Using Turbo Tax Business (desktop) to file 1120-S. A warning pops up that says payroll entered should match payroll forms files with the IRS. I use Quickbooks online, and I entered employee and officer wages (under payroll expenses) as they appear on the P&L report. When I checked the payroll tax forms from for the same period, it is off by around $250. After digging, I discovered the difference is the amount of an employee's pre-tax deduction. Do I need to include a statement because of the discrepancy?
Probably good idea to include a statement if you made a mistake on the payroll forms already filed.
Unless there's something I'm missing, I don't believe I make a mistake in filing payroll taxes. Quickbooks automatically calculates payroll taxes. Because the deduction is pre-tax, there are no taxes calculated for it. The payroll form is generated by QB and has the amount for adjusted gross wages. The deduction is paid by the employee, and not claimed as a business expense, so I would think that the total for gross wages is the correct number to enter into Turbo Tax. The payroll forms sent to the IRS only include the adjusted gross wages. If there is absolutely not supposed to be a difference, them something must be wrong with the way I have the deduction set up (account-wise) because it is not subtracted from employee wages on the P&L.
The employee payroll deduction credits a payroll liability account, and the payment I make to the insurance company each month debits the same liability account. Perhaps this is incorrect?
The IRS may compare the federal wages listed on your payroll tax forms 940 and 941 to the payroll amount listed on your tax return as an auditing technique to judge the accuracy of the income tax return. If it is only off $250, that is probably not going to cause any trouble, as it is immaterial. However, you could adjust the tax return payroll amount to make sure it agrees with the payroll tax return amounts to be cautious, and simply report the difference as labor or other expense.