The Taxable Pay and Withheld Report contains the correct employee Federal Gross, Federal, Social Security Gross and Medicare Gross Totals. This report is used to compare to the 941 Form numbers. If they do not match, it is likely because an Employee's Tax Statement field is set up incorrectly, or at some point during the year, an Employee's Withholding boxes were not marked which is now throwing 941 the numbers off. Both of these fields are set up in each Employee's Tax Data screen.
To quickly ascertain which employee, if any, has the Tax Statement set up incorrectly, run the Employee Record Report for all employees. Use the View PDF option which allows the use of the Find function. Once the PDF is displayed, click the CTRL-F keys to execute the Find Function. Type in the words, No Statement. If these words are found in the report, record the employee's name and click the Next Button in the Find Function until all employees are recorded.
Once you determine the names of all the employees who have No Statement in their setup, go into Payroll => Employees => and Go into those employees', Tax Data Tab. Update the Tax Statement field from No Statement to W-2 and Submit. Then run the 941 again and compare with the Taxable Pay & Withheld Report.
Withhold Tax Check Box
When no taxes are taken because an employee has a Self-Employed Clergy Status, or for any other reason, the Withhold Federal Tax boxes are often unmarked. This is a mistake. The correct setting is to mark the boxes using a 0.00 override as shown below. Marking the box tells the software to accumulate the Taxable Wages for EOY reporting. The 0.00 Override tells the software to not deduct taxes from the paycheck. Any paycheck generated when the Withhold box is not marked will not be included in the Taxable Wages on EOY Forms. If this setting was changed during the year, the correct numbers will simply need to be entered into the 941 form at Year End, using the Taxable Pay and Withheld Report as a guide.
The Taxable Pay and Withheld Report
Here are the numbers to compare: (RT = Report Total)
941 2 = RT Federal Gross
941 3 = RT Federal
941 5a = RT SS Gross
941 5c = RT Med Gross