- [Instructor] At the end of the quarter,
you have to reconcile all of your 941 deposits
against the actual amount that you owe.
This process is difficult and can be confusing
unless you understand what you're doing.
Let me show you how this works.
So I'm in the government's 941 form
that we have to file every quarter.
Now this happens to be the 2018 version,
but the reality is that, honestly,
it looks pretty much the same from year to year.
So initially, we're going to fill out our EIN number
and our address up top.
That's pretty straightforward.
Then we're going to check this box over here on the right
that tells us what quarter we're filing this report for.
Down below is where we start to get into the nitty gritty.
A couple of suggestions for you.
Number one, go through and extract any information
that you can related to the 941 from your payroll software
or from any accounting software that you use.
QuickBooks and other similar competitive
software packages out there offer 941s
that are partially pre-filled.
That'll help you a lot.
One area that you're going to need to start with
is the number of employees that receive tips
or wages from you each quarter.
You have to make sure that this matches
across your different tax forms,
so whatever you put on the 941,
the federal form needs to match
what you put on your state forms, et cetera.
Otherwise, you're simply inviting an audit.
Next, you're going to need to look at what you've paid out
in wages and compensation.
Now for our purposes as an example,
I've just put in $10,000 here.
We've got to look at what we took out in federal taxes
from that $10,000, so I said we've taken out,
as an example, $1,000 out of the 10,000
for federal income taxes.
Next, we've got to put in the total amount
of taxable Social Security wages and Medicare wages.
Now, Social Security gets paid up to about $120,000
per year in salary for each employee.
The number varies a little bit over time,
but, you know, it's just under 120,000.
We've got to pay 12.4% of that.
6.2% comes from the employee.
6.2% comes from the employer.
So in this case, with $10,000 in wages for the quarter,
probably nobody has made over $120,000,
which means that our 12.4% will be $1,240.
Now, in addition to your Social Security wages,
you're also going to have to pay taxes on Medicare.
Medicare, in general, gets taxed
no matter how much the employees make,
so you're going to have, in this case, $10,000 in wages
and 2.9% of that goes in to funding Medicare,
so that's $290 in our case.
Then we come down to Line 5e and add up the amounts
from 5a through d, that's $1,530.
From here, we'll have to add up the amount that we've got
in federal income taxes plus the amount
that we have in Medicare and Social Security.
Once we've done that, we'll be better prepared
to figure out what our total tax liability is.
So in this case, it's going to be $2,530,
1,530 from Social Security and Medicare
and 1,000 from federal income tax in our example.
We've got any adjustments here for sick pay,
group life insurance, things like that.
Those are less commonly used.
You may have some adjustments there.
You'll need to look at your specific circumstances,
but they're not universal in any case.
So, in Line 10, we're going to go through
and determine that we owe total taxes of $2,530.
That's the total amount that we should've paid
throughout the quarter in 941 deposits.
And then our total adjustment
after any research activity credits,
again, unusual for most businesses, is 2,530.
We should also look at the total amount that we have paid
each quarter based on all of our 941 filings.
This is the second piece of information
that you want to have on hand to make your life easier.
Make sure that you've kept records every two weeks
for the amount that you have paid into the 941 fund.
Once you've done that, if you have those records on hand,
you can easily go through and add up
to figure out how much you've paid.
So let's just pretend that we've paid $1,900 here.
Well, we owed 2,530.
We've paid 1,900.
That means that we're going to have a balance due of $630.
If we'd overpaid, if instead we paid, say, $2,600,
well now we wouldn't owe anything,
and in fact, the federal government would owe us $70
and we could either get a refund
or get this applied to our next quarter's return.
Now you should understand the basic parts of the Form 941,
and hopefully, the process of doing these deposits.