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Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

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I became totally and permanently disabled after a working for 44 years. I returned to college late in life (while working full-time) to fulfill my dream of becoming an RN and at that time found it necessary to secure student loans. Three years after being declared totally and permanently disabled my student loans were discharged. In January 2013 we received a 1099-C form declaring said student loans that were discharged however that amount could be considered as income for 2012. This was a large amount of money and we live on two pensions and social security income.

I started looking on the internet for information regarding 1099-C and felt that this was something that we could not handle alone. I made phone calls locally to a very reputable tax group in a city near us and they said it would cost $500 for an appointment and that they really prefer to do corporate taxes and they referred me to a local person who had worked for them at one time, we called and explained the situation and an appointment was made and then the comment was made that "I will have to do some research on this" and flags immediately went up and we called back and cancelled that appointment. I had been researching the IRSwebsite and every place else I could think of and I was not comfortable doing our own taxes this year. We called another local tax preparer that we had used in the past and made an appointment, however prior to the appointment, while still seeking information regarding our situation,

I came across a website for Gary l. Bode, MSA, CPA, PC in Wilmington, NC. I called Mr. Bodeand explained our situation and asked if he could help. He spoke very knowledgeably regarding the situation and stated that yes; he felt he could help us. As Mr. Bode was in North Carolina and we were in New York I scanned all of our documents including back-up documents for all of our claims and forwarded all to him. Mr. Bode kept in touch with us via email; we have spoken on the telephone several times and have become very comfortable with his knowledge and professionalism. Also, as I am a true "worrier" I have continued looking into information regarding our tax situation and I came upon another web page for Mr. Bode that included testimonials which spoke of his experience with this type of tax situation as it became prevalent during the recession. This reinforced in our minds that we had made the right decision in hiring this person as our tax preparer.

I share all of this as our taxes are now ready to be filed (we do owe tax for 2012 but not the astronomical figure we thought we were facing), and we are confident that they have been prepared with the utmost care by a gentleman who has an excellent working knowledge of the situation we faced and the tax laws that were applicable to said situation.

 

Bill and Carol

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Form 941 CPA offers an example Form 941 Preparation | 2013 Payroll Administration

Form 941 CPA offers a 2013 Form 941 Example

Gary Bode, CPA: Form 941 might seem complicated. But it’s just a set of processes; only the numbers change. (910) 399-2705.

I’ll provide an example for preparing IRS Form 941. Please see the Form 941 link below. I’m using the 4th Quarter of 2012 version, which is due January 31st, 2013. Lines 5a and 5b increase, from, 10.4% on the 2012 Form 941, to 12.4% on the 2013 version.

Hi, I’m Gary Bode, a Form 941 CPA. Payroll tax CPAs, services and software are expensive. Payroll administration is profitable. For example Paychex has more sales folks than bookkeepers. I like to train clients to be as self-sufficient in payroll as they care to be. Which includes preparation of Form 941. Then I’m available for support if and when needed.  But of course, we do it all if the client prefers. At some point, bringing payroll in-house makes financial sense. That being said, payroll administration incurs heavy penalties once you make a mistake. I suggest asking your current CPA to look over the first Form 941 to check for errors. If you don’t have a payroll tax CPA, consider calling us.

I don’t recall ever getting payroll training as an undergrad or grad accounting student. I’ve taught the first four entry level accounting course for Baker College in the past. There was payroll example ever presented. A nice bookkeeper showed me around Form 941 and I’m trying to pass it forward.

“Payroll administration is just a set of processes; only the numbers change. Most clients are fully capable of doing their own payroll.” 
- Gary Bode, Form 941 CPA

Rule of Thumb for Payroll Cash Flow

Your company’s true payroll cost is about 110-115% of gross wages. So if you’re paying an employee $100 of gross pay, expect to pay $10-$15 extra for payroll taxes, unemployment taxes and Workman’s Comp premiums.

Payroll Administration Pitfall

Payroll CPAs suggest you not think of payroll in terms of net pay. Plan your cash flow to include the Form 941 deposits. Technically, most of the payroll taxes you with hold are held in trust. So not paying them has criminal implications too. Again think of your total payroll administration cost as 110-115% of gross payroll.

Correcting Form 941 with Form 941-X

Correcting Form 941 is either time-consuming or costly. If you must use Form 941-X, ask your Form 941 CPA to help.

Form 941 Timeline

Deposits must be made by the 15th of the following month. Deposits can be monthly or quarterly, depending on the size of your payroll. Form 941 is due at the end of April, July, October and January. The April 941 reports payroll for the first Calendar Quarter; January-March.

How to make Form 941 Deposits

The IRS mandates some entities to deposit Form 941 payments through their online payment center. Just Google EFTPS. Sign up for an account. I expect they’ll require all entities to make payroll deposits through EFTPS in 2014. The era of using banks and payment vouchers is gone.

Other Payroll Administration obligations besides Form 941

  • The annual Form 940.
  • Sometimes Schedule A for Form 940.
  • W-2s.
  • W-3.
  • State Unemployment.
  • State Withholding.
  • Workman’s Comp.
  • Annual Federal and State employee forms.

