SSI & MED calc. off by $19/QTR? - Use Line 7 on 941?

Fund Accounting, Accounts Payable, Accounts Receivable, Payroll

Moderators: Moderators, Tech Support

Post Reply
Sienna
Posts: 4
Joined: Wed Nov 15, 2017 1:27 pm

SSI & MED calc. off by $19/QTR? - Use Line 7 on 941?

Post by Sienna »

Each 941 quarterly return I do has a discrepancy in the SSI & MED taxes owed, Line 5e of the form (compared to what I actually paid for the 3 months). The taxable social security and taxable medicare wages are in agreement ($28,161.81) with my records, but the column 2 amounts differ by approx. $16 for SSI and $3 for Med. I understand that the rounding up & down makes things a little off, and that you are supposed to use Line 7 on the 941 return to adjust for the fractions of cents... but are you supposed to make an adjustment of approx. $19 (dollars, not cents)? To make it turn out so that we didn't overpay or underpay, I would have to make that approx. $19 adjustment. If I don't, then it says we overpaid by $19.

Which is the correct way to handle this discrepancy?

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: SSI & MED calc. off by $19/QTR? - Use Line 7 on 941?

Post by NeilZ »

Sienna wrote:
Thu Jul 28, 2022 4:05 pm
Each 941 quarterly return I do has a discrepancy in the SSI & MED taxes owed, Line 5e of the form (compared to what I actually paid for the 3 months). The taxable social security and taxable medicare wages are in agreement ($28,161.81) with my records, but the column 2 amounts differ by approx. $16 for SSI and $3 for Med. I understand that the rounding up & down makes things a little off, and that you are supposed to use Line 7 on the 941 return to adjust for the fractions of cents... but are you supposed to make an adjustment of approx. $19 (dollars, not cents)? To make it turn out so that we didn't overpay or underpay, I would have to make that approx. $19 adjustment. If I don't, then it says we overpaid by $19.

Which is the correct way to handle this discrepancy?
Are your tax items properly setup? The amount for the employee and employer should be the same. This page has info about setting up the Social Security & Medicare tables midway on the page, are these the numbers you have in those tax tables?

Do you do a monthly or quarterly deposit?
Neil Zampella

Using PC+ since 1999.

Sienna
Posts: 4
Joined: Wed Nov 15, 2017 1:27 pm

Re: SSI & MED calc. off by $19/QTR? - Use Line 7 on 941?

Post by Sienna »

Yes, the tax tables are set up correctly. I do a monthly deposit.

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: SSI & MED calc. off by $19/QTR? - Use Line 7 on 941?

Post by NeilZ »

Sienna wrote:
Thu Jul 28, 2022 4:59 pm
Yes, the tax tables are set up correctly. I do a monthly deposit.
And do you notice any issues with the monthly 941 tax deposit report ? Also, forgot to ask, what version of Powerchurch are you using?
Neil Zampella

Using PC+ since 1999.

Sienna
Posts: 4
Joined: Wed Nov 15, 2017 1:27 pm

Re: SSI & MED calc. off by $19/QTR? - Use Line 7 on 941?

Post by Sienna »

I'm using 12.2.

I really believe it's all due to rounding up & down. I've manually checked each payroll transaction, checked the setup of the tax items and the tax tables, and they are all correct.

The example I gave you with: 8 employees (paid twice a month) having taxable SSI & MED wages of $28,161.81 for Qtr 2, -- that's 6 paychecks/employee/Qtr X 8 employees = 48 paychecks configured Qtr = 48 times of rounding up or down, which could easily add up to overpaying by $19 or so.

So I guess the real question is whether I should fill out the Qtrly return showing a $19 overpayment, OR should I fill out the Qtrly return and put a $19 adjustment on line 7 for the fractions of "cents" and have the return show no overpayment/underpayment?

Thanks for your advice.

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: SSI & MED calc. off by $19/QTR? - Use Line 7 on 941?

Post by NeilZ »

Sienna wrote:
Fri Jul 29, 2022 12:31 pm
I'm using 12.2.

I really believe it's all due to rounding up & down. I've manually checked each payroll transaction, checked the setup of the tax items and the tax tables, and they are all correct.

The example I gave you with: 8 employees (paid twice a month) having taxable SSI & MED wages of $28,161.81 for Qtr 2, -- that's 6 paychecks/employee/Qtr X 8 employees = 48 paychecks configured Qtr = 48 times of rounding up or down, which could easily add up to overpaying by $19 or so.

So I guess the real question is whether I should fill out the Qtrly return showing a $19 overpayment, OR should I fill out the Qtrly return and put a $19 adjustment on line 7 for the fractions of "cents" and have the return show no overpayment/underpayment?

Thanks for your advice.
Honestly ... I'm not an accountant, just a long time user of the program. I, along with the techs, really can't advise on what to do about what you should have on the form since the program is working as designed. I'd call the IRS directly for an answer, but I would turn off 'rounding' since its really not needed.

All that said, my thought is that if you indeed paid in an extra $19 over the quarter, than it should show the overpayment since the calculations show that is the difference between what you owe for the quarter, and what you paid.
Neil Zampella

Using PC+ since 1999.

Sienna
Posts: 4
Joined: Wed Nov 15, 2017 1:27 pm

Re: SSI & MED calc. off by $19/QTR? - Use Line 7 on 941?

Post by Sienna »

Thanks, that is what I was thinking, too.

Zorak
Tech Support
Tech Support
Posts: 3006
Joined: Thu May 13, 2004 9:59 am
Location: PowerChurch Software
Contact:

Re: SSI & MED calc. off by $19/QTR? - Use Line 7 on 941?

Post by Zorak »

As Neil said, there isn't a hard and fast rule as to what to enter where. Box 7 is the adjustment for fractions of cents, so not necessarily related to the Round to the Nearest Dollar setting on the tax table, though that would affect the end result.

I ran some numbers, just using your $28,161.81 in taxable wages across 48 checks. That averages $586.704375 per check (the .004375 rounded down for fractions of cents making it $586.70).

On a check with $586.70 in taxable wages, the calculation of employee SSI is 586.70 * .062 = 36.3754, with .0046 dollars rounded up to 36.38. That same amount again for employer SSI. The employee Medicare is 586.70 * .0145 = 8.50715, with .00285 dollars rounded up to 8.51. That same amount again for employer Medicare.

In this instance, working with your average taxable wage amount, it works out so they were all rounded up. That adds up to .0149 dollars, or 1.49 cents being rounded on each check. Multiplied by 48 checks, that's .7152 dollars or 71.52 cents.

In the real world with different wage amounts for each employee (and possibly each check, if they are hourly), it's a 50/50 chance that they would be rounded up or down, so that amount would likely be less - the rounded down fractions of cents would offset the rounded up fractions of cents.

Again, I can't say with any certainty one way or the other, and my calculations may be way off, but to me it looks like $19 is A LOT to blame on fractions of cents. My gut instinct, since you have verified the tax table amounts are correct, would be that there is an employee (or employees) whose deduction items are currently (or at some point were) set to a manual amount instead of using a tax table to calculate.

You can easily verify that by looking at the Maintain List of Employees screen on the Pay Items tab. It shows the tax table name next to each item (if there is a tax table assigned). If everyone has tax tables assigned to the SSI & Medicare deductions AND employer liabilities, that means the employees are currently set up correctly. The next thing to look at would be in their Check History tab, looking at the amounts processed on each check for those four items, verifying that they weren't previously processing the wrong amounts at some point over the quarter.

Post Reply