941 frequently asked questions and troubleshooting

Box 1

If Box 1 is perceived to be incorrect (Number of employees who received wages, tips or other compensation for the pay period including: March, June, Sept. and Dec.)

Were all employees paid for a payroll period that includes the 12th day of the last month of each quarter?

• Employees are not counted as an employee in Box 1 of the 941 if the employee is not paid in a payroll period that does NOT include the 12th day of the last month of the quarter for which the 941 tax form is prepared for.
  For example, if an employee is paid weekly and is paid on December 4 and December 11, but not on December 18 which includes the 12th day of the month, the employee is NOT counted as an employee in Box 1 on the 941 tax form, as defined by IRS guidelines. You can verify that each employee was paid and the date the paycheck was generated with the Payroll register report. To view this report, click Reports & Form, select Payroll, and then click Payroll Register.

Box 2

Box 2 (Fed_Income Total wages, tips, and other compensation) is incorrect
Box 2 is based on the adjusted gross as determined in the Adjusted Gross window for Fed_Income. It is calculated when the 941 is displayed. Box 2 should match the Tax Liability report total for FIT for the quarter.

Are the total wages incorrectly adjusting a deduction or addition to gross?

• Box 2 is based on the adjusted gross for all employees paid during the quarter.
• Verify adjustments in the Adjust window of Fed_Income. If the adjustments look correct in Employee Defaults, look to see if USE DEFAULTS (STD) is unchecked next to Fed_Income in any of the employee records.
  To find the Fed_Income adjust window:
  1. Click Maintain, Defaults Information, Employees, Employees Fields tab.
  2. Click the Adjust arrow in the Fed_Income row to open the Fed_Income adjustment window.
  3. Look in the Employee Field Names table for items selected in the Use column. These items will affect how Fed_Income will be adjusted.

Is Box 2 missing any employee earnings?

1. Click Maintain, Employees / Sales Reps
2. Verify the employee has CALC checked on the Fed_Income line.
   
   Note:
   • CALC may have been unchecked, under the incorrect assumption that this makes an employee exempt from federal withholdings.
   • CALC must be checked for the employee record and FIT selected in the Tax name to report employee’s gross on the 941.

Is Box 2 empty or reporting another tax’s Gross Wages or Withholding Taxes?

1. Go to Maintain, Payroll, Payroll Settings.
2. Select the Taxes.
3. Select Assign TaxFields.
4. Click W-2 Fields.
5. Ensure the correct payroll field name is assigned to Federal income tax withheld.

Box 3

Box 3 (Total Income tax withheld) is incorrect.

Box 3 is based on the total withholding balances the Fed_Income has accumulated for the quarter. The balance should match the Quarterly Earnings Report’s Report Total for Fed_Income.

Does Box 3 match the Quarterly Earnings Report’s Report Total for Fed_Income?

• If yes, Sage 50 is working as designed.
• If no, verify the correct payroll field name is assigned to FIT Withheld:
  1. Go to Maintain, Payroll, Payroll Settings.
  2. Select the Taxes.
  3. Select Assign TaxFields.
  4. Click W-2 Fields.
  5. Ensure the correct payroll field name is assigned to Federal income tax withheld.
• If any payroll check has a positive value in the field for Fed_Income, the 941 form will still look at as a negative value which will cause the amount to be wrong. If this is the case, manually adjust Box 3 to what it should actually be.
• This may also be the result of an issue with the data itself. If you have followed the above steps and still have the issue, you may need to perform data tests to correct the issue. See How do I load, access, and run Data Verification?
• When the test is complete, review your reports again. If there is still a discrepancy, please click the "Chat with support" button below or call into Sage 50 US support for further assistance.

Box 5a

Box 5a (Taxable Social Security Wages) is incorrect.

Box 5a is based on the adjusted taxable gross as determined in the Adjusted Gross window for Soc_Sec EE. It is calculated when the 941 is displayed. Box 5a should match the Soc_Sec total wages for the quarter on the Tax Liability report.