The Five Form 941 Components

  • Federal withholding. Deducted from the employee’s gross pay, federal withholding is held in trust until you deposit it through EFTPS. The amount depends on the gross pay, frequency of the pay period, and the number of allowances the employee claims.Don’t be intimidated, the withholding amount is easily obtained through IRS tax tables.
  • Employee Social Security. 4.2% of gross pay for 2012 (6.2% in 2013), up to a calendar year wage cap, of say $110,000 for conversational purposes. In this example, no employee exceeded the wage cap for the year and all gross payroll is subject to the 4.2%. Also held in trust.
  • Employee Medicare Tax: 1.45% of gross wages with no yearly wage cap. Also held in trust.
  • Employer’s Matching Social Security Tax: Your company “matches” the employee’s amount as described above. Not held in trust, because your company doesn’t deduct it from the employee’s gross pay. It is an added cost of employment, over and above gross wages.
  • Employer’s Matching Medicare Tax: your company matches the employee’s amount as described above. Not held in trust. It is an added cost of employment, over and above gross wages.

Subcontractor Issues

Your company saves 7.65% by using subcontractors. But abuse of this classification makes them skeptical. There are no hard and fast rules about the employee vs. subcontractor issue. Ask your Form 941 CPA to help you balance out the 17 or so IRS guidelines.

Here’s a Form 941 filled out to the specs below.

Form 941: Company ID

Fill in your company information at the top of page 1 of Form 941. Place a check mark for the Quarter you’re reporting.

Part 1, Line 1 Form 941

Just count the number of employees your company had on the 12th.

Part 1, Line 2 Form 941

Gross wages you paid during the calendar quarter.

Part 1, Line 3 Form 941

Federal taxes your company with held during the Quarter.

Part 1, Line 4 Form 941

Yes you must file Form 941 even if you had no gross wages.

Part 1, Line 5a Form 941

Gross wages x 10.4%. You withheld 4.2% from the employee’s paychecks. Your Company “matches” that with 6.2%.

Part 1, Line 5c Form 941

Gross wages x 2.9%. You withheld 1.45% from the employee’s paychecks. Your Company “matches” that with 1.45%.

Part 1, Line 5b and 5e Form 941

I don’t cover a typical restaurant scenario in this post. Tips are a payroll tax component. But once you get the process right, tip related compliance is straight forward. Ask your Form 941 CPA.

Part 1, Line 6 Form 941

Total tax due before adjustments.

Part 1, Line 6-9 Form 941

I don’t cover adjustments here. But Line 7 is usually just a few cents secondary to rounding errors. I suggest calling your Form 941 CPA for help the first time you have sick pay or group life insurance. No big deal though.

Part 1, Line 10 Form 941

Total tax due after adjustments.

Part 1, Line 11 Form 941

How much did you deposit for the Quarter? An advantage of using EFTPS for deposits is their Payment History feature.

Part 1, Line 12a and 12b Form 941

COBRA complicates things. Just ask your Form 941 CPA to help once you incur COBRA issues.

Part 1, Line 13 Form 941

Since I don’t cover COBRA, your company’s total tax deposits are the same as Line 11.

Page 2 of Form 941 – Header

Enter your company’s name and EIN.

Page 2 Form 941 Line 16

Since we had over $2500 in taxes for the Quarter, the IRS rewards you with additional compliance work. For monthly depositors the amount of the deposits generally matches Form 941.

Page 2 Form 941 Part 3

Use this for a final Form 941 if your business closes. I suggest filing all Form 941s even if you’re a seasonal employer. It’s just easier. But payroll CPA opinions differ.

Page 2 Form 941 Part 4

3rd party designee. My clients list me even if they do their own payroll. Why? If there’s a problem it’s probably prudent to let me handle it. Doesn’t happen often in my experience.

Page 2 Form 941 Part 5

Sign, date, give your title and phone number.

Form 941-V

Most clients just pay any extra amount due through EFTPS. Not doing so may confuse your Form 941 CPA secondary to having two types of payments.

I’m a payroll CPA that believes in payroll self-sufficiency. Our virtual allows us to serve you regardless of where your company is. For a free first phone consult call (910) 399-2705.

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4 comments to Form 941 CPA offers an example Form 941 Preparation | 2013 Payroll Administration

  • Marie

    I have a question about line 5d taxable wages & tips ? Is this a new tax? I have been including it on my 941 2013 ..It’s not much..thank you,

    Marie

    • I think you’re referring to the 2013 IRS tax Form 941? If so, yes, it’s a new tax. I’ll eventually update the post to include that. Most companies don’t have wages subject to the additional Medicare tax so I suspect you’re paying more than you should. Ask a CPA to review your situation. Hope that helps.

  • TOM CREASY

    My question is if you are just correcting line 2 on the 941 which will not have any payroll tax effect . what blocks do you check on page 1.
    I over reported gross wages for exempt wages like 401k , cafeteria plans , etc . which will not allow me to tie to my w-2′s ???

    • Hi Tom, well you’d file a Form 941-X to amend the original 941. I’m sorry but the info you provide doesn’t allow me enough info to directly answer the question. But yes the 941s tie to the W-2s and W-3 and state unemployment forms and Form 940. Hope that helps.

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