How to Make an Employee Tax Exempt in QuickBooks Online

Last Updated on February 24, 2021 by Editor Team

Do you want to make an employee tax exempt in QuickBooks Online? If so, then you are on the right platform. Because in today’s blog, we will know how to set up, make, and adjust employee tax exempt in QuickBooks Online. Read the blog completely till the end to recollect all the knowledge regarding this topic.

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How to Set Up Exempt Employees in QuickBooks 

We have given all the setup procedures regarding this topic, but before that you need to know what Intuit Online Payroll and QuickBooks Online Payroll products support for this process.  

What QuickBooks Online payroll Products SupportWhat QuickBooks Online Payroll Products Not Support
It supports to recalculate employee paid taxes.It does not support social security or medicare exemptions. 
6% of QuickBooks Federal tax withholding will be calculated.FUTA (Federal Unemployment Tax Act) exemption is not supported by QuickBooks Online Payroll products.
The employees can be paid on the next check, which is owed amounts. The recalculation of previous tax year is also not supported by this. 
The owed amount of employees will be recaptured on the next check. 

How to Adjust Employee Exemption Taxes in QuickBooks

We need to adjust employee exemption taxes in QuickBooks while we notice the employee should have any one of the exemptions, either exempt or not exempt from the state unemployment insurance

Here we have given the procedure for the different scenarios, have a look; 

Scenario 1: An Employee is Already Marked as Non-Exempt, But It Exempt

Whenever an employee is marked as non-exempt but, it should have been exempt from the state unemployment insurance then, follow the below procedure:

  • Visit the ‘Workers’ section, and select the ‘Employees’ option from the list.
  • Select the particular employee name.
  • Go to the ‘Pay’ section, and click the ‘Edit’ option, which may symbolize the pencil icon.
  • Again select the ‘Edit’ option or the pencil icon under withholdings.
  • Visit for the ‘Tax Exemptions’ tab, and select the state tax to be exempted.
  • Click the ‘Done’ option.
  • Then, follow the onscreen instruction.
  • After that, you can see the adjustment checks on the paycheck list.   

Scenario 2: An Employee is Marked Exempt, But It Non-Exempt

Whenever an employee is marked exempt but, should have been non-exempt then, you can go for this procedure to adjust it.

  • Select the ‘Employees’ option from the ‘Workers’ section, and select the employee name.
  • Again go to the ‘pay’ tab, and click the ‘Edit’ (pencil icon) option.
  • And select the ‘Edit’ option from the withholdings.
  • Choose the ‘Tax Exemptions’, and uncheck the state tax. 
  • At last, click ‘Done’, and follow the onscreen instructions. 

How to View or Change Employee Tax Exemptions

Sometimes the employees need exempt from certain payroll taxes, at that time the employee need not contribute to the specific tax. And can set up each employee for the Medicare tax, Social Security tax, and other supplemental state taxes. Here, we have given the setup procedure of employee tax exemptions in different QuickBooks payroll services.  

Procedure to Change Employee Tax Exemptions in QuickBooks Online Payroll

Go for this procedure to change employee tax exemption in QuickBooks Online Payroll: 

  • First, log in to QuickBooks Online Payroll, and go to the ‘Payroll’ menu.
  • From the ‘Payroll’ menu, click the ‘Employees’ option to choose the name of the employee name.
  • Now go to the ‘Employee Details’ section, and click on the pencil icon beside the ‘pay’ section to edit.
  • You can see the question, ‘What are (employee’s name) withholdings?’ from there click on the pencil icon.
  • Search for the ‘Tax Exemptions’ section by scrolling down the mouse pointer, and click the arrow drop-down.
  • Now you need to choose the taxes the employees are exempt from, and click the ‘Done’ option.

Procedure to Change Employee Tax Exemptions in Intuit Online Payroll

If you are an Intuit Online Payroll user, and want to view the employee tax exemptions, or want to change the tax exemption then, you can follow this procedure.  

  • Sign in to Intuit Online payroll, and select the employee’s name from the ‘Employees’ menu.
  • Go to the ‘Taxes & Exemptions’ box, and edit by clicking the ‘Edit’ option.
  • From the ‘Exemptions’ tab, click the ‘Edit’ option, and select the employee exempt from.
  • At last, click the ‘Save’ option. 

Procedure to Change Employee Tax Exemptions in QuickBooks/ Intuit Full Service Payroll

To change or view employee tax exemptions, you may need to connect with QuickBooks ProAdvisor for the best process.  

Final Words!

So this was the blog, we hope you got the proper guidance to make an employee tax exempt in QuickBooks Online by adjusting, and changing the tax exempt. Still, if you have any kind of issue regarding the tax exempt then you can get our Intuit certified QuickBooks support to clear your all doubts in a genuine process. 

How to Make an Employee Tax Exempt in QuickBooks Online