Reports to use to reconcile your payroll tax forms (that is, 941, W-3 forms) - Employers Expense Summary - printed during each payroll run (You must print before updating the check register)
- Quarterly Tax Report - print before processing the period end. Available to print after closing a quarter if you set the appropriate Years to Retain in Payroll Options.
- Deduction Reports - print before processing period end. Available to print after closing a quarter if you set the appropriate Years to Retain in Payroll Options.
- Employee Retention Credit Worksheet - print at the end of the quarter to assist in completing the 941 Worksheet. These credits are only applicable for the current tax year, starting with the second quarter.
- Emergency Leave Worksheet - print at the end of each quarter to assist in completing the 941 Worksheet. These credits are only applicable for the current tax year, starting with the second quarter.
- Quarterly Unemployment Report - print at the end of each quarter to assist in completing the 941.
IRS compares payroll reports for accuracy The IRS compares totals from your quarterly Forms 941 with yearly W-2 and W-3 amounts to ensure accuracy. If these amounts don’t match, the IRS or Social Security Administration (SSA) will contact you to resolve the discrepancies. Per the IRS Form 941 Instructions, About Form 941 -
Federal income tax withholding (941-line 3, W3-box 2) -
Social security wages (941-line 5a column 1, W3-box 3) -
Social security tips (941-line 5b, column 1, W3-box 7) -
Medicare wages and tips (941-line 5c column 1, W3-box 5) Why this reconciliation matters The IRS and SSA use these comparisons to confirm you reported wages and taxes accurately. Mismatched amounts can trigger notices, delays in processing, and potential penalties. To avoid issues, verify that: - Quarterly Form 941 totals match annual W-2 and W-3 amounts
- You've correctly reported all employee wages and tax withholdings before filing
- You made adjustments or corrections promptly if discrepancies occur
For more information, see the section 12 of Pub. 15 (Circular E) and the Instructions for Schedule D (Form 941) on the IRS website. Where FUTA Tax Amounts on Form 940 Part 5, Lines 16a–16d Come From - Amounts on Form 940 Part 5, Lines 16a–16d come from Federal Unemployment Insurance totals. These totals appear on Employer Expense Summary reports by quarter (totaled up by quarter).
- Pension or cafeteria plan deductions can reduce State Unemployment wages. These amounts appear in totals based on chosen Tax Rules.
- Contact a tax advisor to determine if your pension or cafeteria plans reduce State Unemployment wages.
Helpful Resources IRS website 'Don't let your employees down'
IRS website 'Year-end Reconciliation Worksheet for Forms 941, W-2, and W-3'
SSA website 'Employer Reconciliation Process' [BCB:155:Chat 100 US:ECB] |