We discovered that we did not classify our youth pastor correctly. He should have been classified as a dual tax status minister. We classified him as a regular employee deducting social security & medicare. We made the correction to his withhold as of April 1, 2014. the 941 1st quarter tax report has been submitted - I understand that I must file a 941X report to correct this error.
My problem is how to correct this in the payroll module with out voiding the 6 checks issued through 3/31/14. Is there another way to do this? If I have to void the checks - should I post them to Fund Accounting module as well?
Any assistance in correcting this problem would be greatly appreciated. Our version of software is the 11.5
Pamela Shaw
Treasurer
Correcting Payroll
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Matt
- Authorized Teaching Consultant
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- Joined: Fri Dec 05, 2003 4:04 pm
- Location: Jacksonville, AL
Re: Correcting Payroll
If you are going to file a 941X then you will need to void the 6 checks and then reinput them. When you reinput them you will need to make sure that the reinput is in sync with the corrections made on the 941X. The challenge is that the 6 checks have already been written and most likely have already cleared on your bank statement. So when the checks are reinput the net check account must be the same as the original check amount in order to keep these corrections from showing up as uncleared items on your bank reconciliation. In order to accomplish this you will need to reclassify the Social Security and Medicare tax withheld on the original check as Federal income tax withheld on the reinput check.
Here's an example. Let's say the gross pay on one of the checks was $100.00. The Social Security withholding was $6.20, the Medicare withholding was $1.45, and the Federal income tax withholding was $10.00. So the net check amount was $82.35.
You'll void the check and post to both Payroll and Fund Accounting. Then, you'll need to reprocess the check as a manual check in payroll as follows. The gross pay will still be $100.00. But there will be no Social Security or Medicare withholding. The Federal income tax withholding will now be $17.65. The net check amount will then come out to the same $82.35 amount.
If you take this approach the church should receive a refund when the 941X is filed. The refund will consist of the employer's share of the Social Security and Medicare taxes. When posting the refund you will want to debit the checking account and credit the liability accounts for the withholding. This will offset the debits to the liability accounts that will be created when you do the voids.
Here's an example. Let's say the gross pay on one of the checks was $100.00. The Social Security withholding was $6.20, the Medicare withholding was $1.45, and the Federal income tax withholding was $10.00. So the net check amount was $82.35.
You'll void the check and post to both Payroll and Fund Accounting. Then, you'll need to reprocess the check as a manual check in payroll as follows. The gross pay will still be $100.00. But there will be no Social Security or Medicare withholding. The Federal income tax withholding will now be $17.65. The net check amount will then come out to the same $82.35 amount.
If you take this approach the church should receive a refund when the 941X is filed. The refund will consist of the employer's share of the Social Security and Medicare taxes. When posting the refund you will want to debit the checking account and credit the liability accounts for the withholding. This will offset the debits to the liability accounts that will be created when you do the voids.
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FBCVandalia
- Posts: 34
- Joined: Wed Mar 14, 2012 2:35 pm
Re: Correcting Payroll
Thank you for answering my question - this was what I thought I would have to do. Thanks again