additional ? re 941 and Powerchurch

[tbcbrown]

On the maintain item descriptions. when setting up housing allowance under tax options, housing allowance is a selection; however beside tax options, housing allowance is also listed. Are both of them supposed to be selected.

[NeilZ]

On the maintain item descriptions. when setting up housing allowance under tax options, housing allowance is a selection; however beside tax options, housing allowance is also listed. Are both of them supposed to be selected.

This is a tricky question, the answer: its one or the other.

The reason I say that is that there are some tax jurisdictions, other than Federal, that may tax housing allowance as income. If you select the Tax Option of Housing Allowance, you're basically saying that the entirety of the allowance is tax free, and that no tax jurisdiction sees it as income. This also hides the two items with the checkbox next to them. This is usually done for ministers that do not have SS & Medicare withholding done since they pay their Self-Employment taxes quarterly.

However, if your minister has SS & Medicare withheld, or there are those jurisdictions that do tax the allowance, under Tax Options you would select <more options>. This reveals the two checkbox items (Housing Allowance & Advanced EIT), and also gives you a list of all the tax tables in your system. This is normally the option taken. Usually you would have the SS & Medicare boxes checked, along with any state or local taxes that may apply. By checking the checkbox next to Housing Allowance in this case, you're letting the system know that the Housing Allowance amount should appear in the W2 box 14.

[tbcbrown]

O.K. I must not have set something correctly. Line 10 on the 941 and schedule b do not match. I found the error but don't want to penalize the employee for a mistake I made. How can I correct this with an adjustment without affecting the employee's payroll and so the 941 will be correct. Thanks.

[NeilZ]

O.K. I must not have set something correctly. Line 10 on the 941 and schedule b do not match. I found the error but don't want to penalize the employee for a mistake I made. How can I correct this with an adjustment without affecting the employee's payroll and so the 941 will be correct. Thanks.

OK, you have to pay 'semi-weekly' ?? How many employees do you have?

In any case, you're going to have to increase the employer's SS or Medicare contribution to correct the issue.

[tbcbrown]

15 employees

[NeilZ]

15 employees

And you're required to pay bi-weekly, not monthly ??

[tbcbrown]

yes

[NeilZ]

yes

OK ... you must have a very large tax liability of 50K or more per month.

[tbcbrown]

yes, according to the lookback period but the amount we owe due to my error is 500+. So what do I do so the employee won't have to pay, The church is willing to assume liability.

[tbcbrown]

Neil - I just noticed you said 50,000 or more month. I thought the look back period covered 4 quarters not month???

[NeilZ]

Neil - I just noticed you said 50,000 or more month. I thought the look back period covered 4 quarters not month???

You're right ... shows that I need to rely on the IRS instructions rather than my faulty memory.

[tbcbrown]

Neil, how do I correct this?

[NeilZ]

Neil, how do I correct this?

You're going to have to add funds somewhere, the question is was this an error in Taxes, or in SS & Medicare?

If it was in Taxes, you'll have to take out some money from the employee if it was not enough, or return some in an adjustment. If it was SS & Medicare, and you don't want to take it out of his paycheck, you'll have to increase the employer share of the SS & Medicare.

I really need more info on where the error was and how it came to be.

[tbcbrown]

are you talking about in payroll module or general journal adjustment?

[NeilZ]

are you talking about in payroll module or general journal adjustment?

If this needs to show up on the W2, then you have to do this in payroll. Where is the error ?