Tax Return Preparation & PlanningBefore mailing out Forms W-2 at year end and filing your fourth quarter Form 941 you will want to do a reconciliation to ensure its accuracy.

The following information will help you balance your Forms 941 & W-2 at year end:

  • 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.
 

 

 Form 941*

Line#

 W-2/W-3

Box #
Compensation 2 Must Equal 1
Federal Income Tax 3 Must Equal 2
Social Security Wages 5a, Col. 1 Must Equal 3
Social Security Tips 5b, Col 1 Must Equal 7
Social Security Tax (5a Col. 2 + 5b Col. 2) / 2 Must Equal 4
Medicare Wages 5c Must Equal 5
Medicare Tax Sc Col. 2 / 2 Must Equal 6

* Total the values for the listed line number for all four 941 reports in the year.

Troubleshooting hints if Forms W-2 and 941 do not balance:

If the wages are higher on Form 941:
1. Are you missing one or more Forms W-2?
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:
1. 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.
2. 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:
1. Social security tax (box 4) is 6.2% of the social security wages (box 3).
2. Medicare tax (box 6) is 1.45% of the Medicare wages (box 5).
3. 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

1. Go through the payroll records of the employees who had one of the following:
a. The highest probability of errors
b. The highest wages
c. Payroll changes or manipulations during the year
d. If necessary, go through all payroll records, quarter by quarter, until you find the
error on the Forms W-2, Forms 941 or both.

Forms W-2/W-3 Due Dates

February 2, 2015 – Due date to mail employee copies of Forms W-2.

March 2, 2015 – Due date to send paper format of W-2 Federal (SSA) filing

Or

March 31, 2015 – Due date to send e-file format of W-2 Federal (SSA) filing

*Remember, you must e-file if you file 250 or more Forms W-2 or W-2C.