Social Security & Medicare Taxes

[mircpa]

Good evening everyone

I am preparing 941 for a client who provided me payroll summary generated from quickbooks. Report shows employer's portion of social security and medicare taxes are more than employee's portion. Does anybody knows under what circumstances soc sec & medicare taxes varies for employee and employer

[JohnH]

Off the top of my head, they probably have some of their "Payroll Items" set up improperly.

[Gail in Virginia]

Is it possible that the Employer's Payroll tax includes SUTA and FUTA, and maybe even workers comp?

[jainen]

>>under what circumstances soc sec & medicare taxes varies for employee and employer<<

I can think of several reasons. Of course there may be an error, so you should do typical accounting analysis to see if a number was transposed or entered twice or rounding errors or whatever. Determine if the variation is across the board or limited to a single employee, and whether it occurred in earlier quarters.

Then consider the nature of the earnings. Perhaps there was some non-subject benefits that were coded incorrectly in the employer column. Or maybe tips were reported that the employer could not withhold from. I mean, there are plenty of possibilities, so mark your billable start time and get to work!

[JohnH]

I'm sticking with my original hunch. Start by mapping the "Payroll Items" - you can print the "Payroll Items" list and compare how everything is set up. Then print a payroll summary by employee. I think the answer will pop out pretty quickly. But, as jainen says, mark your billable time from the outset. Finding the problem is probably the easy part - making adjustments to payroll in Quickbooks can be a major headache.

[mircpa]

Thanks to all who responded, I am looking at each individual employee's payroll set up trying to figure out variation.

[taxxcpa]

My guess is that the employer is voluntarily paying more than half of the amount due, and reducing the employee's salary in a way that allows the employer to get the full deduction, including extra SS while paying the employee the same as if he gave them a higher salary but deducted the full tax.

It might not work out to be exactly the same net pay, but close enough for government work.

[mircpa]

Friends

I was able to catch the problem, it seems the person who were printing pay checks manually changed soc sec & medicare taxes for an employee for reasons best known to her, since then she has been advised to stay away, when the owner confronted her she claims it is quickbooks not her who changed the figures.

thanks again to all who provided valuable suggestions

[kcjenkins]

Ah yes, human intervention is often the cause, when a software output is not as it should be.

[JohnH]

How large is the variance? Is there a large discrepancy or is it relatively minor? Is it a simple matter of the bookkeeper trying to adjust withholding downward to help an employee meet a financial emergency, or was there a repetitive pattern here? It's easy for someone to adjust the wrong figures if they don't know exactly what they're doing.

I'm not justifying their actions, but it sure would be a shame to see someone get canned over a momentary lapse in judgement, and how you handle the situation might make the difference between someone losing their job vs a slap on the wrist.

[mircpa]

Soc Sec & Medicare taxes were off by $22.00 & $5.00. I was able to fix it

thanks

[Gail in Virginia]

It's easy for someone to adjust the wrong figures if they don't know exactly what they're doing.

I'm not justifying their actions, but it sure would be a shame to see someone get canned over a momentary lapse in judgement, and how you handle the situation might make the difference between someone losing their job vs a slap on the wrist.

I also wonder what version of quickbooks they were using. Part of the planned obsolescence of QB is that after 3 years it quits figuring the payroll taxes and you have to upgrade to a newer version to be able to continue doing payroll unless you are willing (and able) to calculate the taxes manually. Was someone trying to save some money on QB by doing taxes themselves and just messed up the SS and medicare calculation one month?