Line 2 of Form 941 (Employer’s QUARTERLY Federal Tax Return) rarely matches gross wages as it reports taxable income rather than total pay. The primary reasons for this difference include: pre-tax deductions such as 401(k) or health insurance, non-taxable wages/benefits such as mileage reimbursement or dependent care benefits, S-Corp Shareholder Health Insurance, etc.

To review the amount reported on Line 2 of Form 941 compared to gross wages for the period, follow these steps:

1. Review your 941 by navigating in isolved to: Reporting / Return Archive and filtering for the year, period and Federal return.  Use line 2 of form 941 or line 6 column 1 of form 941x.
2. Determine Gross Wages for the period by navigating in isolved to: Reporting / Client Reports and selecting the Earning Export Date Range report.  Filter the report by the period date range (quarter end and begin dates).
   1. Sum the Gross Wages reported in Colum J of the report.
   2. Sum any non-taxable earning(s) (it is not common to have this type of earning).¹
3. Determine Pre-Tax Deduction amounts by navigating in isolved to: Reporting / Client Reports and selecting the Deduction Export Date Range Report.  Filter the report by the period date range (quarter end and begin dates).
   1. Sum any pre-tax deductions.¹
4. Line 2 of Form 941 should equal:
   1. Gross Wages from step 2a less,
   2. Non-taxable earnings from step 2b less,
   3. Pre-tax deductions from step 3a

If you have any questions regarding these reports or how line 2 of Form 941 has been calculated contact taxes@employdrive.com.

¹ If you are not sure which of your earning or deductions are non-taxable/pre-tax you can review them in isolved by navigating to: Reporting / Client Reports and selecting the Client Profile Export and filtering for “Include Earnings” and “Include Deductions”.