AccountingBLOCK - Accounting Forums

I want to setup payroll in QB for a company where employees get tips.

When I enter the reported tips it calculates the taxes, but wants to include the amount in the net pay.

The employee does not acutally give over the tips just the infromation so it is calculated in the gross pay but should not be used in determining net pay. Is there a way to get QB to calculate this automatically and print a correct net pay or do I have to make the adjustment manually?

You set up two payroll items - tips in (to be taxed); and tips out(as an after tax deduction). Post both to the same account so they zero out.

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Zahid H. Lilani

You need to gross up the wages for the tip amount and then put the tip wages as a deduction. So the only thing that is taken out is the payroll taxes.

Hope this helps.