941 and W-2 reconciliation

[Karen Lee]

Client is PS Corp. Income is distributive share from partnership. Only employee is himself. Has 401(k). Person (not me) doing 941's didn't reduce FIT wages for deferral plus overwithheld on SS, overpaid SS. I have done the 941C to be filed with 1Q08 941 and can't figure out how to correct Line 2 on 941 with 941C. I have not issued the W-2 yet since I do his PS Corp tax return and his personal but the deadline for W-3 transmittal is coming up soon so I have to get this resolved.

If I issue the W-2 correctly how is SSA going to reconcile Line 2 from the 941's. 941C does not allow for a Line 2 correction unless I do the W-2 incorrectly then issue a W-2c with the correct figures...

I have never had this problem before since I usually do the payrolls and reports and W-2's and reconcile before all is said and done.

Need your opinions

Thanks

Karen

[Gail in Virginia]

I don't think SSA reconciles line 2 with anything, and IRS is mainly going to look at the W-2. I have had this happen a couple of times where the Simple did not get adjusted on line 2 of 941 until at the end of the year we did the w-2's and it did not match. We try to get clients to correct it forward, but so far I have never had a letter about the back quarters not matching the W2's. I suspect this happens a lot, and either that number is never matched or they look at the box 12 adjustments and figure out what happened. I think it is the former.