April won’t fool smart Payroll managers. They know that the first-quarter Form 941 is due by month’s end. Here’s help.
√ Before filing, reconcile quarterly data with the wage/tax data from the general ledger or service bureau reports; watch the totals back to gross wages and the employee Social Security rate.
√ 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 up to the Social Security taxable wage base ($117,000).
√ 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 14, must match the Line 10 amount.
√ Semiweekly depositors verify that the ROFT and Line 10 balance. Reminder: Post tax liabilities, not deposits, to the ROFT.
√ After filing, reconcile year-to-date data, 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; for later quarters, balance cumulative payrolls to quarterly totals and balance quarterly totals against each other, identify discrepancies and correct them.
√ 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 the 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.