April is the cruelest month not because it rains buckets, but because it’s time to file your first-quarter Form 941, Employer’s Quarterly Federal Tax Return. Here’s help.
√ Before filing Form 941, reconcile quarterly data with the wage/tax data from the general ledger or reports from your service bureau. Pay attention to the totals back to gross wages, the employee’s Social Security rate and the COBRA subsidy.
√Check the box at the top of the form for the quarter, and make sure the quarter checked is the same as shown on Schedule B, Report of Federal Tax Liability (ROFT).
√ Check the “Yes” box and complete the third-party designation information in Part 4 if you want to discuss this form with the IRS.
√ Check that numbers aren’t transposed; use a minus sign to enter negative amounts.
√ Report employees’ earnings only up to the Social Security taxable wage base ($110,100).
√ On Line 2, enter total wages and other compensation paid and taxableprovided, even if you didn’t withhold taxes from the payments.
√ The amount monthly depositors report in Part 2, Line 16 must match the Line 10 amount.
√ Semiweekly depositors should verify that the ROFT amount and the Line 10 amount balance. Reminder: Post tax liabilities, not deposits, to the ROFT. The COBRA subsidy, therefore, has no impact on ROFT reporting.
√ After filing, reconcile year-to-date data again, including imputed values for noncash compensation. What must balance: 941 amounts/W-2 summary/payroll reports. Run sample W-2s to confirm the reconciliation. Tip: Create a reconciliation spreadsheet. Advantages: Fourth-quarter totals won’t be a surprise, and problems can be found and fixed easily.
√ Balance gross-to-net and taxable wages quarterly.
√ Make interest-free adjustments of underreporting errors by filing Form 941-X by the due date of Form 941 for the quarter during which the error is discovered, and pay any tax due. Also, file W-2c/W-3c forms.
√ Review payroll bank accounts for additional tax debits or credits made by your service bureau; book any corresponding journal entries.
√ Password-protect payroll audits and register reports that you’re storing on your computer.
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