 In this presentation, we will fill out the quarterly 941 forms for payroll taxes. We will do so using our information from the Payroll Register in Excel. Note we have information so far for the month of August and September. Support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. Our data starting in August therefore we don't have any first or second quarters. We're in essence starting in the third quarter here. So we have these two months of data and then the fourth quarter October November December we don't have yet. Note when we talk about quarters sometimes it's easy to sometimes it's we can think that there's four months in a quarter because a quarter because it's a quarter but just remember that quarter is going to be the 12 months divided by four which is three months. So there's three months in each quarter and our quarter here of course is only two months because we started in the middle of the third quarter. So what we're going to do is we're going to sum up this data and we're going to use this data in order to fill out the form 941. To do that we're going to have to add this up. So I'm going to add up the two quarters. I'm going to do that all the way at the bottom down here of our payroll register. We have quarter three and then then we have the year to date totals. So I'm going to I'm going to put both of those. I'm going to fill both of those sections out. So in F 39 we're just going to say equals and we're going to scroll all the way up top to the total in our first data which is in F 9 and then just say plus and then going to scroll down just a bit and pick up these total in the next set of data which is September in F 16 and that's it. That's all we have for the first quarter and then enter. So there we have that. Now I'm going to do the same thing for the yearly totals down here and that'll mean that as when we use the worksheet in the future the totals will populate just for us automatically. These probably shouldn't be green here. I'm going to ungreen these. I'm going to I'm just going to highlight these. It's probably not green on your sheet right now right click but I'll show you what I'm doing and then paint and make it blue. Okay so now we're going to do the same thing for the yearly totals and it'll match right now but as we move forward then it'll differ. So and once we do that then I'm just going to copy these formulas over to all of our total datas and it'll populate for us automatically. So in cell F 41 we're going to say equals and scroll all the way to the top and we're going to point to the F 9 and then plus scroll down just a bit point to F 16 plus and note the formula is up here. We can see the formula and the formula bar up top and then we're going to scroll down even though there's zeros in October I'm still going to pick it up pick up that number plus and then here's the totals in the formula bar then we're going to pick up this zero in F 30 plus and then we're going to scroll down just a bit and we're going to pick up the zero in F 37 and enter. So there's our information now we're just going to copy that information and paste it over into our totals on the right and it should just move over the relative formulas. So I'm going to highlight these cells right click and copy and then we'll just populate I'm just going to highlight all of these cells or select all of these cells right click and paste the first one and it shouldn't matter here or the formulas but they're all dollar amounts so it should be the same. So there we have that now we're using well it doesn't matter which one we're using they're both showing the same numbers right now because we only have three quarters but as we populate the worksheet from here it will then populate the rest of the data. Now we're going to take this data and see what we can fill out here on the 941. So the 941 we're going to have the EIN number first that's going to be the employer identification number no matter what type of entity we are so proprietor partnership corporation we typically will need well we will need an EIN number to fill out the payroll and that's going to be separate than our other identification number for the internal revenue service. So we've got the name the address we're not going to concentrate on that here what we do want to make sure we do is check off that we are in the proper quarter the third quarter July August September note we only have data for August and September because we started operations within October. Okay so then we're going to go down and start filling out our form down here line one says number of employees who receive wages tips or other compensation for the pay period including March June and the quarters here so we're going to pick up the number we had four employees so we're going to say four. Okay then the next one says wages tips and other compensation now the wages tips and compensation here has to do with the federal income tax wages tips and compensation which will differ from what we will have down here in terms of wages and tips and whatnot for social security and Medicare. So those are the three taxes that we will be reporting here these are the federal taxes payroll taxes including FIT federal income tax for the employee remember this is the employees withholding not our taxes as a corporation that will report at the end of the year or as a business tax this is the payroll tax and then we'll have the social security and Medicare both the employee and employer portions so here we're looking for line two what the wages are for the FIT federal income tax and that should match if we add up the 941s to the end of the year what will be recorded if we sum up all the W2s meaning on the W3 it'll match the total wages for federal income tax there so we're going to go back to our data then so from our data we're going to pick up the total earnings for the quarter and we're going to reduce it by those things that are going to be reduced from total earnings which when we calculate the taxes and those will include the retirement plan so the 401k in this case and it would include the group insurance if the group insurance was a section 125 cafeteria plan we're going to say this one is not here so we're just going to reduce the net pay and note that this should kind of match the the type of calculations we had with the withholdings when we withheld on the federal income tax meaning when we looked at each individual payment and tried to find the FIT tax we should have taken the payment minus the 401k plan and then looked at that information up to tie out to the tables so in essence we're looking for that same kind of total number for total wages regarding federal income tax so if we pull the calculator out here we're looking for this 96973.5 minus this 5548.4 that'll give us the 91 425 and 10 cents so we'll go back to our form 941 back to the 941 and we're going to put then the 91 comma 425 tab to be on this other side because they put the desk one for us and 10 cents so then we got the federal