Preparing for Year-End 2017 Presented on Monday, December 4, 2017

Transcription

1 Preparing for Year-End 2017 Presented on Monday, December 4,

2 2016 The Payroll Advisor 2

3 Housekeeping 3 Credit Questions Today s topic Speaker 2016 The Payroll Advisor

4 To earn RCH credit you must 4 Stay on the webinar, online for the full 60 minutes Be watching using your unique URL Certificates delivered by , to registered , by January 4th 2016 The Payroll Advisor

5 Our Focus For Today 5 IRS Update DOL Update State Update SSA Update Other Regulatory Updates Best Practices Reconciliations

6 6

7 What We Will Cover 7 Updates from the IRS have a timetable that can be predicted but is never cast in stone. One year they release information as early as October 5 th and other years as late as November 10 th. This year the information for 2018 is coming in as expected but may not be in time for this webinar. Attendees will be provided updated information as it becomes available via updates. We will begin sending the day after the webinar up until December 15 th.

8 8 IRS Update

9 IRS Update-What We Will Cover 9 Pension Plan Limits Federal Per Diem allowance Standard Mileage Rate Tax Rate Changes Adoption Benefits Transportation Fringe Benefits

10 IRS-Pension Plans for Elective Deferral limit 2018: $18,500 Up $500 from 2017 Catch up contributions limit 2018: $6,000 Unchanged from 2017 Defined Benefit Plan Limit for 2018: $220,000 Up from $215,000 for 2017 Defined Contribution Plans limitation 2018: $55,000 Up from $54,000 for 2017 Annual compensation limit 2018: $275,000 Up from $270,000 in 2017

11 IRS-Pension Plans for Deferrals for Government Plans: $18,500 Highly Compensated Employee Limit: $120,000 SIMPLE Plan Employee Deferrals: $12,500 SIMPLE Catch-up Contributions: $3,000 SEP Coverage: $600 SEP Compensation Amount: $275,000

12 Mileage Rate Per Diems Foreign Earned Income Exclusion Delivery Services IRS Per Diems and FEIE

13 IRS Transportation Fringe Benefits Transit Passes $260 Up $5 from 2017 Qualified Parking $260 Up $5 from 2017 Bicycles No change from 2017 $20 per month

14 IRS Earned Income Credit 14 Earned income credit Must still notify employee of Earned Income Credit on back of copy B State may still require notification OR added this year

15 IRS Adoption Benefits For 2018 this will be $13,840 Up from $13,570 for 2017 Begins to phase out at $207,580 and completely phased out at $247,580

16 FSA Changes Dollar limitations under a Section 125 plan on voluntary employee salary reductions for contributions to health flexible spending arrangements is $2,650 for 2018 Up from $2,600 for 2017

17 FSA Changes 17 IRS has issued guidance on modifying the useor-lose rule for health flexible spending arrangements. Permits plan participants to carry over $500 of unused balances remaining at end of plan year Also allows a grace period at the end of the plan year But cannot do both

18 Medical Savings Accounts High deductible health plan definitions: Type of Coverage Minimum Annual Deductible Maximum Annual Deductible Maximum Annual Out-of-Pocket Expenses Self-only $2,300 $3,450 $4,600 Family $4,600 $6,850 $8,400

19 Supplemental Tax Rates No changes withholding up to $1 million up 25% Withholding on wages in excess of $1 million 39.6% Back up withholding 28% If tax bill passes would need conforming legislation to keep 25% but no change to 39.6% rate

20 Exempt from Levy Amounts

21 Percentage Method Table

22 Nonresident Alien Table

23 Federal Holidays for Monday, January 1: New Year s Day Monday, January 15: Birthday of Martin Luther King Jr. Monday, February 19: Washington s Birthday Monday, May 28: Memorial Day Wednesday, July 4: Independence Day Monday, September 3: Labor Day Monday, October 8: Columbus Day Monday, November 12: Veteran s Day Thursday, November 22: Tuesday, December 25: Thanksgiving Day Christmas Day

24 Taxation of Fringe Benefits 24 Taxation of fringe benefits at year end including: awards and prizes moving expenses personal use of company cars gift certificates Cell phones Educational Assistance Best practices for gathering the data

25 Reporting for Health Care Act 25 Affordable Care Act required all employers to report the cost of coverage under an employer-sponsored group health plan Box 12 code DD Requirement optional for small employers at least for 2017 (filed less than 250 W-2s in 2016) This reporting is for informational purposes only Show employees the value of their health care benefits so they can be more informed consumers The amount reported does not affect tax liability still not taxable wages

26 Form 940 for Final version has been released

27 FUTA Credit Reduction for 2017 There is one state and one territory for credit reduction in State Reduction Rate California 2.1% 2.7% Virgin Islands 2.1% 2.7% Adjusted FUTA Rate 27

28 Form 941 for Draft Form for 2018 No later than Appear to be no changes from 2017

29 Form 941 for

30 Schedule B for Use in Current form issued 1/2017 No Draft form pending for 2018

31 Form 944 for version reflects addition of qualified small business payroll credit for research Lines are moved down two lines after line 7 IRS has created a page on IRS.gov for information about the form.

