Non-Qualified Tips not included on Line 2 of Quarterly 941 Report
Created a non-qualified tips payroll item to separate gratuity from qualified tips to more easily assist client employees for the No Tax On Tips deduction for my restaurant clients. When preparing the 1st quarter 941 report I noticed that the non-qualified tips payroll item was not included on Line 2 wages, tips, and other compensation on the 941. It is included on Line 5b (SS tips) and 5c (medicare wages & tips).
Reviewing the payroll item via Edit Payroll Item I can confirm that the non-qualified tips tax tracking type was selected (which mentions will increase line 2 on the 941) and that all payroll tax items are selected. On the payroll summary I double selected the federal withholding item and confirmed the non-qualified tips is included in the subject to income tax.
I understand that override exists, however I don't want to run into this issue when completing the W-2. It will be a nightmare to correct with how many employees there are. Unsure why the non-qualified tips payroll item is not being reported correctly on the 941. Has anyone else experienced this? How did you get this resolved?