tborgal wrote:
However if you multiply the calculated amount by 4 you get $116.2624 or $116.26 for the month giving you a $0.02 error. With employer liability this becomes a $0.04 error for the month. There is no way that I know of to compensate for this other than using line 7a on the 941 form.
Tom,
from what you are saying (and from what I read in IRS Pub 15), this type of error is caused by the rounding to nearest cent, is to be expected, and is covered on the 941 ??
That is my understanding. The last quarter of 2009 was the first time I have ever seen ours come out exact. I think that over the course of the year it tends to average out.
Tom has it right, the difference is the difference between caculating the tax on a check by check basis and the calculation of the whole total.
Version 11 should fill in the fraction of cents amount if the difference between what was withheld and the calculated amount is less than a specific threshold amount (I think it is either $2 or $5, I don't have source with me right now)
Jeff wrote:Tom has it right, the difference is the difference between caculating the tax on a check by check basis and the calculation of the whole total.
Version 11 should fill in the fraction of cents amount if the difference between what was withheld and the calculated amount is less than a specific threshold amount (I think it is either $2 or $5, I don't have source with me right now)
So Jeff, if we don't worry about it for the first 3 quarters, the last report of the year will fix any difference, and so we should use the numbers that are computed in Powerchurch.
In the original post, the difference was, .05 or less, this is within the rounding margin. You will see this difference whenever you file the 941. Always double check your numbers to make sure they look reasonable, a difference of more than a small amount indicates something is wrong.
One way to adjust and not have to carry over the cents or pay a few cents is to calculate the total 941 for a given quarter before making the payment for the third month or the final payment if on biweekly or other schedule. Adjust the by general journal entry the liability and expense accounts and determine the final payment to add up to the correct total with all previous payments for the quarter. I am a CPA with several small business clients and have been doing this for many years. You cannot change what was withheld from the employee pay but you can adjust the employer liability which is where everything is ultimately reconciled anyway.
championcpa wrote:One way to adjust and not have to carry over the cents or pay a few cents is to calculate the total 941 for a given quarter before making the payment for the third month or the final payment if on biweekly or other schedule. Adjust the by general journal entry the liability and expense accounts and determine the final payment to add up to the correct total with all previous payments for the quarter. I am a CPA with several small business clients and have been doing this for many years. You cannot change what was withheld from the employee pay but you can adjust the employer liability which is where everything is ultimately reconciled anyway.
True, but the idea is for the program to do the computations, thus relieving a person from having to do it.
I don't think it is possible for any computer program to make an automatic adjustment of a few cents to an expense account or know how to allocate to which accounts and I would be quite uncomfortable to not be in control of that. The reason for the 941 form to have the adjustment items is to account for those anomalies due to differing pay periods and rounding issues.
I did notice that it is possible to make a manual adjustment on each paycheck should you choose to select one or two to adjust but then you have to remember to change back to percentage at the next payroll processed. So far, I think I will stick with what has worked for me and my clients for over a decade.
FWIW ... having a computer program make an adjustment is very easy based on the criteria given by the IRS. I, myself have written programs which made such adjustments to student loans; and in COBOL no less !!
As noted above:
Version 11 should fill in the fraction of cents amount if the difference between what was withheld and the calculated amount is less than a specific threshold amount (I think it is either $2 or $5, I don't have source with me right now)
Okay, then, let's lobby for that update. It would make things so much easier. But I'm understanding it doesn't now have that capability. I guess there would just be the default of allocation of additional expense or decrease in expense in proportion to the Medicare and FICA as appropriate. And in COBOL! I was briefly a COBOL programmer in the 70's. I am impressed!
I have upgraded and run the year's payroll in v11. Dissappointed; it calculated SS and Med the same as it did in v9. Wages are 4561.92 PC med is 66.24, SS is 282.72. IRS 941 med 66.14, SS 282.84. In v9 I had hoped it would make the adjustments. Any ideas to overcome this difference?
The calculations have not changed, PowerChurch Plus still uses the annual percentage method tables.
There is a field on the 941 to handle the fraction of cents differences. This has never been handled in PowerChurch previously, because there was not 941 functionality previously.
