OVERVIEW. This chapter, along with documentation and hints, will give you everything you need to begin your year-end planning including:

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1 Chapter 1 Steps to a Successful Year End OVERVIEW Year-end is quickly approaching and there is a great deal of work ahead. All of us at PayChoice understand how much is involved and we are here to help. This chapter, along with documentation and hints, will give you everything you need to begin your year-end planning including: A Comprehensive Year-End Preparation Guide A Year End Journal Quarterly State Unemployment Magnetic Media Instructions (non-efile) Quarterly E-file Returns 940 Annual Return Instructions 945 Annual Return Instructions Social Security Administration Information via website link Online website Links of W-2, W-3, 1099-Misc and 1099R Forms and Instructions This document is the beginning of a series of year-end documentation. Its purpose is to get you and your clients prepared for year-end.

2 Year End Customer Support Coverage Daily PayChoice Support Coverage: Monday through Thursday - 9 a.m. to 8 p.m. Eastern Time Zone Friday - 9 a.m. to 7 p.m. Eastern Time Zone In addition to our standard hours DURING YEAR END, PayChoice will offer emergency on-call weekend coverage on Saturdays and Sundays starting December 28 through February 2. Saturday, December 28-9 a.m. to 1 p.m. Eastern Time Zone Sunday, December 29-9 a.m. to 1 p.m. Eastern Time Zone Tuesday, December 31-9 a.m. to 5 p.m. Eastern Time Zone January 4, 5, 11, 12, 18, 19, 25, 26-9 a.m. to 5 p.m. Eastern Time Zone Emergency calls/issues should be submitted through the PayChoice Call Center. Do NOT send a fax or call the main support phone number. Submit an emergency issue only if the following conditions occur: You have completed your troubleshooting efforts and you still cannot process quarterlies or year-end. You encountered an unexpected error that prevents you from quarterly or year-end processing and cannot find the solution on our website. If we are unable to solve the problem by phone, one of our on-call staff members will contact you with additional information on how to correct the problem. All other support calls received during weekend on-call coverage will be returned on the next business day. Remember, our customer support website is available 24/7 at Support.Paychoice.com HOLIDAY CLOSINGS In recognition of the holidays, PayChoice will be open on Tuesday, December 24 th from 8:30 12:00 noon and will be closed Wednesday, December 25 and closed Wednesday, January 1. Our combined teamwork at this most critical time of year will help ensure our mutual success. Let s have a great year-end and a successful 2014!

3 Forms for 2013 The Social Security Administration (SSA) now accepts black and white Form W-2 and W-3. Red Forms are still required for 1099/1096 s. The forms must be printed in non-reflective black ink and contain a four-digit vendor code that identifies the taxpayer s software vendor. Forms should be printed on 8 ½ by 11-inch paper, in accordance with the new W-2 and W-3 specifications for tax year PayChoice has been programmed for these forms. While the SSA hopes the new regulations will ease employer burden, it will push its electronic agenda. More information regarding magnetic media will be available in January You may also visit the SSA website at or call them at IMPORTANT NOTE 2013 the SSA will NOT accept mag media diskettes E-FILE ONLY via the internet As part of the PayChoice Alliance Program, Print Management Partners, , will be able to supply all year-end form needs. Please visit the PayChoice Customer Support Website for additional information. Remember to order EARLY to avoid delays.

4 Key Year End Dates at a Glance DUE DATE DESCRIPTION Thursday, October 31, 2013 Thursday, November 28, 2013 Friday, November 29, rd Quarter Tax Returns due Thanksgiving Day Federal Holiday PayChoice Closed PayChoice Closed Monday, December 9, 2013 First day SSA allows submission of W-2 information Wednesday, December 25, 2013 Christmas Day Federal Holiday - PayChoice Closed Tuesday, December 31, th Quarter End Year End 2013 Wednesday, January 1, 2014 Monday, January 20, 2014 Friday, January 31, 2014 Friday, January 31, 2014 Friday, January 31, 2014 Monday, February 17, 2014 Friday, February 28, 2014 Monday, March 31, 2014 Monday, March 31, 2014 New Years Day Federal Holiday PayChoice Closed Martin Luther King Jr. Day Federal Holiday W-2 s, 1099M s and 1099R s are due to Employees 4 th Quarter Tax Returns due 944 & 945 Annual Return of FWT due 940 & 943 Annual Return due President s Day Federal Holiday Paper W-2 s, 1099 s and W-3 s due to SSA / IRS 1 st Quarter End W-2, 1099 and W-3 On-Line Electronic Wage reporting due to SSA

