I have a question about payroll items and tax tracking categories in QuickBooks. I have JUST ME and I’m an 1120S, so I don’t feel it’s worth the $169 subscription price when I can download the tables once for free. I waited until after 2/15/2003 to activate my free download, but now the Payroll area keeps running me through the setup wizard and telling me that my tax tracking categories are all wrong. Even when I check “this payroll item is inactive” for the things I don’t use (like Tips Out and Tips In), it still gives me the error.
Belinda: I am enjoying your columns and articles very much. You’ve answered some questions I had and introduced me to ones I didn’t, but still I learned from the answers!! So first let me say Thank You!! for those gifts of knowledge.
Now I have a question about payroll items and tax tracking categories in QuickBooks. I have JUST ME and I’m an 1120S, so I don’t feel it’s worth the $169 subscription price when I can download the tables once for free. I waited until after 2/15/2003 to activate my free download, but now the Payroll area keeps running me through the setup wizard and telling me that my tax tracking categories are all wrong. Even when I check “this payroll item is inactive” for the things I don’t use (like Tips Out and Tips In), it still gives me the error. Maybe this is just a quirky consequence of my NOT handing over the cash like Intuit would prefer….?
Wayne: If you are not going to buy the annual payroll update, you are really asking for trouble. I don’t like having to buy the update either, but if you’re going to use Quickbooks for payroll, you really have no choice. Eventually, the program will not work right for payroll without the most recent update installed.
When it comes to payroll, my advice to you is: Don’t try this at home! If you want to use Quickbooks to track basic income and expense info, fine; but stay away from payroll and all the Balance Sheet stuff, like fixed assets, depreciation, etc. — you can really get messed up there.
Belinda: My REAL question is how do I reimburse myself for mileage? I remember from my corporate days that mileage reimbursements are not subject to withholding taxes, but I’m thinking they would be a business expense that reduces the amount I carry over to my personal taxes on the K-1. How do I set this up in QuickBooks payroll? Where do I report the expense on my 1120S? and is the reimbursement considered taxable income for my 1040 filing?
Wayne: Do not setup mileage reimbursement as a Quickbooks payroll item. Just write yourself a “regular” non-payroll check for the amount of the reimbursement. Assign the check to a category called “Mileage Reimbursement.” Then, the company gets the deduction and you get reimbursed tax-free. Hope that helps.
Belinda: Thanks in advance for any answers and understanding you can shed on this subject.
Sincerely,
Belinda Wagner, President
Biographic Design, Inc.
(336) 945-6331
www.biographicdesign.com
Wayne M. Davies is author of 3 tax-slashing
eBooks for small business owners and the self-employed. For a
free copy of Wayne’s 25-page report, “How To Instantly Double
Your Deductions” visit http://www.YouSaveOnTaxes.com
