Help with 941 fraction of cents adjustment - is $140 normal?

Is it possible the mistake is actually in their tax software? I've seen cases where the software pulls wrong numbers if payroll records aren't entered correctly. Would it be worth checking the raw data entry first?

The software could definitely be part of the problem, especially if it's not properly reconciling the individual employee calculations with the aggregate amounts. I would recommend checking the raw payroll data first to ensure it was entered correctly. The most common issue with large fraction of cents adjustments is actually manual manipulation of Schedule B to force it to match deposits that were made, rather than reporting the actual tax liability for each pay period. This creates a discrepancy that some preparers incorrectly plug with the fraction of cents adjustment line.

Does it work with QuickBooks payroll data? Our accountant uses that and I'm wondering if it would be compatible.

I'm a bit skeptical about uploading my company's payroll data to some random website. How secure is it? And can it really identify specific errors or just tell you something's wrong?

Yes, it works great with QuickBooks! You can export your reports from QuickBooks and upload them directly. The analysis shows you exactly which pay periods might have issues. As for security concerns, I had the same worry initially. They use bank-level encryption for all uploads and don't store your data after analysis. It doesn't just tell you something's wrong - it pinpoints exactly where the discrepancies are occurring, which saves so much time compared to manually reviewing every calculation.

How does this actually work? Do they just call and wait on hold for you? I don't understand how they can get through faster than I could myself.

Yeah right. No way this actually works. The IRS phone system is deliberately designed to keep people waiting. I've spent literally days of my life on hold with them. How could some random service magically get through?

They use a combination of technology and call systems to navigate the IRS phone tree and wait on hold for you. When they reach a live agent, you get a call back to connect directly with the agent. It's not that they have a "special line" - they're just handling the painful waiting part for you. I was skeptical too, but the time saved was absolutely worth it. When you're trying to figure out a tax issue with a deadline approaching, spending 3+ hours on hold isn't practical. With this, I was talking to an actual IRS agent within about 30 minutes of using the service.

I think you're right about the Schedule B. I just pulled our EFTPS payment history and there's definitely something off. One of our semi-weekly deposits from early February is recorded on Schedule B as $58,435 but the actual deposit was $58,294.81. There are probably more discrepancies I need to find.

That's definitely your issue then. Go through and correct Schedule B to match your actual deposit dates and amounts. The fraction of cents adjustment should then drop to nearly nothing. Remember that Schedule B is supposed to show your actual tax liability for each pay date, not necessarily when you made deposits. If those numbers don't match your deposits, you need to determine if the liability calculation was wrong or if the deposits were made incorrectly.

The IRS definitely cares about proper reporting on all lines of Form 941. While you might not get an immediate notice for an unusual fraction of cents adjustment, it can certainly trigger a review of your filing. They're looking for patterns of misreporting. When an agent sees large adjustments in line 7 across multiple quarters, it suggests systematic errors in how you're calculating tax liabilities. This could lead to a more comprehensive examination of your payroll practices. Better to fix the root cause than risk scrutiny.

That's a really good point about the Social Security wage base! I hadn't thought to check that specifically. We do have several employees who are likely hitting the $160,200 limit this year, and if the payroll system isn't handling the mid-quarter cutoff properly, that could definitely explain a large discrepancy like this. I'll pull the individual employee records for anyone making over $140k and verify that Social Security withholding stopped at the right point. Thanks for that insight - it's exactly the kind of specific calculation error that could create a $140 "adjustment" that really shouldn't be there.

This is incredibly helpful - thank you for the step-by-step breakdown! I'm definitely going to work through each of these systematically. The distinction between tax liability by pay date vs deposit amounts/dates is something I need to clarify with our accounting team, as I suspect that might be part of our confusion. One quick question: when you say "don't submit until you've tracked down every significant discrepancy" - what would you consider significant? Should I be concerned about differences under $10, or are you talking about larger amounts like the $140+ discrepancy we found?

For Form 941 purposes, I'd focus on discrepancies over $5-10 per deposit when reviewing Schedule B. Small differences under that amount could be legitimate rounding or timing differences. However, when those small discrepancies add up across multiple pay periods, they can create a larger cumulative error. The key is that your total Schedule B should match your actual tax liability for the quarter, and your deposits should reasonably approximate that liability (within the safe harbor rules). If you're finding multiple discrepancies like that $140+ difference in February, definitely track down each one. A few dollars here and there might be acceptable, but when you're seeing adjustments over $100, it usually means there are several underlying errors that need correction. Also remember that the IRS penalty safe harbors are based on timely deposits of the correct amounts - so getting Schedule B right isn't just about the fraction of cents line, it's about avoiding deposit penalties too.

This is really valuable insight about the SUI wage base issues - I hadn't considered that our payroll system might be mixing state and federal calculations. We do use ADP for payroll processing, and I'm now wondering if some of their automated adjustments are creating these discrepancies without us realizing it. I'll definitely request that detailed tax reconciliation report you mentioned. Do you know specifically what to ask for from ADP? I want to make sure I get the right report that shows the federal tax calculations broken down by component. Also, your point about year-end adjustments carrying over is interesting - we did have some W-2 corrections from last year that required amended forms. I should check if any of those corrections are somehow affecting this quarter's calculations.