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Patdrin
September 1, 2022
Question

How do I change the last payroll of 2021 for an owner to reflect his payments to an IRA & health insurance?

  • September 1, 2022
  • 1 reply
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My client just informed me that in December of 2021 he opened an IRA & purchased health insurance for himself. He is a S-Corp. He wants me to change his final paycheck, which has been cashed, to reflect his 2021 contributions. How do I do this? I know once I do correct the paycheck, I will need to submit a corrected 941, W2C & W3C. I am stuck on fixing the paycheck. Do I just make a special payroll with the final pay period for 2021 and add the amounts he contributed/deducted as an employee/employer. Are there any other steps I need to take?

1 reply

BigRedConsulting
BigRedConsulting
September 1, 2022

Well, technically the how to edit a paycheck is the same no matter it's date. But, doing so at this point seems suspect, since those deductions didn't actually happen on the check and the check was cashed.  And presumably a W-2 issued and so on.

 

Most likely a better way to do this it to create a new paycheck for last year with no earnings, and then add the deductions to it. You'll then have a negative paycheck you can't record. So, then add a net addition to the paycheck (one that has None for the tax tracking type and it does not impact any taxes) for an amount that equals the deductions and increases the negative check to 0.00. Use an asset account for that item, probably, and then either 1) have the owner write a check to the company for the amount, or 2) create and use a net deduction that uses the same asset account as the addition, and use it on current paychecks to reduce and pay back the money owed to the company.

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