Refunding Incorrect SSI Tax to Employee

[Mt Olive Church]

I am using PC version 11
I discovered too much SSI was deducted from several employees. I know I can refund that back to them through decreasing the amount held out of their next check. My problem is I discovered it after the December 2011 month was reconciled and can not make changes to the month without causing a problem in income and expense amounts for the financial statements.
I am trying to get W2's out by end of January and need to make the corrections first.

Thanks In Advance
Vshirley

[Matt]

This will take some careful analysis and work to correct. Hopefully you have not closed the months where the errors occurred yet. Without actually seeing your records it is hard for me to tell exactly what will need to be done. Having said that, here is the general approach you will need to take.

1. Determine whether the SSI calculated and paid on the quarterly 941's was for the correct amount. I am assuming that it was. If so you should be showing a credit balance in the SSI withholding liability account for the amount of the over withheld SSI tax. Make note of this amount.

2. Identify all of the checks where the SSI tax was incorrectly withheld.

3. Go into the Payroll module and then Void Check. Void all of the checks in #2.

4. Review the SSI tax table in the Payroll module and make sure that it is updated correctly with the 4.2% rate.

5. Go back into the Payroll module and then Maintain List of Employees. For each check that was voided you will need to update the Pay Items tab to reconstruct the check the way it should have been calculated.

6. Go into the Payroll Module and Process Payroll. Process a new manual check for each of the checks that need to be corrected. Use the same check number and date that was on the voided checks.

7. When finished doing the voids and the corrected input run the Unposted Transactions report in the Payroll module to review your input. The net of the debits and credits to your checking account should be the same amount as in #1. It should be a net credit.

8. Post the transactions in the Payroll module.

9. Post the transactions in Fund Accounting.

10. To correct the checking account balance and the bank recon (since you didn’t actually cut any checks) you will need to input an entry in Fund Accounting that debits the checking account and credits the SSI withholding liability account for the amount in #1. Post this entry.

11. The Payroll records will now be correct for running of the W-2’s. The SSI withholding liability account should now show the amount in #1 as a credit.

12. Run the bank recon and clear the voids done in #3, the reinput that was done in #6, and the adjustment that was done in #10 against each other. The deposits and checks for all these should net to zero.

13. The last step will be to cut new checks to the employees for the over withheld amounts. Because the Payroll records have already been corrected you will need to cut these checks in the Accounts Payable module. The debit account will be the SSI withholding liability account. This will clear the balance from this account.

I hope this helps.

Matt

[Mt Olive Church]

Matt,
Thank you so much! I will try this as soon as I return to work tomorrow. You have done a great job explaining the process. I will let you know when I finish the corrections if it comes out correctly.
Thanks Again,
vshirley

[Mt Olive Church]

Matt,
Well, when I read your post more thoroughly I see that most of the checks are in months that are closed. Any advice on how to do the correction in closed month?
Thanks,
vshirley
Mt. Olive Baptist

[Mt Olive Church]

Matt,
After going through all the steps to make the corrections everything looked great till I looked at the SSI withholding liability account. It shows a negative (-) in the end balance. Hope you can help with correcting this.
Thanks Again,
vshirley
Mt. Olive Baptist

[Matt]

The negative balance indicates that there is something else that needs to be researched and corrected besides the checks with the incorrectly withheld SSI. It could be any number of things. You will need to research the postings to the account to figure this out.

In the meantime you can still complete the procedure in my previous post. The only change you will need to make is that because the balance in the SSI account in step #1 doesn't represent the true balance of over withheld SSI you will need to use the net of the debits and credits to the checking account in step #7 to prepare the entry in step #10.

Since some of the months are closed you will need to post those entries to the oldest month that is still open. This just affects the postings in Fund Accounting. The dates posted in the Payroll module are ok.

[Mt Olive Church]

Matt,
Thanks for all your help. I got the corrections made. You go above and beyond to help people solve their problems. You are much appreciated by me!
vshirley