 In this discussion we will discuss the discussion question of describe quarterly payroll tax reporting So quarterly payroll tax reporting we are required generally oftentimes most of the time to report payroll taxes quarterly Using the quarterly payroll tax form that form is form 941 so that would be the first thing we'd probably want to list out if we're talking about the quarterly payroll tax reporting Make sure we don't get the 941 mixed up with the form 940 which is very easy to do given the fact that they sound So similar. It's also easy to do because you would think that the 940 Being the number before 941 would be done You know a form that you would fill out Before you'd fill out the 941 you would think you'd fill out the 940 and then the 941 at the end of the year But it's reversed what's happening is we fill out the forms 941 quarterly and then the 940 Yearly at the end of the year. They're not even related in that. They're not exactly the same data either But we'll get more into that in a second. So then the quarterly forms then are the 941s and we have to report them each quarter So that means if we take 12 months in the year and we divide it by a quarter or multiply it times a quarter Or divide it by four we get three months So we got to make this report happen every three months. That means January February March first quarter April May June July August September October November December those are gonna be the four quarters That'll be indicated in the upper left upper right of the actual 941 form So we'll have to check off and make sure that we check off the correct quarter if we do not then we're gonna apply this to the Wrong quarter and we'll confuse the IRS and that that that'll cause problems So we want to make sure that we get that otherwise the forms will look pretty much the same for the entire year We could find the forms on the IRS website at irs.gov There are the three main taxes that will be reported on a quarterly basis those include federal income tax Medicare and social security So those are gonna be the three things that we're reporting on the quarterly forms Now the quarterly forms are similar to like the 1040 that we do at the end of the year for our individual tax reporting so the 1040 we do on a yearly basis and we basically Calculate how much we owe and then we've already made the payments So typically we say hey, this is how much we already paid and usually we paid a little bit more than we owe and Therefore we get a little bit back That's what we're gonna do here except the the IRS says hey these these forms are a little bit more important because they deal with everybody's payroll and This is my scenario by the way on what the IRS thinks which is may or may not be accurate if you're trying to find reason within the IRS It's a it may not be the best place to to look but this would be my rationale for it. They're saying that Because you're dealing with other people's payroll meaning you're kind of withholding other people's money and then Have been obligated to pay a pay it out We want more reporting than the 1040 which would be just reporting an individual's Money not the reporting of a bunch of others individuals monies that have been with withheld therefore we want to report it Quarterly rather than yearly But the essence of the report on a quarterly basis is much the same We're gonna say hey Here's recalculation of what we owe to the extent that we can on the quarter And then we're gonna say here's how much we paid and it should be unlike the 1040 Pretty much exact for the quarters each quarter should be able to report. Hey, this is how much we owe We already paid it Why can it be exact and it's not exact on the 1040 that we do at the end of the year? Because the the 1040 that federal income tax calculation that we have at the end of the year is Way too complex for us to ever estimate correctly This is not gonna happen. So we try to basically overestimate it usually and get a small refund to avoid penalties and interest but on the on the quarterly forms we can Estimate at least social security and Medicare exactly and therefore should have already paid the exact payment Now you might be saying well, hey, there's a federal income tax on the 941 as well But note that we're not really estimating the federal income tax liability To the employees on the form 941. We're basically just telling the IRS how much we withheld That's all we can tell them which that it is what it is. That's how much we withheld We don't really know what the liability is because it's not we don't know what it is until the 940 is gonna be filled out So if we go through those components then once again, we got we got FIT we've got social security and Medicare that will be report reported quarterly on the form 941 federal income tax is gonna is gonna be the FIT and That's gonna be the wages that we withheld from the employees So we will report to the federal income tax wages, which may differ than total from total wages By things that were typically be reduced. I say like above the line They would be reduced for income like lower in AGI or just gross income if you're thinking about a 1040 things like the 401k plan or a Cafeteria plan and then we're going to list out the amount that we withheld and You would think it would be nice if those two things were related It would be nice if we can look at the wages and like multiply at times a rate or something and know how much was withheld and verify that it's correct, but we can't because once again the Federal income tax is too complicated to do that So all we can do is say hey, this is the wage base that we used and here's how much we withheld from it We can't tell you any direct relationship between the two because it differs from employee to employee Based on whether they're married what their number of exemptions are and what they filled out basically on the W4 Then we go to the the Social Security, which will include the Social Security wages Which could differ from FIT wages and total earnings for the employee Based on if there's a cafeteria plan and if they hit the cap so higher earners Could result in lower Social Security wages because they would have hit the cap Then we're going to multiply the Social Security wages times a rate to get the amount of liability for Social Security It's important to note that the 941 reports both employer and employee portion So we're not trying to break out the employer employee portion here We're saying hey, this is how much we owe total based on the liability both what we withheld from the employee's paycheck And that which we hold or owe from the employer side of things Then we've got the Medicare where we will have the Medicare Wages which could differ from total wages if there's something like a cafeteria plan. However, there's no cap So this might be the highest wage amount on the 940 higher than the FIT wages and the Social Security wages We will multiply that times a rate once again to get the Medicare liability Note that that will include both employee and employer portion of the liability Then we'll add the three types of taxes up the liabilities up which will be the FIT federal income tax Social Security and Medicare will add them up. That'll then be the total liability that we would owe then we'll have that the amount of Payments that we already made because remember this is just a reporting document So we'll then tell the if we're telling the story about this form we would say hey, here's our recalculation of the liability and Right underneath it. We're gonna say and here's how much we deposited for it And they should match because they should line up exactly because it's just we already it's a flat tax And we're just telling them what we withheld for the FIT taxes So then hopefully we don't have anything we owe and we just an information return We don't have to write a check or anything if it was done properly and that's it If it wasn't done properly, then we might owe money. We'll have to write a check Then on page 2 and or a separate form We often have to tell a little bit more detail about the deposit that was made In terms of the actual payments So then we may have to list out the actual payments in other words And that's basically telling the IRS. Hey, this is when we made the payments You should have a check or some type of electronic transfer close to these dates for these amounts And they can check them on their side given that and if there's a problem then we can check Our side see if they cleared the bank and that's how we would basically go go through and reconcile and see whether or not They have been paid so that will be of course done this process done four times a year We get to do that lovely process four times a year and then the quarterly is then if we add them up We can use to kind of reconcile to the yearly forms not the 940 Necessarily, but the form w2s and w3s will tie out in significant ways to the 940 ones The form 940 the yearly form seems like it would be the same You would think you would take the quarterly forms and add them up to the yearly form But that's not really what's happening the 940 is isn't a totally separate tax Which is the Futa tax so because it's smaller That's my interpretation or reason or guess as to why because it's smaller It only needs to be reported yearly so they kind of took pity on us said we'll only make you report this yearly Rather than on a quarterly basis and simulation and the simulation