Is the total wages incorrectly adjusting a deduction or addition to gross?
Box 5a is based on the adjusted taxable gross for all employees paid during the quarter. Check for incorrect adjustments in the Adjust window of Soc_Sec EE. If the adjustment looks correct in Maintain, Default Information, Employees, Employees Fields Tab then check to see if Maintain, Employees / Sales Reps Use Defaults (STD) is unchecked next to Soc_Sec EE in any of the employee records.

Did any employees earn more than the annual Social Security limit for Adjusted Gross Wages?
Soc_Sec limits the amount of adjusted gross wages taxed per year (as per the LIMIT line in the Soc_Sec EE formula), if an employee earns more than the limit for the year, Soc_Sec will only report the limit as that employees taxable gross on the 941. Confirm the amount on the Tax Liability Report Soc_Sec total under the Taxable Gross column.

Is Box 5a missing any employee earnings?
Determine if the employee record has Calculated checked on the Soc_Sec EE line. If not, check Calculated for that record and enter FICA EE in the Formula column to report the employee’s gross on the 941 Form.

Are you using custom formulas in User-Maintained?
Verify that the formulas are updated with the new formula requirements. Also, Verify that the LIMIT amounts are correct in the Soc_Sec EE and ER formulas (IE. $127,200.00 in 2017).

Is Box 5a empty or reporting another tax's Gross or Withholding?
Verify that the correct payroll field name is assigned to FICA Withheld in Maintain > Payroll > Payroll Settings. In the Payroll Settings Wizard, go to Taxes > Assign Tax fields, verify Social Security is using Soc_Sec.

Box 5b

Box 5b (Taxable Social Security Tips) is incorrect

Box 5b is empty or reporting a value other than Tips Gross

1. Go to Maintain, Default Information, Employees.
2. Select the Employee Fields tab.
3. Locate the line for Social Security and click the Adjust button on the line.
4. Verify the Use box is checked.
   • If it is not, mark the checkbox and click OK, then click OK to close the Employee Defaults window.
   • If it is, check the employee records to determine if they are using the default settings.
     1. Go to Maintain, Employees/Sales Reps...
     2. Select the Employee Fields tab.
     3. Select each employee with wages in the quarter to verify the Use Defaults box is selected.

Are the payroll field names assigned properly?

1. Go to Maintain, Payroll,Payroll Settings.
2. In the window that opens, select Taxes.
3. Select Assign TaxFields.
4. Click the W-2 Fields button.
5. Verify the correct payroll field name is assigned to the Social Security tax withheld field.
6. If any changes are made, click OK then click Finish.

Box 5c

Box 5c (Taxable Medicare Wages and Tips) is incorrect

Box 5c is based on the adjusted, taxable gross as determined in the Adjusted Gross window for MEDICARE EE. It is calculated when the 941 is displayed. Box 5c should match the Tax Liability Report total for Medicare wages and tips for the quarter.

Are the total wages incorrectly adjusting a deduction or addition to gross?
Box 5c is based on the adjusted, taxable gross for all employees paid during the quarter. Check for incorrect adjustments in the Adjust window of MEDICARE EE.

• Verify the adjustment is correct in the Employee Defaults:
  1. Go to Maintain, Default Information, Employees.
  2. Select the Employee Fields tab.
  3. Locate the line for Medicare and select the Adjust button.
• Verify the adjustment is correct on the individual employee records:
  1. Go to Maintain, Employees/Sales Reps...
  2. Select the Employee Fields tab.
  3. Select each employee with wages in the quarter to verify the Use Defaults box is selected for the Medicare line.
     
     Note: If Use Defaults is not selected on the line item, click the Adjust box and confirm or correct the settings.

