401K Wages

[debits99]

In preparing the W2s, I've noticed box 1 wages & box 16 wages are different. 3 employees have 401K deductions, I selected under company setup for the wages to be exempt for Fed & State; however, it appears that it did not exempt the fed wages. How do I correct this?

[Paul Mayer]

Yes, the the company settings for that deductions, the 941 box MUST be checked.

[debits99]

I've done this; however, it's not showing the federal wages as exempt by this amount. Please advise.

[Paul Mayer]

Look at the two attached images. In the Company screenshot we show typical settings for the 401K plan and have arrows pointing where you marked what was exempt and the 941 box. This had to be setup during the year while you were paying the employees for the selected tax to have been exempt for the deduction.

The look at the Employee settings in the second image. That must have been set up as a constant as shown in the example as well as non-taxable deductions cannot be entered on the fly to calculate properly during the year.

If you had it setup like this, it will work as expected.

[sanov]

Does this apply to form 943 also; we don't use 941? I haven't been deducting 401k from gross so he has been paying tax on gross amount and now I will have to ammend the last 2 years but want to get back on track for this year.

[Paul Mayer]

It shows the taxable wages subject to FICA on line one unlike the 941 which shows wages subject to FIT.