5 Year End Preparation Guide Client and Service Bureau Schedule A Meeting Know Your Stuff!! Read all PayChoice Release Notes and Year End Documentation. o The two most important pieces of information to become familiar with is Chapter 3, Quarterly Processing and Earnings and Deduction Base Accumulator Guide, Deductions and Earnings Accumulators/W-2 Print found the Year-End / Quarter End Manual. This manual is updated every year in December and is available on the PayChoice Customer Support Website at o There is another document on the website Quarter End Variances and Incorrect State Code Adjustments that is very helpful, Article ID 589. This document reviews how to research and correct variance reports and how to correct state code adjustments. Discuss preparation and implementation procedures needed to complete a successful 2013 Year End. Prepare a task list with target dates Prepare a Year-End Package for your clients based on the information included in this Chapter. ADHERE TO YOUR TARGET DATES

6 2013 Processing Schedules Verify all processing schedules for the remainder of 2013 Verify client s holiday closings along with your Service Bureau holiday schedule When you create the 2014 Scheduling Calendars, it asks if you would like to print the remainder of Scheduling Calendars Create 2014 scheduling calendars. The GLOBAL creation of the 2014 calendars will be available October. To create the calendars globally, from the Main Menu choose [ S ] Payroll Administrator Menu, [ S ] Edit/Print Company Schedules. Print and send to your clients for verification. Update the clients scheduling calendar based on changes. NOTE: Pay attention to the Last Period End Date displayed on the screen. To create 2014 schedules, the last period end date must be in If not, you will not be able to create a 2014 schedule. You may edit an individual company by pressing F6 on the highlighted company without exiting the global scheduling feature.

7 Special earnings, deductions and base accumulators Determine, with your client s, if any 3 rd Party Sick Pay information, Auto, Fringe Benefits, Group Term Life Insurance, Tip Allocation, 457 Distributions, Moving Expenses, S Corporations, etc. needs to be entered. Review Earnings and Deduction Base Accumulator Guide, Deductions & Earnings Accumulators/W-2 Print Info in the Year End /Quarter End Manual. This chapter is designed to give you a better understanding of the function of each item and how it affects the W-2 or 1099-Misc or 1099-R. It is STRONGLY RECOMMEDED YOU BECOME FAMILIAR WITH THIS CHAPTER. Enter as much as possible with a regular payroll and/or as adjustments with a regular payroll. IE: Third Party Sick Pay, Auto Allowance, Life Ins. Premiums, Fringe Benefits, 457 Distributions, Moving Expenses, Etc. Most of these items will affect Social Security and Medicare wages. Please keep this in mind when entering the adjustments. If entered prior to the last payroll of the year, these taxes will self adjust on the next regular payroll. If entered AFTER the last payroll of the year, you may have a variance; which will need to be address prior to running the 4 th quarter returns and year-end. ERHCST-ER Sponsored Health Care Converge. Select any deduction code - as a memo deduction - make the Base Accum ERHCST (on the second screen of the deduction options setup). See page 78 of the Earnings & Deduction Accumulator/W2 Print Guide.

