941 Return
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941 Return
Our church received a 941 Refund from the United State Treasury. I have NO idea why and no idea how I should put it back on our books. I just took over book keeping and this check was received in May with no explaination. The former book keeper said to just put it back on the books and at the end of the year reimburse whoever we held too much taxes from OR if our church paid too much then to just keep that money on our account. The problem is I don't know where to post this return. Any advice would be greatly appreciated
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JohnDMeyers
- Posts: 1338
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- Location: Potsdam, NY
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Re: 941 Return
It would probably be a good idea to check with the IRS to see why you received the refund. For example, was it due to a change in a particular law that may affect your withholdings going forward.
There are two possibilities of how I would handle this. I will show you both.
One is to create a new income account. This will keep this refund out of the employee expense categories. This is my first choice simply because the refund likely is a little refund from many employees, so it would hard to identify one expense category to place the income.
I would ADD 01-4090-000 941 Refund Income, and the transaction would be:
DB 01-1110-000 checking
CR 01-4090-000 941 income
The other option is to use the refund to decrease employee pay expense category (you may find out it is employee health insurance, or some other reason after you ask the IRS representative).
That transaction would look like this:
DB 01-1110-000 checking
CR 01-5180-000 employee salary expense
If it was me, I would probably do the first one (create an income account).
There are two possibilities of how I would handle this. I will show you both.
One is to create a new income account. This will keep this refund out of the employee expense categories. This is my first choice simply because the refund likely is a little refund from many employees, so it would hard to identify one expense category to place the income.
I would ADD 01-4090-000 941 Refund Income, and the transaction would be:
DB 01-1110-000 checking
CR 01-4090-000 941 income
The other option is to use the refund to decrease employee pay expense category (you may find out it is employee health insurance, or some other reason after you ask the IRS representative).
That transaction would look like this:
DB 01-1110-000 checking
CR 01-5180-000 employee salary expense
If it was me, I would probably do the first one (create an income account).
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Matt
- Authorized Teaching Consultant
- Posts: 733
- Joined: Fri Dec 05, 2003 4:04 pm
- Location: Jacksonville, AL
Re: 941 Return
If you received a refund, this would indicate that you overpaid the taxes for some reason. That being the case this duplicate payment would have created a debit balance in the Federal Withholding, Social Security Withholding, and/or Medicare Tax Withholding liability accounts. Thus, the refund should be posted as follows: Debit the checking account and credit one or more of these three liability accounts. Then, as John states, you need to find out why the check was received. Depending on what you find out you may need to make additional corrections in the Payroll or Fund Accounting modules.