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Before closing the year in Payroll Period End Processing, it’s recommended to reconcile the Quarterly Tax Report. Steps provided in this article aren’t to be construed as tax advice. Consult your CPA or tax professional for guidance related to earnings, subject wages, pre-tax deductions, cafeteria and pension plan deductions. 1. RECONCILE QUARTERLY TAX REPORT GROSS WAGES TO EARNINGS REPORT Gross wages on the Quarterly Tax Report will equal Gross Wages on the Earnings Report. Quarterly Tax Report: 1. Open Payroll --> Reports--> Quarterly Tax Report. 2. Select Year 2025 and Quarter 4. 3. Use the Federal Totals page for comparing to the Earnings Report. 
Earnings Report: 1. Open Payroll--> Reports--> Earnings Report. Generate the report for the 4th quarter when using for year-end reconciliation. 2. Use Year to Date Amounts for Cafeteria and Pension Plan Deductions only. (The Report shown was created for demonstration purposes only.) 
2. RECONCILE GROSS WAGES TO SUBJECT WAGES General reconciliation tips: - Subject wages are the wages subject to the tax. - Gross wages are reduced by pre-tax deductions IF a tax rule that reduced taxable wages was used. - Gross Wages Less Pretax Deductions = Subject Wages.  EXAMPLE:
- Cafeteria and Pension Plan Deductions reduce Federal Wages (taxable) - Pension Plan Deductions reduce Social Security wages - Pension Plan Deductions reduce Medicare wages - Cafeteria Plan and Pension Plan Deductions reduce State Wages  TIP: Use the Tax Rule Inquiry utility to see how your Tax Rule selections will impact the treatment and categorization of wages paid and deductions taken. See KB 225924750095959 Use the Payroll Tax Rule Inquiry
KNOWN ISSUES - If payroll checks were reversed using the manual method (manually entering negative amounts and not using the one-click reversal button), subject wages may be incorrect in the employee tax summary. See KB 220924160101151 Incorrect wages when reversing payroll check using legacy method
- Differences may exist if tax rules selected for deductions didn’t reduce wages as expected or if the tax rule on a deduction was changed during the year. Use KB 220924260101868 Edit employee wage and tax history in Tax Summary  CAUTION: Make a backup of your company before changing the Tax Summary.
3. RECONCILE TAX CALCULATIONS ON QUARTERLY TAX REPORT Using the FEDERAL TOTALS on the Quarterly Tax Report reconcile Calculated Totals to Liability Totals. Calculated Totals is the Total Subject Social Security and Subject Medicare Wages multiplied by the Rate. Liability Totals the amounts posted to payroll history by updating Payroll Check Registers. NOTE: Amounts may be off by pennies due to rounding EXAMPLE: Q4 Employee and Employer Social Security Wages = $19,050 x 6.2% = $1,181.10 Q4 Employee and Employer Medicare Wages = $19,050 x 1.45% = $276.23 YTD Employee and Employer Social Security Wages = $19,050 x 6.2% = $1,181.10 YTD Employee and Employer Medicare Wages = $19,050 x 1.45% = $276.23 
IMPORTANT If Calculated Tax Totals don’t agree to Tax Liability Totals, additional research should be done. Tax forms may not reconcile and may be rejected if the taxes don’t agree.  NOTE: Rounding will cause small discrepancies in these amounts.
KNOWN ISSUES: - Use of the 'manual taxes' setting during payroll entry to post amounts that are incorrectly calculated. - Payroll Product Update 2.20.0 had a program issue and was corrected with a Hot Fix for version 2.20.1.0 Use the Quarterly Tax Report to determine which Employees have a discrepancy of more than 0.05 between the calculated tax and the tax withheld. Look for Employees with an asterisk [*] in the VAR column on the Quarterly Tax Report. Checks and taxes withheld can be viewed from the #8 Pay History tab in Employee Maintenance. TIP: Run the Quarterly Tax Report for individual employees for ease in reconciling 
TIP: Liability Totals agree to amounts withheld from Employees 
4. RECONCILE QUARTERLY TAX REPORT TO FORM 941 IN FEDERAL and STATE TAX REPORTING Wages and Taxes on the Quarterly Tax Report flow through to tax forms in Federal and State Tax Reporting. This section shows where the amounts on the quarterly tax report display on the Form 941. Line numbers on the Form 941 show on the Quarterly Tax Report. Tax amounts are color matched between the two reports. 
5. RECONCILE QUARTERLY TAX REPORT TO FORM W-2 IN FEDERAL and STATE TAX REPORTING Wages and Taxes on the Quarterly Tax Report flow through to tax forms in Federal and State Tax Reporting. This section shows where the amounts on the quarterly tax report display on the grid when processing Form W-2. Box numbers on the grid for Form W-2 are shown on the Quarterly Tax Report. Tax amounts are color matched between the two reports. 
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