8 Common Earnings Codes for Year-End Earnings Base Accumulator Earnings Code W-2 Box # Description AUTO$ , 03, 05 & Taxable Auto Allowance 14 EXMOVE 5B 12 Code P Qualified moving expenses FRING , 03, 05 & 14 FRING , 03, 05 & 14 INSPRM 59 01, 03, 05 & 12 Code C INSPR2 5P 01, 03, 05 & 12 Code C Taxable Fringe Benefits Taxable Fringe Benefits Acts like 51 but will withhold taxes for PA residents Taxable Group Term Life Insurance Premiums. Does NOT withhold FWT. Taxable Group Term Life Insurance Premiums. WITHHOLDS FWT. MILAGE Code L Non-Taxable employee business expense reimbursements. MOVE$ , 03, 05 & 14 Taxable employer PayChoice moving expenses

9 Common Deduction Codes for Year-End Deduction Base Accumulator Deduction Code W-2 Box # Description 401K 31, 32,33 03, 05, 12 Code D 401(k) pre-tax employee contributions 403B 50 03, 05, 12 Code E 403(b) pre-tax employee contributions 401KC EA 03,05,12 Code D 401(k) pre-tax employee contributions Catch-up , 05, 12 Code G 457 pre-tax employee & employer contributions 457NQ & 11 Earnings 457 Distribution (done as a deduction) CO457 4C 12 Code G Employer Contributions to a non-qualified retirement plan MILAGE Code L Non-taxable employee business expense reimbursements (done as reverse deduction) SARSEP 37, 39 03, 05, 12 Code F 408(k) pre-tax employee contributions SARSPC EC 03, 05, 12 Code F 408(k) pre-tax employee contributions Catch-up SIMPLE 3B, 3C 03, 05, 12 Simple 401(k) pre-tax Code D SMPKU EP 03, 05, 12 Code D employee contributions Simple 401(k) pre-tax employee contributions Catch-up SMPIRA 3I, 3J 03, 05, 12 Code D Simple IRA pre-tax employee contributions SMPICU EN 03, 05, 12 Code D Simple IRA pre-tax employee contributions - Catch-up SEPIRA 38 N/A Simple employee pension contribution deposited into IRA HSACEE 4N 12 Code W Health Savings Accounts Employee Portion-Café Plan HSACAF Code W Health Savings Accounts Employer Portion-Café Plan ERHCST ER Sponsored Health Care Coverage - Optional

10 Adjustment/Bonus Payrolls for 2013 Set a deadline and notify your clients for processing year-end adjustments and bonus payrolls. Schedule any adjustment runs, if possible, based on special earnings, deductions and accumulators. Make sure you adhere to your deadline, especially for clients with a Third Party Tax Service such as CTS, etc. Third Party Tax Service deadlines are MUCH earlier than the SSA/IRS deadlines. NOTE: The service bureau/client is still responsible for the information NOT the tax service. We recommend that you charge your clients for these adjustment payrolls. In addition, you may charge your client based on how late they submit the adjustment or bonus payroll. For example, if they submit the adjustment/bonus payroll in the week you requested or scheduled, charge them a base price. If they submit the payroll a week later, charge them more, etc. This provides you with the opportunity to earn additional revenue on year-end processing. NOTE: Before processing any adjustment payrolls, please become familiar with Chapter 3, Quarterly Processing, found in the Year-End / Quarter End Manual.

11 Verify Your Client s Legal Name, Address and Federal EIN# Print and send your clients a Tax ID & Rate Verification Report. This report can be print from the Main Menu [ S ] Payroll Administer Menu, [ G ] Global Reports. o NOTE: If the report is printing on 2 pages, check the LPI on the printer setup. It should be 66 LPI. Ask your client to review this report, sign and return to your attention. This report is one page per client. Tax Id and Rate Reports At times, you may want to review ALL your client s Tax ID numbers and rates stored in Company Tax ID information screen. There are several reports available. o From the Main Menu choose [ D ] Daily Processing Menu, [T] Tax Service Menu [ S ] Electronic Tax payments EFTPS Menu, [ R ] EFTPS Reports Menu o [6] Print Tax ID & Rates All Clients o [7] Print Tax ID & Rates Any Tax Code o [8] Print Tax Id & Rates Any Client Or From the Main Menu [D] Daily Processing Menu, [X] Consolidated Export Menu and [T] Tax ID Screen Data Export *** This options is much easier to use***

