FICA/Medicare W-2 amounts differ from taxable wages and can cause incorrect figures on tax forms

This tech note explain a bug in CDM+ that can lead to incorrect tax reporting figures in CDM+ 9.2 and later. The problem is centered on how CDM+ reports taxable FICA (Social Security) and Medicare wages to the Aatrix tax forms software and a bug that can cause these figures to be incorrect.

Description of the bug

CDM+ tracks taxable wages at a detail level and a summary level. Tracking independent figures on the detail level allow posting the tax expense on different pay items to different expense accounts in the ledger. Tracking wages on the summary level allows for taxes like Federal, State and Local to be calculated on the full payroll using the correct tax bracket. However, a bug in CDM+ can cause the W-2 taxable figures on the summary level to be different from those on the detail level for FICA and Medicare.

Producing the bug

These steps will invoke this bug and produce a discrepancy in the payroll data:

  1. Calculate a payroll with taxable FICA and Medicare wages
  2. Open the payroll in View Payroll
  3. Click Change
  4. On the Detail tab, mark one or more pay items to be exempt from FICA and Medicare but not excluded
  5. Click Save
  6. The taxable and W-2 values on the detail tab are updated to $0.00 for FICA and Medicare and the Exclude from W-2 boxes are automatically checked
  7. However, the Summary tab show $0.00 taxable, but an amount remains in the W-2 wages for FICA and Medicare

Impact of the bug

This bug appears to have been present in CDM+ for quite some time, pre-dating CDM+ 9.2 that we released in 2013. However, the impact of this bug was limited until the release of CDM+ 9.2 that uses the Aatrix tax forms software. Aatrix derives taxable FICA and Medicare wages from the summary information on a payroll record, while previous versions of CDM+ used the detail record. As such, any payroll affected by this bug that is reported on a tax form produced through Aatrix, including the Federal 941, will incorrectly report the taxable wages.

The FICA withholding on individual payroll checks is correct. The issue is purely related to how tax reports are affected.

Determining if you are affected

CDM+ 9.2.8 adds a utility to check quarterly taxes for any discrepancies between taxable FICA/Medicare wages and W-2 FICA/Medicare wages. First, update your copy of CDM+ to 9.2.8 or later. You can then run the utility to check for discrepancies by following these steps:

  1. Open CDM+ 9.2.8 or later
  2. Log in as a user with access to utilities
  3. Go to File -> Utilities
  4. Find the special function Validate FICA/Medicare Amounts and select it
  5. Click Run Special Function
  6. A window opens that shows potentially affected quarters 
  7. If any quarters are flagged for review, read before for instructions on how to proceed
  8. If no quarters are flagged, you are not affected by this bug

If you have affected payroll

If the Validate FICA/Medicare Amounts special function finds affected quarters, determine if your 941 or other tax forms were produced through Aatrix for that quarter. If not, then you can proceed to the section “Repairing the affected payroll”.

Compare your 941 or other tax form. Look for taxable wages for FICA or Medicare, which are boxes 5a and 5c on the 941. These should match the Taxable amounts on the special function. If they do, then you can proceed to the section “Repairing the affected payroll”

If these amounts disagree, you need to repair the affected payroll using the steps below, then submit a replacement 941 or other tax form.

Repairing affected payroll

In the Validate FICA/Medicare Amounts special function window, select an affected quarter and click the appropriate button to either Set FICA W2 equal to Taxable or Set Medicare W2 equal to Taxable. This will set the W-2 taxable wages on the payroll to match the taxable wages for the given tax.

Contacting CDM+/Suran Systems, Inc. for help

If you have any questions about this bug or need help addressing it, call our support line at 800-633-9581 Monday - Friday 8:30 a.m. to 6:00 p.m. Eastern time. There is no charge for help with this issue, even if you are not currently enrolled in a support program.