income tax withheld now note we can't calculate this again we can't use this total number and calculate the federal income tax withheld because it's not a flat tax it's too complicated to do so all we can do is tell the IRS hey this is the what the wage base that we that we used but all of our employees have a different number of exemptions in a different set of circumstances and therefore we cannot just use that number in order to generate the FIT so this number although useful to the IRS doesn't really indicate anything much at all with regard to what the actual federal income tax withholding could be all we know is what we actually withheld so if we go back to our data here we're going to say that the actual withholdings for the federal income tax is the FIT number this $17,003 and 26 cents so we're going to use that number we're going to go back to our form and we're going to put in that 17 comma 003 tab and 26 cents now we're at the social security so we got social security wages so we're going to go back to our table we're going to pick up the social security wages now in the third quarter they're the same as total earnings and that's because one nobody's hit the cap 128 400 in the next quarter it will because we have one employee who is a high earner and note that it could also be it could also be different if there was something that could be deducted from the wage base for OASDI and Medicare it could be different from the total and that would include a cafeteria plan so remember this isn't a cafeteria plan but if it were then that would be another instance in which the OASDI and the Medicare would differ from the total earnings so we're going to pick up this number so we're going to go back to our form here and just note before we do that I'm going to pick up this number and we already calculated the OASDI here and we calculated it here and note the rate 6.2 6.2 when we go back we'll we'll note the difference here could be a little confusing so we're going to go back and put this data in we're going to say the amount is 96 comma 973 tab and 50 cents and note the rate here it says then the multiply times 0.124 you might okay we'll do that but what is that where does that number come from 0.12 I haven't seen that number before and that number of course is the 0.062 6.2 percent we've been using times two meaning the employer and employee portion so we're calculating the employer and employee portion at the same time in other words so we're going to take that 0.0 I mean 0.124 times the 96973.5 and we get 12,024.71 about so we're going to put that here 12 comma 024 uh tab 71 about again you might say well I don't see that number there well of course and and you're probably thinking at this point that that's the that's twice what it should be so here's the 6.2 and the 6.2 and then the amount then we have the employee portion I'm holding down control and then highlighting the employer portion giving us the total portion of 12.2471 so that's where that number comes from it's a little bit confusing to go back and forth on that now we don't have any tips thankfully so we're going to go to the Medicare wages so Medicare wages we're going to do the same type of thing here's the Medicare wages we're just going to pull from the OASDI it'll remain the same unless of course once again we had this cafeteria plan was something that could be deducted from it there's no cap as there is for the social security therefore we're just going to use the total earnings here so we're going to go back to our form we're going to fill out that number the total earnings is the same 96 it'll differ once we get to the to the last quarter here because someone will hit the cap on this one but not this one notice it is different than this number which is total wages because this one is reduced by the 401k or the retirement plan okay so once again we're going to multiply times the 0.029 a number you may not recognize and but that number is the 0.0145 the one we probably have used way too much if you've gone through this whole problem times two and then you got 0.029 so that's where that comes from it's the employer and employee portion of the rate times the 96973.5 gives us 281223 so we'll put that here 2 comma 821 tab 23 now once again where does that number come from on our worksheet going back to the worksheet here it comes from the hi here there's the employee portion and the hi here i'm holding down control and selecting the other one and that's the 281223 okay let's see what else we have on this exciting form we are then not having tips so we're just going to add these two up this one line 5e says add columns 2 from line a 5a 5b 5c and 5d so we're just going to add these up we're going to say 12 024.7 1 plus 2812.23 gives us 14 836 94 total social security and medicare or total fika taxes 14 comma 836 tab 94 okay so then we have uh the next line says section notice to do uh tax do on unreported tips we don't have any there so we're good leave that blank and then six says total tax before adjustments same number so uh actually we're gonna not the same number we're gonna add line 3 5e and uh 5f meaning federal income tax plus the social security medicare that we've already added up over here so let's pull the trustee calculator account and once again 17 003.26 federal income tax plus the social security meta the fika taxes 14 836.94 and that gives us the total taxes at this time 31 840 and 20 cents so that's going to go here 31 comma 840 and 20 cents okay so then the next one says that's a quarter adjustments if there's any rounding we're gonna have to put some adjustment there we could be off by pennies so if we're off by less than a dollar that's typically okay we're just gonna say that's a rounding error and they're gonna not gonna make us write a check for a dollar which is nice we do need to be pretty precise for payroll taxes as compared to other taxes even in even income taxes we need to be pretty much down to the penny as close as possible then the total taxes after adjustments is going to be the same 31 comma 840 and 20 cents small business payroll tax credit we don't not going to have anything there we're going to say total taxes after the credit 20 31 840 and 20 cents same number now it's really important to wrap your mind around the fact that this is going to be the liability amount and then we're going to compare it to the deposit amount this form is not here to tell us what to pay and then we write a check necessarily this form should be an information form only just like the 1040 except the 1040 doesn't come out to be exact so your individual our individual tax form 1040 at the end of the year we should in a perfect world already have made the payments and we're just telling the IRS here's what we owe here's the payments we already made and in a perfect world it would be zero and we wouldn't get a tax refund or payment now because the income tax is so complicated that's impossible and we usually work it out so that we get a