12 Master File Analysis Report Found under Global Reports from the S-Payroll Administrator Menu Now creates a ANALYSIS.CSV file and/or Helps to identify: o 1099 earnings vs. W2 wages o Missing Prior Qtr FUTA/SUI o Tax transfers o Tax Blocks and exempt status o Additional state and local amounts setup on the employee level o Missing or duplicate SNNO Can be run at anytime time during the year Identify only those companies with anomalies

13 Missing, Duplicate or Invalid Social Security Social Security Numbers Correct any missing, duplicate or invalid social security numbers and/or addresses. Verify SSNO on the SSA Website at Print and send your clients a Missing Social Security List report Print from the Main Menu [ S ] Payroll Administrator Menu [ G ] Global Reports NOTE: This report will list employees with duplicate social security numbers. Be careful NOT to merge a 1099 employee with a W-2 employee. If you do this, a W-2 will not print and additional manual intervention will be required Earnings vs. W-2 Earnings Verify that W-2 earnings are NOT paid on the same employee number as 1099 Earnings. If this happened during the year, a W-2 will NOT be produced. Print a Master File Analysis Report from Global Reports to identify if 1099 employees were Paid W-2 wages OR Run a YTD report for all clients who have 1099 employees and verify that the same employee number does not have 1099 and W-2 earnings. You need to run an adjustment payroll to correct. Please refer to Chapter 3, Quarterly Processing, found in The Year-End / Quarter-End Manual.

14 Check Stub Message Notify client s employees via check stub message to Verify Social Security Number, Name, Address and Tax Status. NOTE: There are 66 characters available for a message. This cannot be done as a global message. Pension Indicator / Retirement Plan Certain Base Accumulators check, or X, Box 13 Retirement Plan - on the W-2 Form. For example: 401K, 403B, SMPIRA, SIMPLE, SEPP, SARSEP, TSA, 408K6, 501C, CO401K, COSIMP, COSIMP2, CO403B, COSRSP. o There is a full list in the Earnings & Deduction Base Accumulator Guide If it is necessary to check Box 13 in situations where one of the base accumulators listed has not been used during the current year, select the F3 Screen for the appropriate employee(s) and select Y in the W-2 pension field.

15 Terminated Employees Ask your clients if they wish to retain terminated employees on their master file. If terminated employees are to be retained, go to the Second Screen of Company Options and answer N, for NO, Drop Term EE s at EOY. (N=does NOT delete employees, Y=will delete employees) You may now select a # from 1-9 to retain employees for that many years determined by year of termination. See PayChoice Release notes Example, if you select 2, the terms will be retained 2 years after their term date before they are dropped from the master file. If the client does NOT want to retain terminated employees, answer Y, yes, to the above question. The terminated employees will be deleted with the first payroll in NO reporting can be done for prior year terms. Terminated employees who have a goal or bond balance on their F5 Screen will NOT be deleted. Research the outstanding balance and clear balance if necessary. If terminates were dropped in error they can be restored. From the Main Menu select C-Utilities, 9-Scanner2 and select T-Imp Dropped Terms into Current Master. Vacation / Sick Balances If vacation and sick balances are to be carried over into 2014, you must change the deduction Start/Stop Switch. The Start/Stop switch in Deduction Options should be changed from an A (Accrual) to a C (Carryover) in the SICKOUT/SICKBAL or VACOUT/VACBAL deduction codes. The Deduction Start/Stop Switch is found in Deduction Options. Otherwise, all accrual balances will be DROPPED when the first payroll of 2014 is processed.

16 W-4 and other tax status changes Ask your client to review any employees who are currently setup with a tax-exempt status for Federal and/or State, etc. Suggest having your client s employees complete a new W-4 Form for These can be printed from the Global Reports Menu. IMPORTANT: If there are any changes, they cannot be made until the first payroll of These changes are NOT automatic. You need to make changes to the employee s tax status/f5 screen. If desired, print and send your client employee W-4 Forms for 2014 and Employee Attendance Calendars. These reports can be printed from the Global Reports Menu. Note: The 2014 forms will be updated with the year-end release in December. Use the Master File Analysis Report to help find company and employee anomalies.

