Reconciling g/l salary expense with 941

If all payroll items are codes to that account, they should be the same. Look at the payroll item list and see if your earning items are all coded to the correct expense account. If the expense account column is not show, right click on the headers and select customize.

Run the payroll summary and see what it shows.

Payroll summary total gross pay matches the salary expense on general ledger. I can also validate all the numbers on my 941 against my payroll summary report. The problem is my auditor is trying to reconcile the g/l expense to the taxable SS wages reported on line 5a of the 941 and there is a significant discrepancy. I feel like I am missing something simple here!

Do you have any pre-tax payroll items, such as 401k or section 125 premium contributions? If so, the amount on the 941 Line 2 will be reduced by the amount of the employee contributions since they are not subject to Fed W/H. If you have a 125 Plan then lines 5a and 5c will be reduced by the amount of the contributions since they are not subject to SS and Medicare. (A 401k contribution IS subject to SS and Medicare.

For example, lets say the Gross amount of the Check is $5000, and the employee makes a $100 401K contribution, and $100 is dudcted for insurance premium under a 125 POP plan.

Form 941 will show $4800 on line 2, and $4900 on line 5a and 5c. Then entire $5000 will appear in your G/L expense account.

I hope this helps. Let us know.

pdevore is it the employers contribution or employees contribution that is deducted from salaries shown on 941 ?