One check had wrong tax calc - from 3 months ago. What NOW?
Running 941 schedule B, and I got the error 'line 12 doesn't match Schedule B' error. It was $33.75 off on a $10k tax bill. So I ran reports on every check and one employee check from three months ago clearly had the tax withholding calculated incorrectly.
In my haste to file my 941 timely, I manually overrode the Schedule B entry for entry week to be the correct amount (on the schedule B form only.) Then I filed a return saying I underpaid by $33.75. But the warning on QB was my manual adjustment would only affect Form B / 941 - not impact my books. So, what now?
Now, specifically, what accounting entries should I make? To be super specific, per Quickbooks, employee gross pay was $880, SS withholding and company each were $40.88, Medicare each were $9.56. By my calculations, SS withholding SHOULD have been $54.46, and Medicare $12.76 for that gross pay.
I've got some information to share oh how you can keep your records accurate in QuickBooks Desktop after creating a manual adjust on your 941 form.
You'll need to create a payroll liability adjustment for the date where the taxes isn't calculated properly based on the Schedule B form. This way, your tax calculations, and payroll liabilities will be corrected so you can prevent this error from happening again.
To do that:
Go to Employees menu at the top.
Tap on Payroll Taxes and Liabilities.
Hit on Adjust Payroll Liabilities.
Supply the information needed in the Date, Effective Date, and Adjustment is for fields.
Select the employee.
Complete the Taxes and Liabilities fields.
Choose the Accounts Affected and then OK.
Repeat this for other employees if you need to, and press on OK.
However, to ensure the best course of action for your business, I recommend consulting your accountant. This is to help verify if these changes should affect your liability account.
To give you the complete details on creating a payroll liability adjustment and on how to resolve errors in the Form 941/Sch. B - Employer's Quarterly Federal Tax Return, please see these references attached: