The year-end cutoff date for you to report changes for 2011 is December 30, 2011 at 1:00 p.m., or the day a payroll with a January 2012 check date is processed, whichever is earlier. We recommend that you run any adjustments with a payroll to ensure that the taxes are withheld correctly. Please remind your accountant to report payroll adjustments no later than your cut-off date.
If payroll adjustments are necessary after the year-end cutoff date, we can rerun your tax returns. However, there will be an additional charge and a processing delay. Depending on when you report the change, your tax payments may be made late. You will be responsible for all penalties and interest associated with the late payment. Any payrolls dated into the new year will reflect our 2012 pricing.
W-2 Verification Report
2011 verification reports are going out this week. If not received by 12/9/11, please notify your Account Manager as soon as possible so that we can supply you with one. Please verify all information and notify us of any changes no later December 16, 2011.
IRS Federal Tax Deposit/State Withholding Deposit/SUI Rate Change Notices
In November and December the IRS and States will be mailing deposit frequency/change notices to all employers who have a change in their deposit frequency for 2012. The State Unemployment offices will also be mailing the rate changes for 2012. If you receive one of these notices, please send us a copy ASAP. We do not automatically receive this information from the IRS and State agencies.
***If we do not receive your unemployment rates by March 1, 2012 there will be a $25 service fee***
Processing Bonus Payrolls
Bonus checks can be processed with your regular payroll. However, bonus checks must be processed separately if you want a separate journal, or if you want the bonus checks to be issued for a different date than your normal payroll date.
Please specify how the bonus checks are to be taxed and what other adjustments need to be withheld. If you have any questions about how your bonus checks should be taxed, please contact your accountant prior to reporting the checks to us. If you need to process your bonus checks separately, please schedule a reporting time with us before you want to process that payroll.
For our full tax filing clients, we will remit on your behalf any bonus payroll deposits for payroll reported by the processing cutoff date. Please initiate bonus payrolls as early as possible to ensure timely deposits. We are asking that all bonus payrolls be called in at least 3 days prior to the check date. If your tax liability exceeds the $100,000 next day deposit limit for the IRS, you will need time to wire transfer funds into our tax account in order for us to make your tax deposit on time. If an individual on your payroll has a Direct Deposit over $100,000 the money will have to be wired to us before we can process the Direct Deposits. Likewise, any full payroll run with Direct Deposits totaling over $500,000 will require funds to be wired to us as well.
Reporting Third Party Sick Pay (Disability Payments)
By law, insurance companies have until January 15th to notify you of any disability insurance benefits paid to your employees during 2011. Should you receive notification of such payment after reporting your last payroll for the year, please contact us immediately. If you have not done so, please contact your insurance company and tell them that we will include third party sick pay on the W-2 forms that we prepare for you.
Since third party sick pay affects all fourth quarter and year-end returns, including W-2 forms, the processing of your returns will be delayed if sick pay is reported after the cutoff date for year-end information.
The value of personal use of company cars or any other taxable cash or non-cash benefit must be included on Form W-2. Please report these benefits before your last payroll for the year. Reporting taxable benefits with cash wages allows the appropriate withholding taxes to be deducted from the employee’s check. If these amounts are processed without wages, you may be required to pay the employee’s portion of Social Security and Medicare taxes.
If you pay any part of an employee’s income tax or FICA withholding, the amount paid must be reported as additional taxable wages for the employee (referred to as “grossing up”). Additional employment taxes, both employee and employer portions, are required to be withheld on this added income. Specific information about several types of benefits is provided below:
Group-Term Life Insurance
Please report the value of group-term life insurance in excess of $50,000 before your last payroll for the year. The value is based on an IRS published table that assigns a value for each $1000 of excess coverage per month based on the employee’s age. If you do not know how to determine the value of the coverage, please contact your accountant.
Dependent Care Assistance
On Form W-2, employers are required to show in Box 10 (Dependent Care Benefits) the total amount of dependent care benefits paid or incurred for the employee, including any amount in excess of the $5000 exclusion. If you provided dependent care services to employees under an employer-sponsored program before your last payroll for the year, please report the benefits paid or furnished.
Educational Assistance Program
The exclusion for employer-provided educational assistance under a qualified Section 127 plan for 2011 is:
- Non-job related undergraduate and graduate courses are exempt up to $5,250.00.
- All job-related education assistance reimbursements are exempt from withholding and employer taxes if they qualify as a working condition fringe benefit.
If you have not already reported these reimbursements with your payroll, please report them before your last payroll of the year.
Health and Accident Insurance Premiums Paid by an S Corporation
When an S corporation pays health and accident insurance premiums on behalf of 2% Shareholder/employees, the IRS rules specify two tax treatments.
Situation 1 – Non-discriminatory Plan
If the premiums are paid under a plan for employees and dependents in general or for a class of employees and dependents, the following will occur:
- The premiums are treated as exempt for FICA and FUTA
- The premiums are included in the shareholder/employee’s federal gross income.
- The premiums are reported on Form W-2 in Box 1 (Wages, Tips, Other Compensation).
Situation 2 – Discriminatory Plan
If the premiums are not paid under such a plan, the following will occur:
- The premiums are treated like normal compensation and as such are subject to FICA and FUTA.
- The premiums are included in the shareholder/employee’s gross income.
- The premiums are reported on Form W-2 in the following boxes:
- Box 1, Wages, Tips, Other Compensation
- Box 3, Social Security wages
- Box 5, Medicare Wages and Tips
If you paid these premiums for any shareholder/employee, please report the amounts and type of plan to us before your last payroll of the year.
Closed: Monday 12/26/2011 Christmas Day Observed Monday 01/02/2012 New Year’s Day Observed
The banks will also be closed on these days. If you normally date your checks for Monday, Tuesday, or Wednesday, please plan to call your payroll in a day earlier than usual to accommodate the banks being unable to process ACH transactions.
On Friday 12/23/11 & Friday 12/30/11 UPS and the postal service will be running on a limited schedule, if there is a possibility of this affecting your delivery, please let us know. Likewise, there will be no mail or UPS delivery on either Monday. If you need to make alternate delivery arrangements on any of these days, your account manager will be happy to work with you.