941 for 2008 errors

[toymakr]

Employer has both regular employees and non-resident alien (NRA) employees. Quarterly 941 report for the third quarter (the first quarter in which employer had NRA employees) is entering incorrect wage amounts on lines 2 and 5(c), col.1, resulting in errors also on lines 5c, col. 2, 5d, 6, 7a and 7h.
Specifically, line 2 is wages tips and other compensation (according to IRS instructions this would be the total of the amounts included in the employees' W-2's, box 1, in other words their taxable wages) For this employer, this would be the total gross wages for all employees, minus gross wages of the NRA employees, minus the non-taxable health insurance paid by the regular employees. The program is not subtracting the non-taxable health insurance for the regular employees.
The amount on line 5c, col.1 (taxable medicare wages and tips) for this employer should be the total gross wages of all employees, minus the gross wages of the NRA employees, minus the non-taxable health insurance of the regular employees. The program is also subtracting the NRA's non-taxable health insurance, thus effectively subtracting it twice. It is not making the same error on line 5a, col 1 (taxable social security wages).

In the Company pay screen the non-taxable health insurance is marked as exempt from Fed tax, FICA, Medicare, FUTA and State tax.

In the Employees' screens, for the regular employees their wages are not marked as exempt from any of the taxes, but for the NRA employees the FICA, Medicare, Suta and Futa fields are marked as exempt.

Note that on the Quarterly Employee Wage Statement for the third quarter, the individual employee Medicare wage amounts and the total wages subject to Medicare for all employees are correct (as are all the other entries on this report). The wrong amount appears only on the Form 941 (5c, col. 1).

A trial run of the 4th Quarter 941 is making a similar error.

Hopefully you can remedy this before the 4th quarter report is due.

[Paul Mayer]

For the non-taxable deductions, see the Tutorial "How to setup and use non-taxable deductions" at http://zpay.com/help.

You must have had that set up both in the company settings as shown as well as the employees for the 941 to perform as expected.

For non-resident aliens, we do not have support for that in PayWindow. It almost sounds like Farm Workers that are not included on the 941 but are reported on the 944. But again if not setup befopre hand would not display on teh correct forms and be excluded from other.

The

[Paul Mayer]

PayWindow does not have support for Non-resident Employees. The closest we have is agricultural workers that are reported on the 944 and not the 941.

On the non-taxable deduction, if you did not follow the instructions in the tutorial titled "How to setup and use non-taxable deductions" at http://zpay.com/help, the 941 would not give you what is expected either. Look carefully at those settings, specially the 941 check box which MUST be checked. Review that tutorial to be certain that you had it set properly BEFORE paying in the employee records as well.

[toymakr]

In response to your two posts to this thread I have looked into this a little more.

The Company and the individual employees appear to be correctly set upin accordance with the tutorials. In pertenant part: On the Company Deduction screen the Non-taxable health deduction boxes for FIT, FICA, MEDI, FUTA, SIT AND 941 ARE CHECKED. On the Employee Pay screen for regular employess the all exempt boxes are N(o). For NRA employees the exempt boxes for FICA, MEDICARE, SUTA AND FUTA are marked Y(es) and all other exemt boxes are marked N(o)

In the 1st quarter there were only regular employees, some of whom had NTH deductions. The 941 report for the 1st quarter reported the correct amounts on all lines. For that quarter the Wage line (2) correctly reported the amount equal to gross wages of all employees minus NTH deduction of those employees who had the deduction.

In the 2nd quarter one NRA employee was added. That employee had no NTH deduction. The 941 report for the 2nd quarter reported the correct amounts on all lines. For that quarter the Wage line (2) correctly reported an amount equal to gross wages of all employees minus the NTH deduction of those employees who had the deduction. The wages subject to FICA (line 5a, col 1) and MEDICARE (line 5c, col 1) both report the correct wages (gross wages of all employees minus NTH deduction of those regular employees regular who had it, minus NRA employee wages). No employees exceeded the FICA wage ceiling so the FICA and Medicare wage amount are the same.

In the 3rd quarter two more NRA employees were added and two of the three NRA employees had NTH deductions during the quarter. The 3rd quarter report over-reported the amount on line 2 by an amount equal to the NTH deduction of only the NRA employees (this is a change from my original report of the problem). It also under-reported the amount of wages subject to Medicare (line 5c, col. 1) by an amount equal to the NTH deduction of only the NRA employees. THe FICA taxable wages are correctly calculated. No employees exceeded the FICA wage ceiling so the FICA and Medicare wage amounts should be the same, but the Medicare wages are underreported as noted above.

It is clear that the errors arise only when an NRA employee also has NTH deductions.

The fact that both errors relate to the NTH deduction of only the NRA employees suggests this error is in the programming, not a set up error.

The fact that the program correctly performs the FICA taxable wages calculation (the line 5a amount is correct) but not the Medicare taxable wages calculation (the line 5c amout is incorrect), even when both numbers should be the same, is strong evidence that the set-up is correct and only the programming is incorrect. Both calculations are the same except that the FICA calculation also excludes wages over the FICA wage ceiling. If the programming it can do it right for line 5a why can't it do it right for line 5c?

Furthermore, the Quarterly Employee Wage Statement for the 3rd quarter properly calculates the taxable amount of Medicare wages (both for each employee individually, regular and NRA's alilke, and for the total amount) and sample W-2's for each employee reports the correct amount of taxable wages (box 1 of the W-2) and the correct amount of taxable Medicare wages (Box 5). This also suggests the error is in the programming, not user or setup error. The program gets it right on the W-2, why can't it get it right on the 941?

The NRA employees are not agricultural employees, they are business trainees. The issue is not whether they should be included on the 941 reports, but only why the 941 report includes incorrect entries. The program does not know or care why they are exempt from Social Security and Unemployment taxes and it should not impact correct calculation of the various wage amounts. The program should deduct the NTH deduction of NRA employees when calculating the line 2 amount even if they are exempt from SS and Unemployment taxes and it should not effectively deduct the NTH deduction of NRA employees from Medicare wages twice, once when excluding all the wages of an exempt employee and a second time by excluding the exempt deduction by itself, especially when it does not make the same error when calculating the FICA taxable wages, and the W-2 taxable wages and Medicare wages.

I would be happy to talk to you about this. I will be happy to call you or email you my phone number for you to call me. My email address is paul@zpay.wolffit.net

[Paul Mayer]

I need to see how you've setup these NRA employees to see what you have going there. Use this FAQ to send me your database backup:

http://zpay.com/vbulletin/showthread.php?t=1449

In the email reference this message thread and tell me the employee numbers for the NRA employees so I can get right to it without any guesswork.

[Paul Mayer]

I received the backup and email and actually what you told me in the email was what I was going to look for:

>>> The NRA employees are 007, 008 and 009. I am pretty sure they are set up the same as regular employees except that they are marked as exempt from FICA, Medicare, Futa and Suta.<<<

That's the problem, you cannot have non taxable deductions taken out of employees that are marked exempt from taxes in PayWindow. It causes a double negative and breaks a number of reports in PayWindow.
Unfortunately that is how PayWindow is designed and there is no work around for that other than setting up a second deduction that is not marked as non-taxable for them.