Is Box 5c missing any employee earnings?
Verify that the employee record has Calculated checked on the MEDICARE EE line. If not Check Calculated for that record and select MEDICARE in the Formula column to report the employee's gross wages on the 941.

Are you using custom formulas in User-Maintained?
Verify the formulas are correct.

Note: Sage does not provide support for custom payroll formulas.

Is the total in Box 5c missing completely or reporting a different Tax Gross or Withholding?

1. Go to Maintain, Payroll,Payroll Settings.
2. In the window that opens, select Taxes.
3. Select Assign TaxFields.
4. Click the W-2 Fields button.
5. Verify the correct payroll field name is assigned to the appropriate field.
6. If any changes are made, click OK then click Finish.

Box 7

Box 7 (Current quarter's fractions of cents) is incorrect
Box 7 reports the difference between the amount of tax calculated and withheld for Soc_Sec EE and MEDICARE EE on each payroll check and the amount that is calculated by the 941 based on the Total Gross Wages for the quarter.

Is the Fractions of Cents value based on rounding?
It is a normal occurrence for some employees to have a rounding difference between the amount calculated at the time of the payroll checks, and the amount calculated at the time of the 941. If the amount is only off by pennies, then this would most likely be rounding. Use the Exception Report to verify the differences. See Troubleshooting and explanation of the Payroll Exception Report.

Note: Rounding is not a program issue, it is an unavoidable difference based on mathematics.
Example:

• An employee who earns $1.00 per paycheck for 10 weeks would have total FICA withheld of $.60.
• Per week, this would be $0.06 ($1 * 6.2% = $.062 rounded down to $.06).
• The tax calculated at the time of the 941 would be $.62 ($10 * 6.2% = $.62).
• The $0.02 difference ($10 * $ .002) would be a rounding difference.

Is the number abnormally large?
Use the Exception report to audit each employee's deductions to determine if an incorrect withholding was manually entered and/or adjustments to Gross were added or edited in the Adjust window for Medicare or Soc_Sec after the payroll checks were distributed. See Troubleshooting and explanation of the Payroll Exception Report.

Additional 941 Troubleshooting Tips

Incorrect amounts printed on lines 2, 3, 5a, 5b, 5c, or 9…

• Verify the program has the latest service release and latest tax service installed. See How to check for updates
• Verify that you do not have Sage-Maintained taxes saved in the User-Maintained payroll formulas area. See What formulas should show in my User-Maintained formulas?
• Verify you are viewing the correct Quarter in the correct year.
• Verify the correct Tax names are entered in:
  • Maintain, Default Information, Employees...
  • Maintain, Employees/Sales reps...

    Payroll Field	Tax Name
    Fed_Income	FIT
    Soc_Sec	FICA EE
    Medicare	MEDICARE
    Soc_Sec_C	FICA ER
    Medicare_C	MEDICARE

• If the 941 is not reporting all earnings:
  1. Click Maintain, Employees/Sales Reps....
  2. For each employee, view the Employee Fields tab to see if the FIT calculation has been removed from the Fed_Income.
     
     Note: If a flat rate has been entered on the line, the 941 will be unable to calculate liabilities based on the employee's adjusted gross. The FIT calculation must be added to the Fed_Income line for all employees prior to running the 941.
• Social Security calculations are based off of Taxable gross. This means that once an employee's adjusted gross reaches a pre-defined limit, Social Security will stop calculating. This may cause Box 5a to differ from Box 2 and Box 5c
  Example: If an employee's adjusted gross is $300,000, Box 2 will report the entire amount while Box 5a will report the wages applicable to the limit.
• If the employer records employee Tips as FICA wages, they will be reported in Box 5b of the 941. They will not be included with the taxable gross in box 5a.
• Medicare is also a taxable gross like Social Security, however, there is currently no limit defined for these deductions.
• Verify that the default information for printing payroll fields on the Form 941 is correct. To do this make sure that the W-2 box description in Employee Defaults matches the appropriate payroll fields. This information is used for the 941 as well as W-2s.
• On the Assign Tax Fields for W-2s window verify the description in the W-2s boxes matches the payroll field description name. If it does not, select the appropriate payroll field from the drop-down list. See Assign payroll tax fields to the W2 form
• If you believe there are incorrect amounts printed in Box 3 or Box 9
  
