Hello there, @KS59803.
You don't need to create a negative check to zero out the liability, you can simply apply the payroll liability over-payment as a credit to your next liability. I'm here to help guide how.
First, negative liability happens when you have an overpayment made on your previous taxes or payroll liabilities, if you have a liability overpayment, you can simply apply it as a credit to a payroll tax account.
To apply a tax credit, you can follow these steps:
- Create a liability check.
- Select the Expenses tab. And select the account where you want to apply the credit.
- Enter the amount of the credit (only up to the amount of the check) as a negative figure in the Amount field.
- Enter an explanation of the transaction in the memo field.
- Select the Recalculate button to lower the amount of the check by the amount of the credit. If there is a credit balance remaining, you can apply it to the next period by repeating steps 1 through 4.
For further details, you can check this article: Apply your payroll liability overpayment as a credit.
Let me know directly if you have any other payroll or QuickBooks questions. I'm just a post away to help you!
