What it is
Payroll taxes are a place where a quiet error becomes a penalty. The filed Form 941, the payroll registers and the general ledger should agree each quarter, and the year’s totals should agree to the W-2 and W-3. Where they do not, the difference is usually an unpaid liability, an unrecorded accrual or a reporting error.
This workbook takes the quarterly Form 941 lines, recomputes social security, Medicare and additional Medicare tax from wages, reconciles GL gross wages to line 2, rolls the payroll tax liability account through accruals and deposits, compares employer tax expense with the expected employer share and ties the year to the W-3.
When to use it
- Auditing payroll expense and accrued payroll taxes.
- Closing out the year for an entity with payroll liabilities that do not clear.
- Reviewing a client’s own quarterly reconciliation.
What’s inside
- Form 941 as filed, quarter by quarter, with recomputation and footing checks
- GL gross wages to line 2 with the usual reconciling items
- Payroll tax liability rollforward against deposits
- Employer tax expense recompute and annual tie to Forms W-2 and W-3
Standard cited
This template follows AU-C 330 / IRS Form 941. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 330 explained.
Questions
Why does line 2 differ from GL wages?
Common reasons are taxable fringe benefits added to box 1, pre-tax 401(k) deferrals and cafeteria plan amounts taken out, accrued wages at quarter end, wages capitalized into inventory or jobs, and officer health insurance for S corporation owners.
Are the rates in the workbook current?
The statutory rates are entered as inputs: 12.4% combined social security, 2.9% combined Medicare and 0.9% additional Medicare on wages above the withholding threshold. The social security wage base changes yearly ($184,500 for 2026); the return’s line 5a wages already reflect it. Update the rate cells if the law changes, and add credits outside this workbook.
What does this not cover?
Federal and state unemployment, state withholding, local taxes and payroll tax credits. Add rows for those where they apply.
Related templates
- Payroll Testing Workpaper
- Audit Program: Payroll
- Payroll Audit Checklist
- Accrued Expenses Schedule (Excel)
Last updated 11/05/2026. All free templates.