FRDillon wrote:941 QTR 1 is exaggerated/erroneous. An employee's tax table was not invoked (Use Tax Table) on setting up as new employee.
error was not caught until letter from IRS received noting we were short on our monthly 941 payments.
I have created a spreadsheet( I can send this via?) , and basically discovered the employee was paid without holding out Soc Sec nor Medicare. Only Fed WT was withheld. Employee has been overpaid by Medicare and Soc Sec amounts. How do I reconcile? I would want to effect some sort of reimbursement from Employee, either over time or? I would think I would need to submit an amended 941 report to the IRS.
Occurred from Q1 thru almost end of Q2(11 bi-weekly pay periods-monthly 941 payments). Would like to fix thru payroll module or journal entries?
In order for the W2 to be correct at end of year, you would need to do this in the payroll module.
1. Make sure that the employee has the proper EMPLOYEE FITW, Social Security and Medicare pay items, as well as the EMPLOYER S.S. & Medicare pay items. These should already be setup for other employees, you just need to make sure you have the Pay Items included via the
"Maintain List of Employees" in Payroll.
2. Let the employee know that the Social Security & Medicare were not withheld, and that you will be withholding these funds the next paycheck.
3 In the
Maintain Item Description function, create TWO new
Tax Deduction Payroll Item Descriptions: one using the TAX TYPE of Medicare, the other of Social Security. Both should use the same Liability Account as the existing employee Social Security & Medicare Item Descriptions, along with the same AP Vendor ID. For the Description enter 'Social Security Adj", do the same with the Medicare item "Medicare Adj".
4 Create one new
Employer Liability Payroll Item Descriptions, using the Tax Type of Medicare. As in 3, set it up using the same liability and expense accounts as the existing Medicare Employer Liability Item Description. Use a Description much the same as that in 3.
5. Head back to the
Maintain list of Employees function, and add the three new Pay Items, but when you do
do not select a Tax Table, use the default
manual amount. You can either enter the amounts at that time (if you're deducting the full amount) or leave it blank, and you can enter the amounts when you run payroll.
6. Make sure each of the new pay items are CHECKED in the employee's list of pay items. When you have finished making the adjustment deductions, UNCHECK those items, but do NOT delete them from the list, as they are necessary for payroll history and the W2.
You need to make the adjustment either all at once, or over a few pay periods, however, you will need to take care of the underpayment with the IRS as soon as possible. Follow the directions that the IRS have given you in their letter for payment and filing of any amended forms.
Doing the method as described above will update the Payroll Module for the W2, and will properly show the additional adjustment amounts in the employees S.S. & Medicare boxes on the W2.