Business Requirements Document. SR W-2 Changes

Transcription

1 Business Requirements Document SR W-2 Changes

2 Document Information Document Attributes ID Owner Author(s) Contributor(s) Information SR Payroll Coordination and Tax Services Marcia Johnson John Barrett Revision History Version Issue Date Changes st Draft /22/15 B. Burkart added suggested updates. Added revised RA record layout Document Approvals Role Name Signature Date Controller Peggy Arrivas SR W-2 Changes Page 2

3 Table of Contents 1 Overview Product/Solution Scope Business Services and Processes Business Rules Business Requirements Non-Functional Requirements External References Sample 2015 W SSA/IRS Layout RA Record SR W-2 Changes Page 3

4 1 Overview Modify the SSA and IRS W-2 process for tax year Background Changes in the printed Form W-2 needed each year to satisfy IRS and SSA requirements. The following PPS processes require modifications for the 2015 tax year: Printed Form W-2 Similar to 2014, IRS Publication 969, IRC 6051(a)(12) and the instructions to the Form W-2 and W-3, employer contributions to a health savings account (HSA), including amounts the employee elected to contribute using a section 125 (cafeteria) plan, must be reported on the W-2 in Box 12 using code W. Contributions for health coverage cannot be deducted from pay on a pre-tax basis unless deductions are made pursuant to a Section 125 pre-tax premium plan (TIPS). TIPS is included in the University of California Section 125 Plan, which was updated in January 2014 to include the HSA offering. As in 2014, per California Revenue and Taxation sections , and , California does not conform to the federal tax treatment of Health Savings Accounts. This nonconformity includes both IRC section 125 plans and non-section 125 plans. The HSA employer and employee contribution is considered taxable income for California and must be included in Box 16, State Wages, tips, etc. for California, of the W-2. The employer contribution should be added to the California State wages gross that is reported in Box 16, (and the employee state taxable gross is not reduced by the employee contribution). SR (R2157) addressed the process for this reporting requirement. Under the 2013 Health FSA Plan, employees could set aside a portion of their income on a pre-tax basis for qualifying medical expenses. Employees use a special debit card to charge medical expenses, which would then be verified as qualifying by the third party administrator, CONEXIS. The University paid all debit card charges to CONEXIS. Unsubstantiated Health FSA Plan claims are regarded as debts owed to the University and, in accordance with IRC Section 61, debts forgiven by the University become income to the employee in the year the debt is forgiven. Unsubstantiated Health FSA claims for CY 2013 were forgiven by UC in CY 2015, and thus must be included on the 2015 W-2 and reported in Box 14. IRC Sec 6051(a)(14) enacted as part of the Affordable Care Act (PPACA) requires employers to calculate and report the cost of applicable employer-sponsored health insurance coverage on employees Form W-2 in Box 12 using code DD. Wellness costs are included in this total. Prior to 2014, employees and SR W-2 Changes Page 4

5 their family members who were enrolled in Kaiser Permanente were not eligible for the Wellness program. The policy changed January 1, 2014; however, the change was not incorporated into the 2014 W-2 process. SR modified the Box 12DD process so that the Wellness component will be included for employees covered under a Kaiser plan. UCOP employees will receive two Form W-2s for tax year 2015 because of the conversion to UC Path. One W-2 covers December 2014 through October 2015 earnings paid in January 2015 through November 2015, and will be produced out of PPS. The other W-2 will cover November 2015 earnings paid in December 2015 and be will produced out of UC Path. 1.2 Objectives Current Process The tax year is Health FSA unsubstantiated claims were reported in Box 14 on the 2014 Form W-2 Health Savings Account (HSA) contributions were reported in Box 12 using code W. Wellness costs for Kaiser Employees were not included in the Box 12 Code DD total. Proposed Process Change tax year to 2015 As in 2014, report employer contributions to a health savings account (HSA), including amounts the employee elected to contribute using a section 125 (cafeteria) plan, on the W-2 in Box 12 using code W. The YTD balances in GTN 612 (employee contribution) and GTN 613 (employer contribution) will be added together and the total will be reported on the 2015 W-2 in Box 12 using code W Health FSA unsubstantiated claims must be reported on the 2015 W-2 in Box 14. Wellness costs for Kaiser Employees will be included in the Box 12 Code DD total. RA Record Changes The Location Address Field (positions ) of the RA Submitter Record is no longer a required field. These changes must be implemented in time for campuses to install prior to tax reporting for calendar year SR W-2 Changes Page 5

6 1.3 Related Projects & Dependencies SR Include Wellness Costs in W-2 Box 12 DD Total for Employees with Kaiser Insurance SR Modify AYSO Form W-2 for Tax Year Stakeholders Acronym Description Role * Authorize Has ultimate signing authority for any changes to the document R Responsible Responsible for creating this document A Accountable Accountable for accuracy of this document (e.g. project manager) S C I Supports Consulted Informed Provides supporting services in the production of this document Provides input Must be informed of any changes Name Position * R A S C I Marcia Johnson Sr. Analyst X X John Barrett Director X X X X X Peggy Arrivas Controller X Beth Burkart Sr. Business Analyst X X X 1.5 Proposed Strategy The printed W2 will be modified. 1.6 Glossary 2 Product/Solution Scope 2.1 Included in Scope Changes to W-2 printed form and file layout for RA record 2.2 Excluded from Scope 2.3 Assumptions & Constraints The transition of UCOP payroll tax reporting to UCPath will impact W-2 processing for tax year UCOP employees will receive two Form W-2s; one will be issued out of PPS for December 2014 through SR W-2 Changes Page 6

7 October 2015 earnings paid January 2015 through November 2015, and the second one will be issued from UC Path for November 2015 earnings paid in December Business Services and Processes 4 Business Rules 5 Business Requirements 5.1 User Requirements 5.2 Functional Requirements Req ID Requirement Type Requirement Description Priority [L/M/H] R0001 Government The RA record of the SSA/IRS H Interface File file updates are as follows: Comments See attached sample The Location Address Field (positions ) of the RA Submitter Record is no longer a required field. R0002 Printed W-2 The year on the printed W-2 must be changed to 2015 H See attached sample 5.3 Reporting Requirements 6 Non-Functional Requirements SR W-2 Changes Page 7

8 7 External References SR W-2 Changes Page 8

9 8 Sample 2015 W-2 SR W-2 Changes Page 9

10 9 SSA/IRS Layout RA Record SR W-2 Changes Page 10

11 The change to the RA record layout is in position (comments only) SR W-2 Changes Page 11