small refund back but on the payroll taxes because it is more precise it is possible to be exact and we should be exact down to the penny that we can around off so no we already made the payment and we already we already have the payment so this is the liability portion now we're going to look up the deposit portion and the story is hey IRS this is what we owe based on the calculation you can see that we prove it up top how we get to this number now we're going to show you that we have already paid it hopefully and and so we don't owe you anything here that's it's been done it's been done properly here's the evidence of that so we're going to go back to our form and we're going to look for the deposits now so to do that we're going to go to the GL so if we scroll down to our journal entries remember our journal entries had like a journal entry to record the expense for the salaries and wages and then to record the payroll tax expense and then we paid the payroll taxes with cash so here's this last journal entry paying it off so the payroll happened in august and then we processed it in september and we didn't make the payment until 15 day the 15th of september so this payment then cash is paying for the OASDI the HI the FUTA the SUTA the federal income tax that was incurred for august which we're paying in september and then we did the same for october we're paying this cash for the federal income tax to FICA the the FUTA and the SUTA and the federal and the federal income tax and the medicare for september that we're paying it in october so in other words this payment in particular can be confusing because we might say well it happened in october and that's the last quarter that's october november december that's the last three months of the year that's the last quarter of the month of the year so where should this payment go well we applied it to the liability which was incurred for the payroll period in september so really this payment is is applied to the liability that was incurred in september so these are the two payments we're going to have here now we have to break this out a little bit more too because we're dealing only with uh oasdi hi social security medicare and fit we're not dealing with federal unemployment or state unemployment and you might say well why aren't we dealing with federal unemployment it's a federal tax and that's what we're working with the federal taxes for some reason the federal unemployment we only do yearly on a 941 possibly because it's so much smaller so the IRS is saying hey you don't have to report that on a quarterly basis we'll only make you report that on a yearly basis because the amount is so much smaller typically uh on these because the amounts are very significant we want to see them on a quarterly basis so in that case what we need to do is pick up this number this number i'm holding down control and this number that's going to be our 16 um 80 21 for our first payment and then we made a payment for uh the next month in the quarter of this this i'm holding down control and this so these highlighted areas add up to 31 8 40 20 if we do that with a calculator of course we would just say it's this 6063.1 plus the 1417.98 plus then i'm picking up this number 8599.13 plus and then we're picking up this number 5961.61 plus and then this number 1394.28 plus and then the FIT this number 8404.13 and that should be that same 31 8 40 and 20 cents so that's what we're going to use so if we go back to our form here uh we calculated it to be 31 8 40 tab 20 cents comes out exactly note that these aren't the same number though this number is our liability and this number is the deposits we made okay so that's basically it now the next component we can have is uh the monthly breakout so we're going to kind of pretend that we need to break this out on on a separate form just to show you the separate form that will basically support this number so here's the schedule B for the 941 and this is going to be supporting once again that that deposit number so we got the same EIN number we need up top we need to represent the third quarter that we're working in and then it's going to break out by month there's going to be three months within the quarter and we want to have the payments that were applied now for us it's only going to be one payment for that month because we're monthly payers or our payrolls monthly but if we were to pay weekly bi-weekly or semi-monthly then we would probably have more than one payment so what we're going to do is just break the same information out by the actual payments so in the second month we've already filled it out here but if we go back to our data we're in essence picking up this number that we paid and that's going to be this plus this I'm holding down down tab and the FIT that comes out to $16,080.21 if we go back to here back to here it's going to be 16.80 and 21 cents and that's the total so we only have the one payment of course and again if we had if we had weekly pay periods we'd have more than one payment in the month and then if we go back over here we're going to say that the the second payment we made is going to be this plus this and this amount and also note of course that when we actually write this check we would probably have to write separate payments or make separate payments whether it be electronic or bi-check for FUTA and SUTA so this journal entry is representing multiple checks that the cash went out the cash went out probably with multiple different checks here so in practice if we were looking up the actual checks that cleared then we would find separate checks and be breaking out at least FUTA and SUTA to form a separate check so in any case this adds up to 15,759.99 if we go back over here here's the 15,759.99 that's our only payment for the third month so here it is over here and if we add those two up then we're going to say that the second month 16,080.21 plus the 15,759.99 adds up to the 31,840 and 20 cents so scrolling down that's the 31,840 and 20 cents so that supports the number that we put on the deposit side so in other words we're telling the IRS hey you know we deposited this much if you want more detail here's the actual deposits we made here's the month we made them in you should be able to see that on your side if you don't see it on your side let us know and we can then go back through and match this stuff up because on our side this if this deposit has cleared the bank then we can be pretty clear that the that the IRS has deposited it and then the only question is well if they deposited it and they say that they don't have it then it may not be applied to the proper quarter meaning we may have put the wrong quarter up here and possibly they applied it to quarter four or something like that when we made the payment and so then all we got to do is hopefully talk to him and say hey it's applied to the wrong quarter would you apply it to the proper quarter and everything should work out that's a common type of problem