32 Form W-2 for No changes for 2018

33 Form W-3 for No changes for 2018

34 941X Form Series 34 Stand Alone Form Has series to match 941 series Updated as of 4/17 to allow for deleted items Next update scheduled for 4/18

35 Third Party Sick Pay Form Used first in 2014 to replace recap form Send to IRS not SSA No changes for 2017

36 36 DOL and State Updates

37 Future Status of Salary Level : DOL notified District Court it will appeal ruling AFL-CIO appealing its ruling In the meantime: DOL has requested comments The Request for Information (RFI) was published on July 26, 2017 Looking at: 2017 The Payroll Advisor

38 RFI is Asking for Comments On: 38 Salary level test, The duties test, Varying cost-of-living across different parts of the U.S., Inclusion of non-discretionary bonuses and incentive payments to satisfy a portion of the salary level test, The salary level test for highly compensated employees, and Automatic updating of salary levels 2017 The Payroll Advisor

39 Department of Labor Update Start the whole procedure over again No idea where it will go or if it will go But basically looking at the same thing as Obama did but just not as high Also looking at job duties

40 State Update SUI wage bases Minimum wage increases Withholding Tables and calculations Meals and lodging updates State laws new for 2018

41 State Update: Be sure to check 41

42 Increases in State Minimum Wage 42 Effective : AK: $9.84 CA: $11.00>25 ees; $10.50 < 25 ees CO: Proposed $10.20 FL: $8.25 HI: $10.10 ME: $10.00 MI: $9.25 MN: $9.65 MO: $7.85 MT: $8.30 NJ: $8.60 OH: $8.30 RI: $10.10 SD: $8.85 VT: $10.50 WA: $11.50 Bernalillo County, NM: $8.85 SeaTac: $15.64 Albuquerque, NM: $8.95 Other Eff. Dates: D.C.: $13.25 eff MD: $10.10 eff NY: $15.00 eff

43 State SUI Wage Bases 2018 (As of ) 43 State Unemployment Insurance Wage Bases Announced for 2018 State Wage Base State Wage Base Arkansas $10,000 Oklahoma $17,600 Colorado $12,600 Oregon $39,300 Delaware $16,500 Pennsylvania $10,000 Iowa $29,900 South Dakota $15,000 Montana $32,000 Tennessee $7,000 Missouri $ Vermont $17,600 Nevada $30,500 Washington $47,300 New Jersey $33,700 Wisconsin $14,000 New Mexico $24,200 Wyoming $24,700 New York $11,100 North Carolina $23,500 Ohio $9,500 No change from 2017: AL; AZ; CA; CT; DC; FL; GA; IN; KY; LA; MN; NE; SC; VA; WV

44 California: Agricultural Workers 44 Assembly Bill 1066 signed Wage and hour law requirements under Code Sections 500 et seq., which includes meal and rest periods apply to agricultural workers Effective Overtime will be phased in between 2019 and 2022 Wage Order #14

45 More than 25 Agricultural Workers: : OT after 9 ½ hours or over 55 hours : OT after 9 hours or over 50 hours : OT after 8 ½ hours or over 45 hours : OT after 8 hours or over 40 hours : Double time will begin after 12 hours in one day

46 Less than 25 Agricultural Workers: : OT after 9 ½ hours or over 55 hours : OT after 9 hours or over 50 hours : OT after 8 ½ hours or over 45 hours : OT after 8 hours or over 40 hours : Double time will begin after 12 hours in one day

47 Sick Leave Additions for Enacts: District of Columbia Washington Rhode Island Bans: Georgia Missouri Iowa

48 Oregon Transportation Project Tax 48 Begins July 1, 2018 Payroll Tax 0.1% on residents of Oregon and nonresidents working in Oregon

