In May, your company should have received a letter from MN Unemployment notifying you of the company’s updated base tax rate and reduction of assessments for 2022 with the signing of the Trust Fund Replenishment bill.
The new law reduces the:
- Base Tax Rate from 0.50% to 0.10%
- Additional Assessment from 14.00% to 0.00%
- Federal Loan Interest Assessment from 1.80% to 0.00%
If you have not done so already, you will want to update the MN Unemployment rate and make adjustments for your tax payments in QuickBooks.
- Go to Lists – Payroll Item List
- Double Click on MN – Unemployment Company
- Click Next until you get to Company Tax Rates for 2022 screen
- Change rate for 3rd and 4th quarter to new rate (rate previously entered less 0.40%), Click Next (your rate will differ from example)
- A warning message will appear about changing the tax rate – click Continue
The amount of tax calculated in QuickBooks for 1st and 2nd quarter is higher than what it should have been due to the higher rate assessed.
Enter a liability adjustment to account for the credit on account.
- Go to Employees – Payroll Taxes and Liabilities – Adjust Payroll Liabilities
- Change the dates to 6/30/2022
- Leave Adjustment is for Company chosen
- Enter an adjustment for 1st and 2nd quarter of the amount of overcalculated tax (taxable wages from filed report times 0.40%); (your amounts will differ from example)
- Click OK
After this, the amount calculated in QuickBooks for 2nd quarter tax due will be higher than what you actually pay due to the credit for Additional Assessment and Federal Loan Interest Assessment previously paid. Some additional entries will be needed when you enter the liability payment.
- Go to the screen to enter the liability payment as you normally would
- Change the amount to the actual payment (may be zero)
- Leave the amounts in the Payroll Liabilities tab as-is so the amounts are cleared out when “paid”
- Go to the Expenses tab
- Enter as negative numbers, the amounts entered in your 1st quarter payment for the additional assessment and federal loan interest assessment to reverse those expenses (your amounts will differ from example)
- The amount on the Expenses tab and Payroll Liabilities tab should net to your payment amount (circled in red) (your amounts will differ from example)
Note: if the amounts on the tabs mentioned above do not net to your actual payment amount, you may need to change the liability adjustment amount entered for 2nd quarter above. This would occur if you changed the unemployment rate sometime in 2nd quarter.
