AboutShirley McAllister, CPP, PHR Expertise I can answer payroll questions, payroll tax questions, 401K questions. No stock option questions please and I have some knowledge of other pensions but am most familiar with the 401K pension.
I can answer U.S.and Canada payroll questions proficiently and have a good general knowledge of UK and South Africa and some knowledge of Australia and New Zealand Payroll procedures.
Please do not ask me homework questions I do not have time to answer them.
Experience 25 years with an international company in the Human Resources, Payroll and Payroll Tax areas.
Organizations SHRM, APA, I.O.M.A.
Publications I.O.M.A. and BNA
Education/Credentials P.H.R., C.P.P., Canadian Payroll Administrator, Successfully passed APA class on UK Payroll Administration.
Boise State University Human Resource Certification
Awards and Honors APA Hotline Citation of Merit for last 8 years.
Question QUESTION: I have started doing the books for a one-man company that has done nothing regarding payroll; except to write a check for the net amount. He uses QBs 2002 that came with his computer and does not have the Payroll module activated.
I need to know how to calculate - from the NET amount - what would be the SS and Medicare amounts. The Federal W/H amount would be something I would have to 'work' in order to come back to the net check.
Of course, January 31st has passed, therefore, I need to get this completed and file the 941s, 940s, etc., before April 15th.
Any information you can provide would be greatly appreciated.
ANSWER: You cannot figure the Fica and Medicare on the net amount. You have federal and state income taxes coming out of the net amount.
What you have to do is find his figures where he figured the amounts in order to get the net amount. He should have the paperwork somewhere.
If he does not than you need to find out how many hours the employee worked and what he was paid per hour. That information is also required to be kept on file.
In order to figure Fica and Medicare on the net amount you would need to add in all other deductions and you do not know what they are such as federal and state taxes.
Are you saying that you have no paperwork at all to work with? How are you going to give the employee a W-2 at the end of the year, not to say that a paycheck stub is required with each paycheck. Do you have a copy of a paycheck stub?
Does he has tax expense accounts set up in Quickbooks? Maybe there is a way to use the amounts in those accounts.
Let me know what paperwork you have to work with.
Shirley
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QUESTION: I have partial on some and no paperwork on anyone. He lost the master 'Hours/Pay' book a month before I started. Therein lies my problem of having the net check with partial or no details. So, my question is if there is a way to work from the 'net' backwards to come up with the FICA/WH. I have Circular E/Pub 15 so if I could work backwards to come up with the FICA; then working on my Excel spreadsheet I can hopefully come up with the W/H and gross. There was no insurance or other deductibles.
He does not use PR or tax expense accounts in QBs. And, as I previously advised, he only uses the 2002 QBs that came with his computer. His CPA more or less dropped him because his business is almost dead. The other person keeping his books embezzled what she could, destroyed files and left. I'm a retired bookkeeper trying to help my son's employer.
Answer The difficulty is that while you know that Fica is 6.2% of the gross and Medicare is 1.45% of the Gross you do not know the Federal amount and State amount that was deducted.
That is impossible to back into because each employee has a different deduction withholding on his or her W-4 form.
You can never do it so it is 100% correct.
You don't know if the employee had 15%, 25% or what tax withholdings.
If you are guessing to the best you can my answer would be to use 25% for withholdings and 7.65% for Fica and Medicare.
So if you add 25% for witholdings and 7.65% for Fica and Medicare you are adding 32.65% on to the net to get the gross amount. This will only be a close estimate because you do not know how much the tax withholding percentage was for each employee.
A net of 500.00 X 32.65% is 163.25. 500 plus 163.25 is a gross of 663.25.