49 49 Legislative Update

50 House Tax Reform Bill 50 5 tax brackets of 12%, 25%, 35% and 39.6% Fringe benefits: repeal exclusion from wages for the following: Adoption assistance Dependent care assistance Educational assistance Employee achievement awards for length of service and safety Employer provided housing furnished for the convenience of the employer limited to $50,000 and phased out for highly compensated employees

51 House Tax Reform Bill 51 Fringe benefits Archer Medical Savings Accounts would be phased out Relocation Transportation fringe benefits such as bus passes and parking Onsite athletic facilities

52 52 Social Security Update

53 SSA Update-What We Will Cover 53 Update on year-beginning annual changes for social security wage base and new Medicare Review of EFW-2 record changes for tax year 2016 Review of filing deadlines Electronic delivery of W-2s to employees When to use the Form W-2c and when to correct the W-2 itself Using SSA s BSO to file W-2s and W-2c electronically

54 Social Security 54 OASDI Taxable wage base for $128,400 Please note: OASDI was originally announced at $128,700 but was revised on Up from $127,200 for 2017 Rate is same at 6.2%

55 Medicare 55 Rate same at 1.45% No wage base

56 Additional Medicare Tax 56 Additional Medicare Tax began in 2013 no changes for 2018 Rate is 0.9% Requires employer to withhold additional amount on wages in excess of $200,000 in calendar year No employer matching All wages currently subject to Medicare subject to this additional tax

57 Changes to 2017 Form 57 Physical Changes: Opened up box 9 for the verification code

58 Verification Code for For filing season 2018 (2017 Forms W-2), the Internal Revenue Service will again test a capability to verify the authenticity of Form W-2 data This test is one in a series of steps to combat tax-related identity theft and refund fraud. The objective is to verify Form W-2 data submitted by taxpayers on e- filed individual tax returns The IRS has partnered with Payroll Service Providers (PSPs) to include a 16-digit code and a new Verification Code field on a limited number of Form W-2 copies provided to employees The code will be displayed in four groups of four alphanumeric characters, separated by hyphens. Example: XXXX-XXXX-XXXX-XXXX. A-F, 0-9 will be used for the codes

59 EFW-2 for Now available on line at m=100

60 EFW-2 Changes for New look for the publication Only AccuWage Online available to test EFW2 wage files A new box 12 Code FF money field, Permitted Benefits Under a Qualified Small Employer Health Reimbursement Arrangement (Code FF), has been added to the: RW Employee Record in positions RT Total Record in positions

61 Electronic Forms W-2 61 Software or website specs will vary Employee must consent electronic consent even if consenting on paper Big stumbling block is disclosure requirements Statement can be furnished on the web if employee given access info

62 Disclosure Requirements 62 May get paper if they want it How long will the consent last Procedure for paper copy after giving consent How to withdraw consent and how it is confirmed Conditions on when electronic Form W-2 is not available Procedures for updating contact info for employee Employer must notify if changes in contact info for employer

63 Correcting the Form W-2 63 If prior to processing then correct the original If prior to disbursement to the employee Then correct the original If after given to employee but not yet submitted to SSA Then replace the original and correct the employer submission version

64 When to Use Form W-2c 64 If the Form W-2 has been given to employee and submitted to SSA then issue Form W-2c If given to employee but the file is not correctable Be sure to use version

65 Filing Requirements Electronic or Paper only to SSA and they really don t want the paper! States may require or accept magnetic media such as CD, or electronic filing Some states do not require filing Using SSA s BSO to File W-2s For smaller companies or EINs do it online Larger companies can upload file W-2cs Can file them independent of W-2s

66 W-2 Due Dates for 2018 WA MT ND ME OR ID SD MN WI NY VT NH MA CA NV UT WY CO NE KS IA MO IL MI OH IN KY WV VA PA DE MD NJ RI CT AZ NM OK AR TN SC NC HI MS AL GA TX LA FL AK Due January 31 Do not need to be filed with state (ME if on paper) Due February 28 (or last day) 66 No state income tax 2017 The Payroll Advisor

67 Best Practices Review 67 Best time to take a good look around Taxation practices Wage and hour laws Independent contractors Watch out for state as well as federal Self audit is better than the alternative!

