The 941 Report Disagrees with the Earnings Reports

There may be instances when your 941 reports are correct but earnings reports are incorrect. This would occur because of the differences in the calculation of Social Security or Medicare. The 941 report does not display the Social Security or Medicare deductions that were actually entered in Payroll Entry. Instead, it calculates the amount based on the taxable earnings. This could cause rounding differences of a few cents. There are other situations in which the Social Security or Medicare was not calculated correctly when you entered a payroll check.

Examples of Social Security or Medicare Calculating Incorrectly

This would occur if you enter a check number first and then manually enter an amount into the “tips” (or any other pretax deduction that affects payroll taxes. Sage 50 will stop calculating.) In other words, the Social Security and Medicare would not be calculated again with tips included in the adjusted gross.

This could also occur if at any point throughout the year the Adjust buttons in either the Employee or Employer tab of the Maintain Employees/Sales Reps window were set up incorrectly. Even if the adjust buttons are now set up correctly, you would still have to adjust/correct all previous payroll entries.

Another example would be when you start entering current payroll so that the employees can be paid. Then the previous month’s payroll entries are entered. After entering in the previous month’s payroll, an employee reached the Social Security limit. Sage 50 would have been calculating Social Security on the current employee’s check since the system did not know of the previous month’s entries.

If the 941 Report Is Incorrect...

Follow these steps to track down and correct the problem:

1. Verify the payroll tax year. To do so, select Tasks, System, and then Change Accounting Period. What is the current payroll tax year? If it is the previous calendar year, use the Sage 50 Year-End wizard to close the first of the open payroll tax years. Once the payroll tax year has been closed, try to print the 941 report again.

2. If the 941 is not reporting all earnings, go to the Maintain Employees/Sales Reps window and for each employee check the Employee Fields tab to see if a FIT calculation has been removed from the Fed_Income line and an Amount (flat rate) has been entered on that line.

   If a calculation is not used, then the 941 has nothing on which to base its calculation of adjusted gross. The FIT calculation must be added to the Fed_Income line for all employees prior to running the 941.

3. Verify that the Earnings report is totaling properly. Print the Quarterly Earnings report. Manually add the checks for each employee and see if the system is calculating properly.

   If you are still unable to figure out the problem, take advantage of Sage 50 Customer Support. Print the Quarterly Earnings Report and the 941 Form generated by Sage 50. You may need to send them to Customer Support.