2016 Year End Guide. Dear Valued Payroll Dynamics Client,

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1 2016 Year End Guide Dear Valued Payroll Dynamics Client, The end of 2016 is approaching! Payroll Dynamics knows that our clients rely on us to guide them through the complexities of year-end payroll and W-2 preparation. As part of our efforts to "go green", we are pleased to announce that the 2016 Year-End Guide will be available online. This Guide is designed to prepare you for a successful year-end experience. Vital Year-End Information: Year-End Check List ** SSN Verifications Reporting Final Changes & Adjustments Changes & Corrections to W2s First Payroll In 2017 Popular Year-End Topics: Bonus Payrolls 3rd Party Sick Pay Fringe Benefits W-2s & Year End Returns Fees & Other Charges Revised 2017 Documents: 2017 W-4 (Not Yet Available) 2017 FSA Enrollment Form 2017 Transit Enrollment Form 2017 Calendar 2017 Tax Guide Preparing for Year End - As 2016 comes to a close, we want to thank you for choosing Payroll Dynamics for your payroll, tax, HR and employee benefits needs. This page has important information for planning the close of 2016 and moving into We appreciate your reviewing this guide. Advanced planning ensures an excellent finish and a successful beginning.

2 Final Changes to 2016 Payroll Records 2016 will close with your last scheduled pay date of the year. Please communicate and submit the following items by your last scheduled payroll. Year-End Bonuses Any employee checks issued between the last scheduled check date and December 31st outside of payroll (manual checks) Special delivery requests of W-2s or 1099s Employee Demographic Changes Fringe Benefits Third Party Sick Pay payments Dependent Care Group Term Life Taxable employer paid insurance Qualified Pension Plans Bonus Payrolls Payroll Dynamics recommends that you process bonus payrolls as special payrolls (separately from regular payrolls). This eliminates the potential of negative impacts to your employees taxes and voluntary deductions. Before processing a bonus payroll, be prepared to answer the following questions: Will the bonus payroll be issued via a live check or direct deposit? Should voluntary deductions be taken out of the bonus payroll (such as loans, 401(k) deductions, etc.)? Are changes needed to the tax amount withheld from the bonus check? (IRS requires bonus payments be taxed at the Supplemental Bonus rates. Payroll Dynamics will not block OASDI or Medicare) Payroll Dynamics will apply, or instruct you on how to apply, these settings to your bonus payments. If your tax liability for the bonus payroll is over $100,000.00, then the payroll must be processed at least 3 business days prior to pay date. Third Party Sick Pay (Disability) Federal legislation requires the reporting of both taxable and non-taxable sick pay made to employees from a third party, as well as taxes withheld on those payments. These payments must be included on the employee's W-2. Please update any third party sick pay with your account manager as soon as possible. Note: These payments must be processed with or before your last payroll of 2015 to ensure that your 941 and W-2 reports are correct. Call your third party provider to request this information. If your third party provider is unable to provide this information before your last payroll, please ask us to hold off processing your W-2s.

3 Fringe Benefits The value of some non-cash fringe benefits must be considered income to employees. The benefits must be reported on the 941 and the employee's W-2. Example of these benefits include: Insurance premiums for Group Term Life (GTL) over $50,000, S-Corp insurance premiums, personal use of company vehicles, memberships, discounts, employer provided vacations and some gifts. Please contact your CPA for additional information regarding the taxation of these benefits. Qualified Pension Plans IRS regulations require that an "X" be displayed in the box on the W-2 marked "Pension Plan" for all employees who participated during any part of the year in a Qualified Pension Plan that is 100% company funded (No employee contributions). Please verify/change your employee's pension status. This box will automatically display an "X" for any employees who have had deductions for a deferred compensation plan (i.e. 401(k)) Social Security Number (SSN) Verification The Social Security Administration (SSA) may charge fines of up to $50 per W-2 for Name or SSN mismatches. Please make sure to have any corrections entered into your payroll system or submitted back to your account manager before your W-2s are processed. Changes & Corrections to W2s Unless notified in advance, changes received after your last scheduled payroll is considered late. After W-2s are created, the following situations impact the W-2s: Changing employee specific data that displays on the W-2 (such as name, address, Social Security number, etc.). Changing a payroll check date to the prior year. Processing a current payroll with manual checks, voids, or third party sick payments using a check date in the prior year. Ask your payroll specialist if your W-2s have been filed yet to determine if amended returns need to be filed or if Payroll Dynamics just needs to reprocess your W-2s and year end returns.

4 Preparing for 2017 Make sure you have reviewed the following prior to your first payroll in Voluntary Deduction: Your employees voluntary contributions may need to be modified for With some plans, monthly or annual contribution amounts may change with each passing year. Limits: For those employees who intend to withhold the maximum contribution limits on qualified pretax benefit plans (i.e. 401(k), transit, etc.), Payroll Dynamics cannot automatically increase an employee's deduction to meet new statutory limits. Please notify your account manager of the new contribution amounts. Minimum Wage: Are any of your employees earning minimum wage? Please check to see if the state you are in has increased their minimum wage for 2016 and submit any rate changes before your first payroll in January. Time Off Accruals: If your employees' accruals need to be manually reset or changed, please notify your account manager at least two weeks prior to your first payroll in January. Fees will be assessed if your Time Off Balances need to be changed after this deadline. Please submit changes at least one week prior to your first payroll in January. Do not submit changes on the date of your payroll processing. If enough time is not allowed to implement changes, applicable fees may be assessed or changes may be held until the following payroll. W-2s, 1099s & Year-End Returns Payroll Dynamics will begin processing your W2s and year end information as soon as you run your last scheduled payroll in We will review your employees' W2s, and send them to you along with Reference Copies and your company's W-3. Once you receive your W2 package, please review the enclosed W2s and make sure you aren't missing any forms. It is our goal to have the W-2s out as early as possible and we will make sure that getting the W-2s out timely is our first priority. If for any reason you expect to postpone our processing of your W-2s for bonuses, fringe benefit payments, 3rd party sick pay or any other reason you must let your account manager know ahead of time. If for any reason, we need to open up the prior year and reprocess your W2s, fees will occur. W-2s will be verified for accuracy, counted, packaged and sent via courier if possible. Any delivery location outside our courier zone will be sent via U.S. mail if no other accommodations are made. 1099s will be processed after your W-2s and Year-End Returns are complete.

5 Fees & Other Charges Process W-2s & 1099s Packaging & Delivery W-2 or 1099 Reprint W-2 or 1099 Reference Copies Reprint SSN Verification Service Corrections Year-End Reprocessing (Adjustments to Demographic Information) Year-End Reprocessing (Adjustments to Wage or Tax Information) W-2C & 1099 Corrections Tax Return Amendment Fees $60.00 base charge + $6.00 per form $11.00 (Not including use of outside delivery services) $12.50 per form + Delivery OR $8.00 PDF Electronic Delivery $ Delivery OR $8.00 PDF Electronic Delivery $35.00 per company code Fees $10 base charge + $12.50 per form + Delivery $60 base charge + $6.00 per form reprint + Delivery (OR PDF Electronic Delivery - $8.00 per form) $90 (W3c) + $15 per W-2c + Year-End Reprocessing Fees If Applicable $90 per amended return

Enclosed you will find the following information to help you prepare for year-end 2018:

Enclosed you will find the following information to help you prepare for year-end 2018: Product Guide Dear Valued Deluxe Payroll Client, This guide has been designed to assist our clients through the year-end process and to meet critical deadlines. Our goal is to ensure an accurate and timely