68 De minimis Errors 68 Due to the new due date, penalties for errors have been updated Even if you can t show reasonable cause you may not be penalized of small number of errors if: Filed forms on time Either failed to include information or included incorrect information Filed corrected returns by August 1 >10 or ½ of 1% to total forms filed Does not apply to TIN, payee surname or $ amount

69 De minimis Errors 69 Incorrect $ amounts may fall under safe harbor No single amount in error differs form the correct amount by more than $100 No single amount reported for tax withheld differs from the correct amount by more than $25 If safe harbor applies you do not have to correct form Unless employee asks for corrected form

70 Their Reconciliation Process of Your Forms 70 The following slides demonstrate the IRS s and the Social Security Administration s process of reconciling your submitted forms to their records

71 71

72 72

73 SSA Reconciliation Points 73 Compare the amounts to be reported to SSA on Form W-3 to the sum of the amounts you reported to IRS on Forms 941, 943, 944, or Schedule H for the tax year. The following amounts on the IRS and SSA report should match: Item W-2 Block 941 Line 944 Line Social Security Wages 3 5a 4a Social Security Tips 7 5b 4b Medicare Wages/Tips 5 5c 4c Additional Medicare Wages/Tips 5 5d 4d Federal Income Tax Withheld 2 3 2

74 Reconciliation 74 In addition to these totals, there are other boxes that must be verified before the Forms W-2 can be processed. These include box 12 that show listing for benefits as required by the IRS. These should be reviewed against the payroll records to make sure that the benefits have been recorded correctly.

75 Reconciliation 75 A very important box that must be reviewed is box 13. This box is for reporting whether or not the employee is covered by a retirement plan. It is critical that this box be marked correctly. The definition of retirement plan can be found in the instructions for the Form W-2 on the IRS website. Penalties can be assessed if this box is marked incorrectly.

76 Notifying the Employees Memo 76 Inform the employees of what is going on in payroll for year end and year beginning No more than 2 pages On or before Dec 1 What should you include?

77 Military Spouse Exemptions 77 Form W-4 state equivalents that are used to claim exempt from state income tax for military spouses expire at the end of each calendar year Need to submit new form for 2018

78 Action Item Checklists 78 Year End Form W-2 Year Beginning

79 Year End 79 Set up committees Set up systems needed Verify all information Set up spreadsheets or files needed After the final payroll

80 New Year 80 Set up calendars Before the first payroll run After the first payroll run Order forms and pubs Set up files and spreadsheets Updates

81 Form W-2 81 Reconcile to Form 941 Reconcile to itself Verify all information Verify state requirements

82 Duplicate Form W-2 82 Announce procedures in advance to employees Create form for employees to use Employers are not prohibited from charging a fee for the issuance of duplicate Form W-2 per IRS Code

83 Sample Request For Duplicate Form W-2 for Tax Year: 2017 Please return this form to: Petrie Plastics Company Inc. Payroll Department M/S Bonny Meadow Road Anytown, NY Fax: Please issue a duplicate copy of the Wage and Tax Statement (Form W-2) for the following employee: Employee Name: Social Security No: Badge # (for current employees): Distribution of Form: (Circle One) Pick-Up From Payroll Mail Form Mail Form To: City State ZIP Code Reason For Request: (circle one) Never Received Lost/Misplaced/Destroyed Signature of Employee: If requesting form be mailed please provide copy of picture identification such as driver s license (former employees) or ID badge (current employees) along with this request form. If picking up the duplicate Form W-2 in person, please be prepared to show picture ID such as a driver s license (former employees) or your ID badge (current employees). Allow five business days to process your request. For Payroll Department Use Only: Date request received: Date form mailed to employee: Received by employee: Signature of Employee: 83

84 Links and Websites 84 Electronic W-2 to Employees: 26 CFR PDF on Filing electronically: Info on verifying social security numbers on line: PDF on Verifying social security numbers and names: Social Security Administration Business Services Online:

85 Questions 85

86 How Can Ascentis Help Me? 86 Ascentis Payroll gives you a lot of control for your year end W-2 form filings. Wizards that are run with each quarterly filing advises you early of wage and tax issues that may potentially cause problems on W-2 forms so you can make changes and corrections without needing amendments during crunch time. A W-2 wizard walks you through verification of both employer and employee W-2 form data as well as walks you through wage balancing steps. Catch and correct problems BEFORE W-2s are filed so you don t have lots of corrected W-2C forms to worry about.

87 To earn RCH credit you must 87 Stay on the webinar, online for the full 60 minutes Be watching using your unique URL Certificates delivered by , to registered , by January 4 th 2016 The Payroll Advisor

88 On-Demand Webinars 88 Watch from anywhere, at anytime, at no cost to you! 2016 The Payroll Advisor

89 Download Slides? Watch again? The Payroll Advisor

90 Sharing the Education The Payroll Advisor

91 Contact Us 91 The Payroll Advisor