941 issues

[athomas]

On the 941 report printed by power church, the amount printed on the 941 report on line 12 does not match the total liability on schedule b. Any ideas of what to look for.

[NeilZ]

On the 941 report printed by power church, the amount printed on the 941 report on line 12 does not match the total liability on schedule b. Any ideas of what to look for.

You're not saying what's off as Line 12 includes both Income Tax, along with SS & Medicare.

99% of the time, 941 errors are caused by improper setup of Payroll. I'd check to make sure that you're using the correct percentages for SS & Medicare, and that the Federal Income Tax tables have been entered using the ANNUAL tables as shown in IRS Pub 15.

Also make sure that the employees subject to Federal taxes have the proper Tax Items assigned to them in Payroll

[athomas]

Think I figured out the problem, Now I need the steps in giving pastor a tax allotment toward his taxes explained. How to set up in power church?

[NeilZ]

Think I figured out the problem, Now I need the steps in giving pastor a tax allotment toward his taxes explained. How to set up in power church?

Could you explain what you mean by 'tax allotment' ?? Are you talking about a Social Security offset?

[athomas]

yes

[NeilZ]

yes

Simple .. its just another income item for the pastor.

In Payroll:
1. Go to Maintain Item Description, click on ADD
2. Select INCOME from the list of items displayed (its the default)
3. Enter an item number, description, and the expense account information
4. The next part depends on where you're located. If you select 'Clergy Salary', this sets the item to take the amount and add it to the other salary item for the pastor so it appears in Box 1 (taxable income) of the W-2, and will not show up in Boxes 3 and 5 as Social Security or Medicare wages. However, if you are in a state (like I am) where the state income tax also considers it as taxable you may need to select the more options selection and manually select the taxes the income is subject to. When finished, click on SAVE, and then click the CLOSE button at the top right.
5. Go to Maintain List of Employees and on the Pay Item tab, click on the ADD button. You'll see the new Item Description listed under the INCOME list. Select it then click on NEXT, which brings up the next window. On this window you'll select the Rate Type as Salary since this is a fixed amount received each paycheck, then enter the amount the pastor will receive. Click on FINISH, and you're done. Just make sure you have the check box for it CHECKED in the item list.

Does this help?

[athomas]

I'm hopeful. Have another question about simple ira contributions but the only guide I can find is the one related to 403b and 401K. Have set up item descriptions as follows:
IRA Income with expense account. Is this taxable or non taxable? I believe it is not subject to federal but is to ss and medicaid while the matching is not so will it be taxable, other options with ss and med checked. Salary was adjusted for income amount.
IRA contribution - other deduction with a liability account. Is this pre tax?
Are the figures supposed to show on w2 similar to 403 instructions. Didn't understand the example about increasing the exempt/year amount on the federal withholding item

[NeilZ]

I'm hopeful. Have another question about simple ira contributions but the only guide I can find is the one related to 403b and 401K. Have set up item descriptions as follows:
IRA Income with expense account. Is this taxable or non taxable? I believe it is not subject to federal but is to ss and medicaid while the matching is not so will it be taxable, other options with ss and med checked. Salary was adjusted for income amount.

IRA contribution - other deduction with a liability account. Is this pre tax?
Are the figures supposed to show on w2 similar to 403 instructions. Didn't understand the example about increasing the exempt/year amount on the federal withholding item[/quote]

OK .. is this a Roth IRA under a 403(b) type of plan? That's what I need to know first, as that requires certain W-2 codes for Box 12. Is the employee contributing, and is the employer contributing?

[athomas]

simple ira with 3% employer match

[athomas]

Neil
Please go back to this post and give me the proper way to handle the ira income. Thanks.

[NeilZ]

Neil
Please go back to this post and give me the proper way to handle the ira income. Thanks.

I'm not an accountant, so I don't want to steer you the wrong way.

Employee Contributions to an IRA are pre-tax contributions, employer contributions are NOT taxed nor are they reported, this income will be taxed when its withdrawn. However, BOX 13 on the W-2 will need to be checked. You will probably have to manually do that prior to printing the W-2s as I do not believe PCPlus does anything to that box.

Normally an employer is allowed a deduction from their business taxes for such a contributon. However, churches do not file business taxes, so no deduction.

The employee deductions are subject to SS & Medicare. You also need to know if your state follows the Federal rules and keep the deduction as a pre-tax deduction, or they are taxed.

For the employee deduction:
When you add the Item Description it will be of the TYPE: Other Deduction, you'll use the liability account you have setup to collect the SIMPLE IRA contributions, For TAX OPTIONS, you will select the More Options selection, and check the Medicare & SS boxes in the list. If your state does not allow these as 'pre-tax' deductions, you'd select the state tax box too. You'd then add this to the employee's pay items, and enter the amount they're contributing.

For the employer, this would be an employer liability, which is a fairly straightforward setup. In reality, you do not have to track this by paycheck, as the IRS allows the employer to contribute the funds up to the normal tax filing date. So at the end of the year, all you would need to do is total the employee's contributions, multiply by 3% and send the result to the firm handling the account.

Does this help?

[athomas]

" Employee Contributions to an IRA are pre-tax contributions; this income will be taxed when its withdrawn. in another section, " The employee deductions are subject to SS & Medicare." does the first sentence only refer to fed withholding?

[NeilZ]

" Employee Contributions to an IRA are pre-tax contributions; this income will be taxed when its withdrawn. in another section, " The employee deductions are subject to SS & Medicare." does the first sentence only refer to fed withholding?

Yep .. pre-tax only refers to Income tax, SS & Medicare tax everything.