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Guide to Using IRS Form 7200 in QuickBooks Payroll

· 3 min read
Debits

Introduction to IRS Form 7200 in QuickBooks Payroll​

IRS Form 7200 allows employers to request an advance payment of employer credits due to COVID-19. This guide explains how to effectively use IRS Form 7200 within QuickBooks Payroll, assisting employers in managing these advance payments to optimize financial operations during challenging times.

Understanding IRS Form 7200​

IRS Form 7200 is used to request advance payment of employer credits, including the sick and family leave credits and the employee retention credit. These credits were introduced in response to the COVID-19 pandemic to alleviate the financial burden on employers.

Preparing to Use Form 7200 in QuickBooks​

Before utilizing IRS Form 7200 in QuickBooks Payroll, ensure you meet eligibility criteria and have all necessary information ready.

Key Preparation Steps​

  1. Determine Eligibility: Verify that your business qualifies for the credits based on IRS guidelines concerning COVID-19 relief measures.
  2. Gather Required Information: Compile all necessary employee payroll data and credit calculation details that will support your claim on Form 7200.

How to Use IRS Form 7200 in QuickBooks Payroll​

Using IRS Form 7200 involves several steps, from accessing the form to submitting it to the IRS.

Step-by-Step Usage Process​

  1. Access IRS Form 7200: Download the latest version of Form 7200 from the IRS website to ensure you are using the most current form.
  2. Fill Out the Form: Enter all required information into the form, including your employer identification number (EIN), total qualified wages, and the credit amount you are requesting.
  3. Review Your Entries: Double-check the form for accuracy. Ensure that the amounts claimed match the calculations based on eligible wages paid.
  4. Submit the Form: Follow the IRS instructions for submitting Form 7200. As of now, the form must be faxed to the IRS at the number provided on the form instructions.

Managing Advances Received Through Form 7200​

After submitting Form 7200 and receiving advance payments, it's crucial to manage these funds properly within QuickBooks Payroll.

Managing Advances in QuickBooks​

  1. Record the Advance Payment: Document the advance payment in QuickBooks Payroll to keep your financial records updated. This entry should reflect the credit received as an advance against future payroll liabilities.
  2. Track Usage of Funds: Use the advance payment strictly for eligible expenses as defined by the IRS to avoid discrepancies during audits.
  3. Reconcile the Credits: When you prepare your quarterly federal tax return (Form 941), reconcile the advance received with the actual credits earned. Ensure any excess advance is accounted for according to IRS guidelines.

Conclusion​

Using IRS Form 7200 in QuickBooks Payroll allows businesses to manage employee retention and sick leave credits effectively. By following the steps outlined in this guide, employers can navigate the complexities of advance credit payments, maintaining compliance and ensuring financial stability during challenging economic periods.