Correcting payroll audit errors for Social Security or Medicare

Leaving Social Security or Medicare audit errors uncorrected won’t prevent closing or archiving your payroll at calendar year-end. 

If you use a third-party payroll service and input payroll information as provided, you don’t need to correct payroll audit errors.

1. Run Repair

1. Open menu 5-3-7 Payroll Audit.
2. Click Repair.
3. Check the payroll audit report.
4. The Balance column shows the withheld amount, while the Audit column displays the correct amount.
5. If the audit errors persist, continue with the procedure below.

2. Determine current year-to-date amounts for Social Security or Medicare

1. Open menu 5-3-1 Payroll Calculations.
2. Verify the Default Rate, Default Max, and Max Type for Employee and Employer FICA and Medicare.
   • Update any incorrect information.
   • Run the 5-3-7 Payroll repair again from the applicable menu.
   • If the payroll audit errors remain, proceed with Step 3.
3. Print the 5-1-1-26 Employee List with Earnings report, identifying quarterly FICA and Medicare discrepancies.
4. Calculate Employer and Employee FICA by multiplying the Quarter 1 FICA wages by 0.062.
5. Calculate Employer and Employee Medicare by multiplying the Quarter 1 Medicare wages by 0.0145.
6. If Quarter 1 withholding amounts are correct, repeat for Quarters 2, 3, and 4.
7. Subtract the report amount from the 5-3-7 Payroll Audit after verifying the incorrect quarter amount.
8. Use the differences between these two amounts to make your adjustments.
9. You can now begin entering 5-2-2 Hand-Computed payroll records.

3. How to enter 5-2-2 Hand-Computed Payroll Records

1. Open menu 5-2-2 Payroll Records.
2. In the Employee field, select the employee number.
3. Enter the Period Start, Period End, and Check Date as the last day of the affected quarter.
4. From the Payroll Type pick list, select 3-Hand Computed.
5. In the Check# box, type 9999.
6. Uncheck the Direct Deposit box if checked.
7. In the Quarter box, type the correct quarter number.
8. The State box pre-fills from the 5-2-1 Employee's record.
9. Clear any amount in the Salary box.
10. Click the Calculations tab of the 5-2-2 Payroll record.  You can now begin entering your adjustments.

4. Adjusting 5-2-2 Hand-Computed Payroll record

If the Payroll Audit error Balance number is higher than the Audit number on the 5-3-7 Payroll Audit report

1. In the Calculation column, select the FICA and Medicare payroll calculations appearing on the employee's payroll audit report.
   • If the payroll audit identifies issues with only Employee, or Employer and Employee FICA or Medicare, add the Payroll Advance (Tax Type 14 - Advance Deduction) to the Calculations column. 
   • If the payroll audit flags only the Employer FICA or Medicare, you don't need to add the Payroll Advance to the Calculations column. These don't affect the employee's net pay.
2. In the Amount column for Employee FICA, Employer FICA, Employee Medicare, and Employer Medicare, enter adjustment amounts as negative numbers.
3. In the Amount column, enter the sum of Employee FICA and Medicare as a positive value next to the Payroll Advance calculation. This ensures the Net Pay amount is zero.
   
   • The program adds the over-withheld FICA and/or Medicare amount as a negative number to the Advances Due field. The program reimburses the employee on the next payroll.
4. Click File, Save.
5. After creating the hand-computed checks for each employee, open the 5-3-7 Payroll Audit and click Repair.
6. If the 5-3-7 Payroll Audit shows no errors, open 5-2-6 Post Payroll to GL and post hand-computed checks to the correct period and cash account.

If the Payroll Audit error Balance number is lower than the Audit number on the 5-3-7 Payroll Audit report

1. In the Calculation column, select the FICA and Medicare payroll calculations that need corrections.
   • If the payroll audit flags only Employee, or Employer and Employee FICA or Medicare, add the Payroll Advance calculation to the Calculations column.
   • The program prevents negative Net Pay. It adds under-withheld FICA and/or Medicare amounts as a positive number to the Advances Due field and deducts this from the employee's next payroll.
   • If the payroll audit flags only the Employer FICA or Medicare, don't add the Payroll Advance to the Calculations column. These don't affect the employee's net pay.
2. In the Amount column, enter the adjustment amounts as positive numbers next to Employee FICA, Employer FICA, Employee Medicare, and Employer Medicare.
3. In the Amount column, enter the total of Employee FICA and Medicare as a negative value next to Payroll Advance. This creates a net-zero paycheck.
4. Click File, Save.
5. Create hand-computed checks for each employee, then open the 5-3-7 Payroll Audit and click Repair.
6. If the 5-3-7 Payroll Audit shows no errors, open menu 5-2-6 Post Payroll to GL and post the hand-computed checks to the correct period.

How do I correct a Social Security or Medicare amount that's incorrect in the archive?