BY BROTHERHOOD MUTUAL A STRESS-FREE PROCEDURAL GUIDE. End-of-Year Payroll, Simplified 1

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1 BY BROTHERHOOD MUTUAL BY BROTHERHOOD MUTUAL End-of-Year Payroll, Simplified A STRESS-FREE PROCEDURAL GUIDE End-of-Year Payroll, Simplified 1

2 Welcome to End-of-Year Payroll, Simplified The key to successfully completing year-end payroll and tax filing tasks is planning. This guide, designed by the MinistryWorks team, gives you the tools you need to meet end-of-year payroll-related deadlines, avoid costly fees and penalties, and save ministry resources. Consult with your tax professional or a locally licensed attorney for facts specifically related to your ministry. Need to Contact Us? Call or your questions directly to your payroll processor. You can find additional departments within the MinistryWorks organization by calling Free Resources The MinistryWorks website offers a free resource library, which includes articles and checklists on payroll and tax filing, employee and volunteer management, payroll-related webinars, and links to government resources. Go to to find useful resources related to year-end payroll tasks. The information we provide is intended to be helpful, but it does not constitute legal advice and is not a substitute for the advice from a licensed attorney in your area. End-of-Year Payroll, Simplified 2

3 Welcome to End-of-Year Payroll, Simplified End the current year smoothly and start the new year stress-free. The list below offers step-by-step instructions to ensure a seamless transition for both you and your ministry s payroll. Click the links for more information about each deadline. Deadline Task 12/1/2016 Alert your payroll processor to any upcoming Tax Frequency or Rate Changes. 12/1/2016 Avoid fees for W-2 corrections by making changes now. Review Employee and Independent Contractor Information for accuracy and make necessary changes. 12/1/2016 Avoid fees for 1099-Miscellaneous Income (1099-MISC) forms. 12/21/2016 Last day to submit Bonus Payrolls. 12/23/2016 MinistryWorks office is closed. 12/26/2016 MinistryWorks office is closed. Before your last 2016 payroll Review Employee and Independent Contractor Information, and Check Employee Totals for Accuracy. On or before Run Final Payroll of the Year, and 12/30/2016 Verify Ministry Information and W-2 Shipping Address. 1/2/2017 MinistryWorks office is closed. 1/3/2017 Year-end and fourth quarter forms processed and available in Front Row. W-2 reports are available for online review. See Review Tax Forms / Changes and Corrections to W-2s. 1/13/2017 Last day to submit W-2 changes to avoid incurring a change fee. Note: 2016 changes submitted after this date may require an amendment. W-2 change fees and amendment processing fees will apply. See Review Tax Forms / Changes and Corrections to W-2s. Second and third week in January W-2 and 1099-MISC delivery. See Delivery and Year-End Forms, Review Tax Forms / Changes and Corrections to W-2s. 1/16/2017 Martin Luther King, Jr., Day holiday. MinistryWorks is open but most banks are closed. 1/31/2017 Deadline for your ministry to distribute W-2s and 1099-MISCs. End-of-Year Payroll, Simplified 3

4 Tax Frequency or Rate Changes In the final months of the year, the Internal Revenue Service (IRS) and your state will notify all employers of any deposit frequency changes that will take effect in the upcoming year. Important: Federal, state, and local governments may assess penalties for failure to deposit payroll taxes. To ensure that your taxes are filed in a timely manner, it is important that all IRS and state notices be sent to your payroll processor as soon as you receive them. Any penalties that result from failure to notify MinistryWorks of such changes will be your responsibility. Unemployment Taxes. If your ministry is subject to state unemployment taxes, you may receive a notice with your 2017 unemployment rates. Please send these notices to your payroll processor so that your first payroll of 2017 will have the correct withholding calculations. For more information on IRS filing frequencies, refer to the calendar section of For state tax information, please visit your state s department of revenue website. If you have questions about your tax setup or if you receive a tax-related notice please contact your payroll processor. End-of-Year Payroll, Simplified 4

5 Review employee and independent contractor information Did a ministry employee move or get married? Have a baby? It s important that all employee information is up to date and correct. Names, addresses, and Social Security numbers in our system will be used to complete your employees W-2s. Information for all independent contractors needs to be verified, too. Fee Alert: Changes made to a W-2 after 1/13/2017 will incur a $50 change fee. For employees, check: Employee name (Is it spelled correctly?) Employee address (Is it accurate?) Social Security Number (SSN) Lived-in jurisdiction Worked-in jurisdiction Status (active, terminated, inactive) Filing status (married, single) Number of exemptions Year-to-date wages Year-to-date taxes Year-to-date pre-tax amounts (e.g., investment or medical plans) For independent contractors, check: Name SSN or Taxpayer s Identification Number (TIN) Address Earnings totals Continue to next page End-of-Year Payroll, Simplified 5

6 Review employee and independent contractor information (continued) Non-payroll data: To make a change to non-payroll data, such as an address, go to the Employees tab on the Payroll Home page or contact your payroll processor. Payroll data: To make a change to payroll data, please contact your payroll processor. Helpful Reports for Employee Verification Choose a report to review your employees information: Starting Point: Front Row Reports > 1. Select Employee Profile, W-2 Pre-List Report (Verification Report), or YTD Report. 2. Review the information in the reports. To make reports easier to review, print hard copies or export the data to an Excel file. 3. If you discover inaccurate information, make the necessary corrections. Need assistance? Contact your payroll processor or call End-of-Year Payroll, Simplified 6

