Year End Guide support informationpage qbw:YEG Year-End Guide
QuickBooks Year-End Guide

 

Task D - Fix incorrect Payroll totals
Q: YTD totals are incorrect. What do I do?
A: Help from a technical support representative will probably be required since specific circumstances would cause YTD totals to be incorrect. Click here to get information about payroll technical support.
Task I - Process Form 940
Q: How does QuickBooks calculate amounts on Form 940?
A: Entries on Form 940 are calculated as follows:

Part I Computation of Taxable Wages

Line 1: Total payments = sum of payroll items with Tax Tracking (in versions prior to 6.0, it is called W-2 tracking) set to Compensation, Tips, Dependent care, Fringe benefits, and Other Moving Expenses.
Line 2: Exempt payments = user's entry (exempt payments as defined in the 940 instructions).
Line 3: Payments of more than $7000 = Line 1 minus total FUTA wage base.
Line 4: Total exempt payments = Line 2 plus Line 3.
Line 5: Total taxable wages = Line 1 minus Line 4.

Part II Tax Due or Refund

Line 1: Gross FUTA tax = 0.062 x Line 5 from Part I.
Line 2: Maximum credit = 0.054 x Line 5 from Part I.
Line 3: Computation of tentative credit. Form 940 supports a maximum of 5 states.

  • Column (a) Name of State = Two-letter state abbreviation from the Company Info screen.
  • Column (b) State ID = State Employer ID from the Company Info screen.
  • Column (c) Taxable payroll = sum of SUI wage base.
  • Column (e) State Experience rate = Rate as defined on the state unemployment payroll item.
  • Column (f) Column c multiplied by .054.
  • Column (g) Column c multiplied by column e.
  • Column (h) Column g minus column f or zero if less than zero.
  • Column (i) Contributions actually paid to state = sum of SUI taxes paid.
Line 3b: Total tentative credit = sum of columns (h) and (i).
Line 6: Credit = whichever is the smaller of Line 2 and Line 3b.
Line 7: Total FUTA tax = Part II Line 1 minus Line 6.
Line 8: Total Federal Unemployment tax deposited = Sum of Federal Unemployment tax from the liability checks and prior payments for the year.
Line 9: Balance due = Line 7 minus Line 8 if Line 8 is smaller than Line 7.
Line 10: Overpayment = Line 8 minus Line 7, if Line 8 is greater than Line 7.

Part III Record of Quarterly FUTA liability

Quarterly FUTA liabilities = sum of FUTA taxes for each quarter (from paychecks, liability adjustments, and YTD information).

Note: Running a QuickReport on the Payroll Item may help you verify the accuracy of the amounts, or customize to show the wage base per item.

To run a QuickReport

  1. From the Lists menu, select Payroll Item List.
  2. Select the payroll item in question.
  3. Click the QuickReport button at the bottom of the Payroll item list.
  4. You may need to change the date range at the top of the report to reflect the quarter for which you are processing the 940.
Q: Why can't I print more than 5 states on Form 940?
A: QuickBooks prints the first five states, alphabetically, on the payroll item list. Edit the SUI items that you want to print on Form 940 so that they are the first five on the payroll item list. If you have more than five SUI items, Form 940 must be prepared manually.
Q: What are the implications of my tax tracking choices?
A: The way you assign types to your payroll items affects how the numbers are carried forward to your tax forms. It's a good idea to have your CPA review your payroll item types to make sure the numbers flow corrctly to your tax forms.
Task J - Process form 941
Q: How does QuickBooks calculate amounts on Form 941?
A: The following chart shows you how QuickBooks calculates the numbers for each line on Form 941.

Line on 941 Line Name How QuickBooks calculates
Line 2 Total compensation Sum of payroll items with Tax tracking set to Compensation, Reported Tips, Dependent Care, fringe benefits, 401(k), 403(b), 408(k)(6) SEP, Elective 457(b), Other Moving Expense.
Line 3 Total Federal income tax withheld Sum of all Federal income taxes withheld, excluding liability adjustments, created from prior payments.
Line 4 Adjustment of withheld income tax Manual adjustment to the 941 and a corresponding liability adjustment.
Line 5 Adjusted total income tax withheld Line 3 minus Line 4
Line 6a Taxable Social Security wages Sum of Social Security wage base minus total tips. (Set Tax tracking to Reported Tips on the payroll item.)
Line 6b Taxable Social Security tips The amount of tips assigned to Tax tracking Reported Tips.
Line 7 Taxable Medicare wages and tips Sum of Medicare wage bases and tips.
Line 8   Total of lines 6a, 6b and 7
Line 9 Adjustment of social security and Medicare taxes Manual adjustment to the 941 and a corresponding liability adjustment.
Line 10   Line 8 minus line 9
Line 11   Total of line 5 and line 10
Line 12 Advance EIC Sum of payroll items with W-2 tracking set to Advance EIC Payment. This amount may be incorrect if this Form 941 is for a quarter where you used an AEIC payroll item from a version of QuickBooks prior to 6.0. If this amount is incorrect, edit it and the amount on Line 3 to include AEIC payment amounts.
Line 13 Net taxes Line 11 minus line 12
Line 14 Total deposits for quarter Sum of all Federal income tax, social security, and Medicare payments from Liability checks and the Prior Payments (Prior Payments in QuickBooks 2000) screen of the Set up YTD Amounts.
Line 17 Monthly summary of Federal tax liability Sum of all Federal income tax, Social Security, and Medicare from paychecks, YTD adjustments and liability adjustments on a monthly basis.

Note: Running a QuickReport on a payroll item may help you verify the accuracy of the summary amounts for the item.

To run a QuickReport on a payroll item:

  1. From the Lists menu, choose Payroll Item List.
  2. Select the payroll item in question, click the Report button, and then choose QuickReport.
  3. Change the date range at the top of the report to reflect the quarter for which you are processing the 941.
Task K - Verify W4 information
Be sure to have each employee review the personal information on their W4 forms at the end of each year.