  If an amount withheld is incorrect (such as Box 3 - FIT Withheld), verify that the Quarterly Earnings report is totaling properly.
• Print the Quarterly Earnings report
• Manually add the checks for each employee and verify the system is calculating the deductions properly. If the Fed_Income or FEIC deductions on the Quarterly Earnings Report do not match the amounts on the 941 (as they should), do the following:
  1. From the Task menu, select System, then Change Accounting Period. Change the accounting period to period 1.
  2. Make a backup of the data.
  3. If you are using Batch posting select Tasks from the Sage 50 menu, then System, and then select Unpost.
  4. Uncheck All Journals and only select Payroll Journal, then select OK.
  5. If you are using Real-time posting, select Maintain from the Sage 50 menu, click Company Information, and change to the Batch posting method. Click OK to accept this change. Next choose Tasks from the Sage 50 menu, then select System, and then follow the instructions above for unpost / posting your Payroll Journal
  6. Verify the 941 withholdings match the Quarterly Earnings Report.
  7. If not, follow the Integrity Check instructions earlier in this article. You will reindex Employee, Jrnlhdr, and Jrnlrow and then run the Employee/Journal Synchronization test. Take note of any errors found.
  8. Once the test is finished, verify the Earnings report and 941 match.
  9. When that is finished go back to Tasks from the Sage 50 menu, then System, and then select Post. Uncheck All Journals and only select Payroll Journal, then select OK.
  10. Could Not Find (Calculation Name) When Running 941
  11. When you try to print the 941, Sage 50 displays the message, "Could not find (Calculation Name)". This message will include one or more employee record IDs. Click Task, Payroll entry, and select the affected employee. The same error should display. To troubleshoot this message, follow Error: "Could not find formula [Formula name][Filing Status][Year]".
  
  The 941 Soc Sec and Medicare Deductions Disagree with the Earnings Reports
  
  There may be instances when the 941 report is correct but earnings reports are incorrect. This would occur because of the differences in the calculation of Social Security or Medicare. The 941 report does not display the Social Security or Medicare deductions that were actually entered in Payroll Entry. Instead, it calculates the amount based on the taxable earnings. This could cause rounding differences of a few cents. There are other situations in which the Social Security or Medicare was not calculated correctly when you entered a payroll check. Here are some examples:
  
  Examples of Social Security or Medicare Calculating Incorrectly
  • If the employer enters a check number first and then manually enters an amount into the “tips” (or any other pretax deduction that affects payroll taxes) Sage 50 will stop calculating. In other words, the Social Security and Medicare would not be calculated again with tips included in the adjusted gross. Wait to enter the check number until you are ready to print the paycheck.
  • Incorrect calculations could also occur if at any point throughout the year the Adjust buttons in either the EmployEE or Company (EmployER) tab of the Maintain Employees/Sales Reps window were set up incorrectly. Even if the adjust buttons are now set up correctly, you would still have to adjust or correct all previous payroll entries. You would need to correct this by using the Exceptions Report and select make adjusting entries.
  • Another example would be when you start entering current payroll so that the employees can be paid. Then the previous month’s payroll entries are entered. After entering in the previous month’s payroll, an employee reached the Social Security limit. Sage 50 would have been calculating Social Security on the current employee’s check since the system did not know of the previous month’s entries. In this situation you would need to delete the current payroll, then enter the previous month’s payroll. Then reenter the current payroll.
  941 Doesn’t Match Tax Liability Report
  
  If you create your own Soc_Sec and Medicare formulas, you will need to update them with new formulas that include LIMIT.