810 Quincy Street | Rapid City, SD 57701
(605) 342-5630
(605) 342-2172

W-2 year-end reconciliation can be a challenge

AliciaEmployers across the Black Hills are likely spending a good part of their January completing W-2 forms for all employees who worked for the company in 2014. This year, the deadline is Feb. 2 to mail the employee copies.

Alicia Burghduff, an Enrolled Agent at the Spearfish office of Ketel Thorstenson LLP, reminds employers to reconcile the numbers before mailing the W-2s and filing the fourth-quarter Form 941. Sometimes reconciliation can be frustrating. The staff at our offices in Spearfish, Custer, Rapid City and Williston help clients find and resolve these seemingling “irreconcilable differences.”

Annual amounts from payroll records should match the total amounts reported on all Forms 941 for the year. Total amounts reported on all Forms 941 for the year should match sum of same data fields shown in W-2/W-3 totals. If they don’t match, Burghduff offers the following tips:

If the wages are higher on Form 941:

  •  Are you missing one or more Forms W-2?
  •  Did you manually change any payroll items for one or more employees on your payroll software?  If so, the payroll software may not have properly computed final wages.

If the wages are higher on Forms W-2:

  • Did you manually change any payroll items for one or more employees on your payroll software?  If so, the payroll software may not have properly computed final wages.
  • Did one or more employees’ wages not get reported on the Form 941 for any particular payday during the year?

If the wages match but the taxes don’t, check each employee’s Form W-2 for the following:

  • Social security tax (box 4) is 6.2% of the social security wages (box 3).
  • Medicare tax (box 6) is 1.45% of the Medicare wages (box 5).
  • Federal income tax has obvious errors such as more tax than wages or zero withholdings when you believe federal income tax was withheld.

If you still cannot find the error, go through the payroll records of the employees who had one of the following:

  • The highest probability of errors
  • The highest wages
  • Payroll changes or manipulations during the year
  • If necessary, go through all payroll records, quarter by quarter, until you find the error on the Forms W-2, Forms 941 or both.
Ketel Thorstenson, LLP

Ketel Thorstenson, LLP

Ketel Thorstenson, LLP, has over 60 CPA’s on staff and has been serving clients across the region since 1936. With offices in Rapid City, Spearfish, Custer, SD, and Gillette, WY, the firm offers a variety of services including tax planning and return preparation, audit services, QuickBooks, bookkeeping, payroll, business valuation and estate planning.
Ketel Thorstenson, LLP

Latest posts by Ketel Thorstenson, LLP (see all)

    Share
    Tweet
    Pin
    +1
    Share
    X