7 1099-Miscellaneous Income Form 1099-MISC is the miscellaneous income form that employers must file for non-employees (independent contractors) who are paid compensation of $600 or more (including fees, commissions, prizes, and awards) during the year. See the fee schedule below if you d like MinistryWorks to process your ministry s 1099-MISC forms. Brotherhood Mutual offers to help guide a ministry s interactions with an independent contractor. For information specific to your ministry, contact your tax professional or a locally licensed attorney. Tip: Avoid setup fees by sending us your independent contractor information before 12/1/2016. Vendor setup Information Received prior to 12/1/16 Received 12/1/16-12/30/16 Received after 12/30/16 Charges No charge for setup, standard $10 per form fee applies. $25 setup fee, standard $10 per form fee applies. $50 fee for setup, standard $10 per form fee applies. End-of-Year Payroll, Simplified 7

8 Check Employee Totals for Accuracy Beginning in the fourth quarter, but before 12/30/16, you must update missing totals for your employees and run any Prior to the last scheduled payroll of the year, correct missing totals for any of the following items: Manual checks Voided checks Third-party sick payments Group term life insurance Dependent care benefits Moving expenses 401(k) and cafeteria plans Retirement plans Paid time off Taxable fringe benefits Other necessary adjustments to employee wage and tax amounts Fee Alert: If you need to run a special payroll for manual checks, voided checks, or third-party sick payments after 12/30/16, government agencies may assess penalties and interest based on their deposit and filing deadlines. MinistryWorks change fees also may apply. End-of-Year Payroll, Simplified 8

9 Run Final Payroll of the Year The last day you can submit final 2016 payrolls with a December check date, including, is 12/30/16. Payrolls submitted after this date may incur penalty and interest charges. Important: If an employee receives payment in 2017 for days worked in 2016, earnings and deductions are reflected in 2017 wage totals. Payroll taxes are based upon the date wages are paid, not the date wages are earned. This may result in extra pay for either the current year or the following year. We encourage you to review your Pay Run Annual Calendar, found under the Reports tab on the Payroll Home page, each year. End-of-Year Payroll, Simplified 9

10 Verify Ministry Information and W-2 Shipping Address MinistryWorks will mail employee W-2s to your ministry mid-january. To help eliminate IRSassessed fines due to delays in distribution, verify your ministry information and shipping address prior to 12/30/16. Starting Point: Payroll > Company Verify the following information: Federal EIN (your tax ID number) Legal name Legal address (will be used to deliver W-2s) Important: Contact your payroll processor for assistance if you need to change ministry information. A change to a legal address may result in correspondence from taxing authorities. End-of-Year Payroll, Simplified 10

11 review tax forms/changes and corrections to w-2s Examine employee W-2s when they are ready for online review. If you determine that changes are needed, contact your payroll processor immediately. Changes made to a W-2 by close of business on January 13, 2017, will be made at no additional fee. Amendments requested after that date will be assessed a change fee of $50.00 per form. Tip: Look for payroll-related items that were paid outside of the MinistryWorks payroll system. Did your pastor receive a check directly from the church? Was a retirement plan or health savings account (HSA) paid by the ministry? Starting Point: Front Row Reports > End of Period Tab Choose Annual Review employees W-2 forms. Important: Employee W-2s must be filed with the Social Security Administration by January 31, This is a change in previous years, the due date was March 31. End-of-Year Payroll, Simplified 11

12 Delivery and Year-End Forms W-2 and 1099-MISC forms are available to view online 24 hours after MinistryWorks processes them. Your ministry will be notified when the forms are ready for review. Before that time, you can use the W-2 Prelist Report to view W-2 information. View W-2 Prelist Report Starting Point: Payroll > Reports > W-2 Prelist Report View W-2 Forms Starting Point: Front Row Reports > End of Period Tab > Annual 2016 (See page 11 for details) End-of-Year Payroll, Simplified 12

13 Bonus Payrolls You have two options when processing bonus payrolls: 1. Process the bonus as a separate pay run. 2. Include the bonus as part of a regularly scheduled payroll. Before processing a bonus payroll, be prepared to answer the following questions: Will the bonus payroll be issued by paper check or direct deposit? Should voluntary deductions (e.g., retirement plan) be taken out of the bonus payroll? Are federal or state tax withholding changes needed from the bonus check? Fee Alert: Bonus payrolls with a 2016 check date will be included in 2016 wages and reflected on all fourth-quarter 2016 tax reports and W-2s. You may incur penalties and interest if you report a bonus payroll with a check date of 2016 after January 1, Taxing Bonus Payrolls You have the following options for taxing bonus payrolls: Bonus included on regular payroll. The bonus payroll is taxed at the regular payroll rates. Bonus run on separate payroll. The bonus payroll is taxed at the supplemental wage rates for federal and state income tax. For 2016, the federal rate is 25% for amounts of one million dollars or less and 39.6% for amounts greater than one million dollars. For more information on supplemental wages, see Insuring America s churches and related ministries Property & Liability Insurance Commercial Auto Workers Compensation Mission Travel Services Ministry Payroll Copyright 2016 Brotherhood Mutual Insurance Company. All rights reserved. Brotherhood Mutual is licensed in most states. End-of-Year Payroll, Simplified 13