Form 941 line 2 does not match adjusted gross wages in Payroll Summary report
The Adjusted Gross Pay in your Payroll Summary report does not match the wages reported on Form 941, line 2 (wages, tips, and other compensation).
What is Line 2 of the 941?
Line 2 is comprised of Total Gross Pay plus any gross pay additions (i.e., tips), any company contributions that are taxable to federal withholding, (i.e. taxable GTLI, company car), minus all pretax deductions (i.e., 125 plans and 401K).
If you double-click on the total amount for Federal Withholding on the Payroll Summary report and scroll to the bottom, the amount in the Income Subject to Tax column should match Line 2 of the 941.
- Assisted Payroll 941/944 Forms do not include GTLI amounts on Line 2. GTLI isn't taxable to federal withholding at the paycheck calculation (the Tax Tracking Type of Taxable Grp Trm Life doesn't have the taxability check mark set on the Payroll Item in QuickBooks). As a result, this doesn't get sent to the payroll service correctly for the GTLI amounts to be reported. If you see an error on your form that requires correction or amendment, contact Intuit for assistance.
The adjusted gross wages in your Payroll Summary report matches the wages reported on Form 941, line 2 (wages, tips, and other compensation).
You are using QuickBooks and Intuit Payroll.
This discrepancy can occur because:
- You have Company Contribution Items (for example, fringe benefits, S Corp, GTLI) that were reported on Form 941 line 2.
- Payroll items are set to calculate using gross pay in the payroll item setup.
- Incorrect tax tracking was used for a payroll item.
To determine what is causing the wage discrepancy:
Use these clickable forms to to learn what each line means on the 941 or 944.
Create a Payroll Summary report for the quarter in question.
View all of the payroll items reported in Deductions from Gross Pay. If any of these items should not be listed here, you must move them to Deductions from Net Pay. (For example, an employee 401(k) loan should not be listed as a deduction from gross pay.)
- Choose Lists > Payroll Item List.
- Double-click the item that is reported incorrectly.
- Click Next until you get to the Gross vs. Net window.
- Select either gross pay or net pay, depending on where you want this item reported on the Payroll Summary report.
- Note: If you change the Gross vs. Net setting and you are using a percentage in QuickBooks, this changes the way QuickBooks calculates the payroll item on paychecks. If you do not use a percentage, this change does not affect payroll.
View all the payroll items in Employer Taxes and Contributions. Company contribution items that affect Form 941 line 2 are not reflected in Adjusted Gross Pay. Add or subtract amounts as needed.
If all payroll items are reporting correctly in the Payroll Summary report, incorrect tax tracking for a payroll item might cause the discrepancy. (For example, an employee 401(k) loan has a tax-tracking type of 401(k). This is incorrect and should be reported as None.) To verify that all payroll items are set up with the correct tax tracking type, run a Payroll Item Listing report.
- Choose Reports > Employees and Payroll > Payroll Item Listing.
- Check the Tax Tracking Type in the column on the right.
- If the payroll item has an incorrect tax tracking type, you might need to file amendments for the affected quarters.