Troubleshoot Form 941 in QuickBooks Desktop Payroll

You select Check for Errors on your 941 form and get the following error: Total taxes adjusted by EIC does not equal the total quarter liability on page 2. You must make necessary adjustments to reconcile the amounts. If you have Hire act qualified employees, please check and adjust your data for any errors.

What the error means

This means the amount of taxes calculated on Line 12 isn’t equal to the amount of taxes you paid on Line 16 on the 941. 

• Line 12: Total amount of taxes calculated based on your employees’ wages, and any nonrefundable portions of Employee Retention Credit (COVID), COBRA, or qualified sick leave
• Line 16:  Total amount of taxes you paid

What causes the error

This error happens most commonly when you have a payroll item setup incorrectly.  

Fix the error

1. Close the 941 form and open a Payroll Summary report. Date the report for the appropriate quarter.
2. Note any payroll items in the Additions or Deductions sections on the report. 
3. Select Lists, then Payroll Item List.  You’ll need to check each of your addition and deduction payroll items from the Payroll Summary report to make sure they’re set up with the correct taxation. If you aren’t sure how the items should be taxed, you may need to work with an accountant or bookkeeper.  
4. Fix the payroll item(s) by selecting the correct tax tracking type.
5. Run a Payroll Check-up to correct your wage amounts.
6. Go back to your 941 form and select Check for errors. 
7. If you owe any additional taxes, be sure to pay that amount due.  If you are due a refund, you can request it from the IRS after you file your 941.  

This may not be an error.  Line 2 on your 941 should match the Federal Withholding Income Subject to tax. Double-click the Federal Withholding tax amount on your Payroll Summary report.  Scroll to the bottom to see the amount. 

This may not be an error.  Not everyone is required to file the Schedule B form with their 941.  You only need to file Schedule B if:

• You’re required to pay your 941 taxes semiweekly
• You accrued $100,000 or more in 941 taxes on any given day in the quarter

If you meet the above criteria and you don’t see a Schedule B form, check your 941 deposit schedule in QuickBooks. 

1. Go to Employees, select Payroll Taxes & Liabilities. Then select Edit Payment Due Dates/Methods.
2. Select Schedule Payments, and then select Federal 941/944/943.
3. Check your payment frequency and change it to semiweekly if needed.
4. Select Finish.