17 Print a Variance/941 Report to Identify Out Of Balances Clear up all variances prior to processing the last payroll of GLOBAL VARAINCE REPORTS From the Main Menu select [ S ] Payroll Administrator Menu [ G ] Global Reports then select Quarterly Variance/941 You can still run a variance report, per client, when in Work With A Company from the Reports Drop Down Menu by choosing Print Variance/941. Under ViewChoice Options Option to print a Variance Report with every payroll or the last payroll of the quarter. This report does NOT go to ViewChoice; however, the option to do so was placed on this screen. There is a document on the customer support website to help you understand and correct variances. Click on the Support Tab, PayChoice then Knowledge Base. Choose the category of Quarter End General and click the submit button. The document is called Quarter End Variances and Incorrect State Code Adjustments or enter Article ID 589.

18 Year End Billing Determine how much you want to charge for year-end processing, including a base charge for W-2 s, rate per W-2 and magnetic media. Notify client of W-2 and Year End Billing. Update your billing codes. Refer to Chapter 5, W-2/1099 Billing Setup, in the Year End / Quarter End Manual. After the W-2 s/1099 s are printed, year-end billing will automatically be added to the next live payroll as Manual Billing. NOTE: That if the payroll where the year-end billing takes place needs to be reprocessed, you need re-enter the year-end billing on the manual-billing screen. If you would like to produce the invoices immediately after printing the W-2 /1099 s, an option has been added to the Year End Processing Menu, [B] Produce Manual Invoice of w2 s. NOTE: This option will NOT produce an invoice check or create an ACH transaction for billing Billing Changes Notify clients of any new billing price changes/increase in 2014.

19 W3 Form Kind of Employer Added Employer Type field to Company Maintenance within the W2PRINT program for reporting on the W3. Once a selection has been made, the system will remember it from year to year. The default (no maintenance required) is the standard employer type which will cover 98% of the customer base. Exceptions will have to be keyed in after YEAREND has been run, but before printing W3s. Those exceptions are: 1. Non-Government 501(c) Employer 2. State/Local Government 501(c) Employer 3. State/Local Government non-501(c) Employer 4. Federal Government Entity Employer 5. Household Employer (using Schedule H)

20 Processing the 4 th Quarter Returns Select all your companies and process them through End of Quarter and End of Year from the Quarterly Processing Menu. Choose [ 4 ] Select Company for EOQ/EOY Processing, NOT [ 1 ] Select Company for Quarterly Process. Select [8] for the no print option. o Choosing Option 4 will pass the company through year-end and will create the W-2 Prelist Report and Form 940. If this option is not chosen, you will not be able to print W-2 s and a 940 will not be produced.

21 4 Th Quarter Returns and W-2 Pre-List Notify your clients to review their 4 th quarter information and to review the W-2 Pre-List. The pre-list is automatically printed with the 4 th quarter returns. The ability to preview the W-2 Pre-List before the live W-2 s are printed will most likely create additional year-end adjustment payrolls. Address any QTD and/or YTD variances and correct on an adjustment payroll PRIOR to the last payroll of the year and PRIOR to sending your clients their 4 th quarter reports. Review Quarterly Taxable Wage Summary for incorrect states. Correct on an adjustment payroll if necessary. o Please refer to Chapter 3, Quarterly Processing in the Year End / Quarter End Manual. TIP: You can run 3 rd Quarter through year-end, Option 4, (see previous page). This will run the company through year-end and will print the W-2 Pre-List, disregard the 940. Running the 3 rd quarter through year-end will not harm any files. You simply run the 4 th quarter through year-end also when the time comes. NOTE: View Choice files for the 3 rd quarter will have the 940 and pre-list included. Instruction client to ignore or reprocess thru the correct quarter options prior to sending to client.

