Tax Payment Breakdown

[silvertown]

I am new to Power Church, so be patient with me

When I do my check for my 941 tax payment, do I debit everything from the Federal Withholding liability account (2215)? Or do I need to debit some of that to the expense account (5305)?

[NeilZ]

I am new to Power Church, so be patient with me

When I do my check for my 941 tax payment, do I debit everything from the Federal Withholding liability account (2215)? Or do I need to debit some of that to the expense account (5305)?

This explanation is for V11.1/11.55 ... I seem to remember that v10.4 also had something along these lines, but don't quote me.

You shouldn't have to touch the expense account if the system is setup properly.

You should have setup a Pay Item Descriptions of type Employer Liability for Employer SSI as well as Employer Medicare. These Item Descriptions are setup to ask you for an Expense Account and a Liability Account. The expense account for each, should be the expense accounts you have setup for the employer portion of Social Security & Medicare. In my case we have one account setup for 'Employer Payroll Taxes'. It covers them both. The Tax Type should be Social Security for the SSI, and Medicare for Medicare. (I won't go into the entire setup of the Fed/State/Local tax types/tables as that's beyond this answer.)

You should then have added a Pay Item for Employer SSI & Employer Medicare to every employee that you are required to withhold Social Security & Medicare deductions.

When you run payroll, the system will use the proper tax tables to calculate the employer portion of the taxes. When you post payroll, the system then creates the transaction to debit the expense account, and credit the liability account you used when you setup the Pay Item Description.

When you do your 941, the bottom line amount should equal what you have in the Federal Tax liability account.

In fact, what I do is use the Payroll Module's Create Accounts Payable Entries function to create a manual check. I select the FedTax item (your name may be different) check the amounts from the 15th and end of the month, enter a due date, a reference, then click OK.

The manual check is then created. Since I use EFTPS to make my monthly deposits, I enter EFT on the manual check for the check number, then post the check to paid items.

I don't have to really do anything manually as far as create the proper transactions, as the system does that for me.

I may have gone into a lot of detail, but if you have more questions, please ask.

[silvertown]

Thank you! I was worried that I would have to do expense AND liability amounts, and wasn't sure how that all played out. It appears that my payroll tax is set up properly, so I will just have to debit the liability account.

I appreciate you!

kim