Tax Table for Social Security and Medicare

[jordan2k510]

The tax liability for FICA in PC does not agree with the 941 calculation. What am I doing wrong? Why is the SS no closer to the PC SS and the Med not matching the Med. I understand the .01 difference between PC and the 941 but the SS and Med individual differences seem too far from the 941.
Detail below.

PC Tax Table
Social Security 6.2%
Medicare 1.450%
Quarterly Wages 1140.48

PC Liability:
SS = 141.37
Med = 33.11

Quarterly 941 Report
SS = 141.42
Med = 33.07

[NeilZ]

The tax liability for FICA in PC does not agree with the 941 calculation. What am I doing wrong? Why is the SS no closer to the PC SS and the Med not matching the Med. I understand the .01 difference between PC and the 941 but the SS and Med individual differences seem too far from the 941.
Detail below.

PC Tax Table
Social Security 6.2%
Medicare 1.450%
Quarterly Wages 1140.48

PC Liability:
SS = 141.37
Med = 33.11

Quarterly 941 Report
SS = 141.42
Med = 33.07

Are you saying that the calculations made in Powerchurch are not the same as if you do them manually? Or is the 941 report in Powerchurch not reflecting the same numbers ??

I was trying to test this, but I would need some information: is the person paid weekly ?? are they salaried or hourly ?? What is their salary or hourly rate and average hours worked?

[jordan2k510]

Powerchurch agrees in its reports. Where I find the difference is between Powerchurch and the 941 report. There is a section on the 941 report to calculate SS and Medicare by multiplying the quarters wages by .124% and .029%, respectively. The results are different for SS and Med individually compared with Powerchurch yet the sum of the 2 is only .01 off. I am concerned that I have reported to the employee from Powerchurch for SS and Med, $141.36 and $33.12 . Yet, on 941 will report (per the calculation) $141.42 and $33.07. The payroll is salary and paid twice a month.

[NeilZ]

Powerchurch agrees in its reports. Where I find the difference is between Powerchurch and the 941 report. There is a section on the 941 report to calculate SS and Medicare by multiplying the quarters wages by .124% and .029%, respectively. The results are different for SS and Med individually compared with Powerchurch yet the sum of the 2 is only .01 off. I am concerned that I have reported to the employee from Powerchurch for SS and Med, $141.36 and $33.12 . Yet, on 941 will report (per the calculation) $141.42 and $33.07. The payroll is salary and paid twice a month.

There is really no need to recalculate the numbers, use the numbers that come from the Powerchurch 941 report. This is the amount being withheld by the system, and being placed in the liability account to pay out SS & Medicare.

[Zorak]

Take a look at your Employer Liability items for SS & Med in the Maintain Item Descriptions screen. There is a step in the Finish Payroll Conversion process that asks about each of your Employer Liability items. If you don't make changes, they are converted as "non-tax items" and not SS & Med, meaning they don't report properly on the 941 and aren't able to use tax tables for calculations.

- Go to Accounting > Payroll > Setup > Maintain Item Descriptions.
- Locate the SS Employer item
- Uncheck the "Non-tax item" box
- Change the Tax Type to "Social Security"

Repeat this process for the employer Medicare item.

Once this is done, you can then go update each employee's pay items on the Maintain List of Employees screen to set the proper tax table to calculate the SS & Med employer items.

[jordan2k510]

I assume you mean the Taxable Income on the Item Information Tab which has a radio button for YES and one for NO. The NO is greyed in and does not allow change.

[NeilZ]

I assume you mean the Taxable Income on the Item Information Tab which has a radio button for YES and one for NO. The NO is greyed in and does not allow change.

I don't believe so.

Zorak is talking about the Employer SSI item that can be found under SETUP -> MAINTAIN ITEM DESCRIPTIONS

[jordan2k510]

I am using v9 of PowerChurch but it is the same place. I just got off the phone with the IRS. The problem is that each pay period is a half cent under. There are 6 pay periods per quarter. This is where the 6 cents is off for SS. For Medicare it is a total of 5 cents over for the quarter or .0083 per pay period. The IRS says that I must report the SS and Med as figured on the IRS 941 form and that my software should be able to correctly handle this situation. The wages per pay period are 190.08.

[NeilZ]

I am using v9 of PowerChurch but it is the same place. I just got off the phone with the IRS. The problem is that each pay period is a half cent under. There are 6 pay periods per quarter. This is where the 6 cents is off for SS. For Medicare it is a total of 5 cents over for the quarter or .0083 per pay period. The IRS says that I must report the SS and Med as figured on the IRS 941 form and that my software should be able to correctly handle this situation. The wages per pay period are 190.08.

I hate to say this but version 9 is no longer supported, that said. Make sure you have the last maintenance release for v9 dated 10/16/2008.

[jordan2k510]

Thank you. I cannot understand how this ever worked, regardless of the version, to anyone's satisfaction for reporting FICA to the IRS. I have come up with a way to reconcile with the IRS number by changing the rate midyear. I am also going to ask the employees to change their pay period from twice a month to once a month. This will resolve the issue without changes in PC midyear.

[NeilZ]

Thank you. I cannot understand how this ever worked, regardless of the version, to anyone's satisfaction for reporting FICA to the IRS. I have come up with a way to reconcile with the IRS number by changing the rate midyear. I am also going to ask the employees to change their pay period from twice a month to once a month. This will resolve the issue without changes in PC midyear.

Again, is your version of Powerchurch up to date as far as the latest Maintenance Release?? There have been thousands of churches using the payroll module for years without an issue, in fact, the payroll module is used by the Powerchurch offices to generate their paychecks, and they have not any any issues with the 941s.

That said, i would seriously consider upgrading to version 11. The payroll system was completely revamped making it much easier for all types of deductions (taxes, medical, retirements, etc)

[jordan2k510]

no the church has not updated the software in years. How does the newest version of PC handle a biweekly payroll with these fraction issues?

[NeilZ]

no the church has not updated the software in years. How does the newest version of PC handle a biweekly payroll with these fraction issues?

That may be part of the issue you're seeing. If the software has never had a maintenance release applied, it could be that whatever you were seeing was fixed.

Version 11 doesn't have any problems with weekly, biweekly or monthly payrolls.

[tborgal]

I just checked both V10 and V11 and they both calculate the tax correctly. You've got me curious about this since just about every quarter I am off by some amount. This quarter I was off by $0.20. I am sure this is seen a lot and that is the reason for the fraction of cents adjustment on the form and the higher the number of pay periods the higher this number can be. Your example calculates out to the penny however. Now I am going to have to dig into this a little deeper.

[tborgal]

I just did some checking and found that in some cases rounding errors are inevitable.
For example, an employee's salary is $468.80 per week.
For a 4 week month the following occurs.
PC+ calculates SS at 29.07 per week for a total of $116.28 for the month
If you hand calculate this you get $29.0656 per week which rounds up to the $29.07.
However if you multiply the calculated amount by 4 you get $116.2624 or $116.26 for the month giving you a $0.02 error. With employer liability this becomes a $0.04 error for the month. There is no way that I know of to compensate for this other than using line 7a on the 941 form.