Article: 317439
Title: Understanding and Auditing Form-941
Orientation
The 941 is a federal form that is reported every quarter by businesses. It is used to
report Subject Earnings and Payroll Taxes for the organization for the quarter as well as
a variety of other information related to payroll taxes.
There are several sections of the 941.
Part 1
Contains information to specific questions about how many employees were employed,
their subject FIT, SS and MC earnings, any adjustments or exemptions as well as
amounts of payments and how much is owed.
Part 2
Accessed by going to the next page Part 2. This is where you indicate if you are a
monthly depositor or a semi-weekly depositor. Most are semi-weekly. Indicating you are
semi-weekly will automatically mean that you must complete schedule B.
Part 3-5 is additional contact and official information.
Schedule B
Schedule B is a day by day schedule of taxes paid (actual Tax, not subject earnings).
The amounts in here should correspond to the total of all taxes paid on that date in
payroll.
There are three months, each one being one month in the quarter. Then there are
boxes for each day in that month. There are monthly and quarterly totals.
Auditing
There are several tools to audit form 941. These are the 941 Worksheet and Tax
History report. The basic strategy when auditing the 941 is to ask the following
questions:
Does the 941 in Aatrix match the 941 Worksheet in Fund Accounting?
Does the 941 Worksheet match the tax history report?
941 vs. 941 Worksheet
If you go to Reports>Payroll Tax Worksheets>941 Worksheet. The only real option on
this report is to choose the dates the report runs for. There are not other filters or
adjustments. This report cannot be altered.
The report has two basic parts, the summary and the Schedule B. Each of the numbers
on the 941 worksheet should match their corresponding values in Aatrix. Once this has
been established the next step in auditing comes from looking at the tax history report to
get the detail of the numbers. This is done by running a Tax History Report.
941 vs. Tax History
Matching the 941 Report to the Tax History Report involves running several different
Tax History Reports to match the different sections.
Part 1
Part 1 is the basic form of the 941, it contains a summary of Federal taxes paid over the
quarter. You will need to set up a different report to proof each number.
NOTE: The values in this section are calculated values. It takes the subject earnings
and multiplies it by the proper percentage. If for some reason the actual amounts
withheld were different (rate changes/adjustments/modifications to calculated payroll)
the value in the tax history report will not tie. At that point adjustments would have to be
made to correct the values
1 – Number of Employees
To proof the employee count see KB 310368 for detailed instructions.
2- Total Wages Tips and Other Compensation
This should equal the total FIT Subject Earnings for the period.
The Report setup should look something like this
Setup Tab
Content Tab
Filter Tab
Options Tab
Report
When you run the report you will get a listing of every check that had FIT subject wages
and a total at the end that should match the 941 Worksheet.
3- Total Income Tax Withheld
This amount should equal the total FIT withholding.
Using the same report from line 2 we should see the total FIT tax withheld.
4- Total Social Security Wages
This section should show your total subject social security wages and total social
security withheld
NOTE: Reports run for 2011 will have a tax rate of 10.4%. Otherwise they will have a
tax rate of 12.4%.
You can use the same basic report as above but change the filter to report on social
security
Filter Tab
Report
If we look at the report the Employee and Employer Subject Earnings should equal the
amount on the 941 worksheet. The amount of Tax should equal the sum of the
Employee Plus Employer Tax amounts. We can multiply the Subject Earnings x Tax %
to check this number.
5 – Total Medicare Wages
This report should show the total Medicare Subject Earnings and Medicare tax withheld.
You can use the same report as above but change the filter to MC.
Filter Tab
Report
If we look at the report the Employee and Employer Subject Earnings should equal the
amount on the 941 worksheet. The amount of Tax should equal the sum of the
Employee Plus Employer Tax amounts. We can multiply the Subject Earnings x Tax %
to check this number.
6- Total social security and Medicare taxes.
This should be the sum of the tax amounts for social Security
7- Exempt Wages and tips paid this quarter (HIRE)
This only applies if you had employees subject to the HIRE act in 2010. It was
discontinued as of 12/31/2010
8 – Advanced Earned Income Credit (EIC)
This only applied if you had employees subject to Advanced EIC payments. This was
discontinued as of 12/31/2010.
If Amounts Don’t Match
If you run the audit reports and the amounts don’t match it is likely that there was a
social security rate change or something has been done in review/modify calculated
payroll before a check was printed. If the amounts don’t match it is very likely the
amount that is off is going to show up at the bottom of the report in the “Fractions of
Cents”. For detailed instructions on how to troubleshoot this scenario see KB 317401.
Schedule B
Schedule B is a detailed report that gives a document date by document date
breakdown of Tax Liability. The amounts should include the actual taxes collected for
FIT, MC, SS and EIC.
You can proof these numbers in Summary by setting up the following Tax History
Report. Go to Reports>History>Taxes and Create a new report
Setup
On the Setup Tab
You should have the report dates equal to the document date you see on the Schedule
B.
On the Content Tab
On the Filter Tab you will filter to include FIT, MC, SS and EIC.
Options Tab
Report
The total should be equal to the sum of the PTD Employee + PTD Employer Tax.
If you want to see more detail of what makes that total up you can add that detail to the
content tab.
This will give you a paycheck by paycheck breakdown of the amounts.
Using these reports you should be able to get the detail of what makes up the values in
the 941 Worksheet and 941 Report. If the values are incorrect they will most likely need
to be adjusted through Setup/Adjust Employee balances.
Fractions of Cents
In the 941 the Fraction of cents is the difference between the calculated amounts in part
1 and the actual amounts in Schedule B. In most cases it should be less than $1. If it is
a larger amount there could be several causes. Most likely because of over withholding.
See KB 317401 for details.
If the Fractions of Cents is good on the 941 worksheet but is not ok in Aatrix it is likely
that you have changed or added a value in Part 1 (some type of adjustment or credit)
but not done the same in Schedule B. You should see KB 197686 and 313406 for
instructions on dealing with that.
Keywords: 941, FICA, worksheet, quarterly, schedule, B, schedule B, tax, history, federal, SS, MC, EIC,
FIT, Aatrix, form Schedule B, audit, auditing, fraction, cents, 317439