setup:  Lists > Payroll Items > PAYG Tax > Edit Item > Agency for employee-paid liability > Liability account (employee paid).

 

You should assign PAYG Tax to its own sub-account so that other payroll deductions are not included with PAYG Tax.  When PAYG is forwarded to the ATO the Liability Cheque can be assigned to this sub-account as since QuickBooks 2010/11 the Liability Cheque transaction type is ignored by W2. 

We have found that in QuickBooks 2009/10 and later, if the “Use account numbers” preference is enabled then W2 will reduce the Liability Cheque amount incorrectly.  This issue will not occur if “Use account numbers” is unchecked. 

 

 

Solutions

1.    Check that W2 is linked to the correct account or sub-account for PAYG Tax withheld. 

2.    Ensure that PAYG Tax is assigned to its own account or sub-account.  If other deductions are assigned to the PAYG Tax account or sub-account, re-assign them to another account or sub-account.  Liability Cheque transactions can remain in this account or sub-account.

3.    Ensure that the PAYG Tax payroll item is assigned to the PAYG Tax sub-account (eg: Payroll Liabilities:PAYG Tax)

4.    Uncheck “Use account numbers” in Edit > Preferences > Accounting.

In each case:

·         Close the BAS Lodgement form;

·         make the change;

·         Re-open BAS Lodgement and configure for the desired period;

·         Re-select the W2 account(s).

 

To re-assign a payroll item to another liability account

1.    Lists > Payroll Item List

2.    Right-click on the required payroll item and select Edit Item

3.    Go to the Agency for employee-paid liability > Liability account (employee paid) field and select another account. 

If you do not have another account, create one by clicking on Add Account;

4.    Click Next a few times and then Finish.  QuickBooks will re-assign all past transactions to the new account. 

 

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