22 Year End/ Quarter End of Special Companies If a company has stopped processing payrolls with you in the 1 st, 2 nd or 3 rd qtr in 2013 AND you need to produce year-end reports and W-2 s use the following procedure. Select Work with a Company. Choose the company. You will need to perform this step for each company individually. From the Company Overview Screen arrow over to Special and select End Company Quarter. NOTE: Pay attention to the quarter #, it may not be the 4 th quarter, which is ok, just follow the next step. From the Quarterly Process Menu select [ 4 ] Select Company for EOQ/EOY Processing. Tag the client under the 4 th quarter and press F9 to process. Print W-2 s and 1099 s when you print your current client s W-2 s/1099 s. The client MUST have an Active status to appear on the W-2/1099 tagging table. NOTE: If a client leaves your service PRIOR to finishing the quarter, you will need to run the last payroll of the quarter as a zero transaction payroll. This will produce any end of quarter tax checks and returns. NOTE: The company must be active to appear on all year-end tagging tables to produce W-2 s.

23 Prior Quarter FUTA/SUTA 940 Annual FUTA Return If you wish to produce a correct 940 FUTA Return, all four quarters in 2013 need to be processed using PayChoice. For clients who were not processed on PayChoice for ALL FOUR QUARTERS, you may still produce a correct 940 form. You must enter all Prior Quarter FUTA/SUTA information in the Prior FUTA/SUTA screen for the PRIOR quarters that were NOT processed on PayChoice. Multi-state UC employers must enter wages and tax amounts for FUTA and ALL UC States. If the prior amounts for each UC state are not entered, the 940 will be incorrect. Print a Master File Analysis Report to ensure all 940 information has been entered. Helpful Report: From the Main Menu, Select S-Payroll Admin Menu and 2-Access Report Writer Branch. Look for CC-FUTA by Qtr for 940 or FUTA/SUTA by Qtr. Both are by client by quarter. ****ATTEND THE FUTA TAX REDUCTION WEBINAR ON Friday, December 14, 2013*****

24 W-2/1099 Magnetic Media Filing Status Verify the Magnetic Media status field in the Company Options screen for each PayChoice client. This switch should be correct before you process the last payroll of the year. However, if not correct at this time, it can be updated when you process your magnetic media information. The available options are outlined below Federal Magnetic Media Choices (W-2/SSA) 2 nd screen on Co. Options o G GROUP Magnetic Media Filer (Default) o D INDIVIDUAL Filer on Diskette o N CLIENT is responsible (Print Red Copy A) State Withholding Magnetic Media Choices- Tax ID Screen o I INDIVIDUAL Magnetic Media filer. o G GROUP Magnetic Media Filer o N No State Magnetic Media required Print a Tax ID and Rate Report by State UC o From the [ Q ] Quarterly Processing Menu [ U ] Print UI Rate and ID # Report [ 7 ] Print Tax ID & Rates and Tax Code. Select a printer, LTP1 or LPT2. Answer Y to Do you wish to create the EFTPS and Tax ID file again. The system will de-archive files, place into a common file and ask you to enter a tax code. IE: ILUC. A report will be produced that lists company code, company name, tax authority code, deposit frequency, tax id number, State UC rate 1, 2 and 3 and state magnetic media options. NOTE: Tax Services such as STS, etc. Remember their due dates are much earlier than the IRS and SSA due dates. o For any company setup for a third party tax service, the Tax Pay Service, (TPS) switch MUST be Y on the second screen of company options. o On the Processor Options screen in Service Bureau Maintenance, the TPF Provider Resp. for Y/E W-2 s must = Y. This tells the PayChoice Magnetic Media program whether to include these companies in the GROUP file or not.

25 W-2/1099 Magnetic Media Creation Instructions will be available the end of January on the creation of Federal and State Magnetic Media for W-2 s and 1099 s. Please ensure you have pin numbers for your service bureau and/or clients prior to creating the Federal Magnetic Media. These can be applied for ahead of time through the SSA. o NOTE: The PIN # must be changed every 60 days or it will expire. Once expired, you must register again. For additional information, please contact the SSA or visit their web site at Their phone number is Information from the SSA website is included in the Appendix. NOTE: SSA WILL NOT ACCEPT Magnetic Media via diskettes for the 2013 tax year. NOTE: Via the Internet due March 31, Tax Changes / Client Instruction Letter Notify your clients of any new tax changes for For example, new 401k limit, Social Security limit, etc. Compose a Client Instruction Letter asking them to review the W-2 Pre-List, 4 th quarter information ASAP along with year-end deadlines, and billing information / price increases, etc. Include this letter with the 4 th Quarter Package. Inform the client upon approval of their W-2 Pre-List, when they can expect their W-2 and/or 1099 Forms.

26 W-2 and 1099 Counts To order the correct number of forms you will need to count the number of W-2 s and 1099 s needed. From the Main Menu select [ S ] Payroll Administrator Menu [ C ] Global Client Statistics. This option will break out the W-2 count from the 1099 count. o Only counts employees with YTD earnings The Social Security Administration (SSA) now accepts black and white Form W-2 and W-3. PayChoice will generate these forms only. You do NOT need to order red forms s still require Red Forms. PayChoice does produce the employee copies; however, they are not perforated. You may want to order perforated forms.

27 Supplies/Miscellaneous Items Order W-2, W-3, 1099-Misc and 1099-R. Order W-2 Envelopes & Address Labels. Use Avery 5163 laser label stock for shipping clients W-2. Order extra diskettes and tapes for backups. Order blank CDs for ViewChoice, if applicable. Ensure you have enough postage. Make sure you have room to organize the large amounts of paper produced at Quarter/Year End. All forms and reports are not necessarily printed together depending upon your configuration.

28 Processor Options Review Processor Options prior to the last payroll of the quarter and year. For example, Run Quarterlies on Multiple Workstations Y or N. The system will allow quarterlies to be processed from multiple workstations; however, a company cannot be accessed by more than one user at any given time. Quarterlies can be run while payrolls are being process. This prompt MUST be yes if you plan to run the Quarterly Consolidation Reports feature. Print W-2 s, L = Laser Returns Interpolate (or back into) Third Party Sick Pay Wages = Y or N. Produce 1099 if < $ = Y or N. Print W-2 Prelist at EOY = Should always be Y If you are using Production Control the Use Production Control System must be Y and Use Production View EOD must be Y. Round 940 Return

29 Production Control Use Production Control to track your Quarter/Year End activity. From the Main Menu select [ Q ] Quarterly Processing Menu and [ A ] View/Print QRTLY Production Control for quarterlies or [ Y ] Year End Processing Menu and [ Y ] View/Print EOY Production Control for year-end. To determine how the system displays this information use the function (F Key) keys listed at the bottom of the screen. o F3 Clients Not Cut o F4 Clients Not Processed o F5 Toggles between Year End and Quarter End o F8 To View All o ALT-P to print any view o The CUT DATE is the date of the last payroll of the quarter. The cut date will overlay each time you re-cut the quarter (automatically or manually). o The PROCESS DATE is the date you ran the client through the quarter/year end utility. This process date will overlay each time you run the client through the 4 th quarter/year end process. o SEND DATE: You can enter the date the forms were sent to your client. Tag the client and press F9 and enter send date. The Service Bureau determines this date. PayChoice does NOT populate this date. If you are not using Production Control, be sure you have a list of monthly depositors. Verify that tax checks are cut and/or EFTPS files were created at the end of each month. If a monthly depositor does not run the last payroll of the month, the tax check or EFTPS file will not be created unless you run a zero transaction payroll. This payroll must be indicated as the last payroll of the month. If a tax check/eftps files was not created, the payments will still be reflected on the 941 and will NOT cause an out of balance error at the top of the 941 return.

30 Printer Configurations Laser Printers Follow the instructions in Chapter 6, W-2 Printing and Chapter 7, 1099/1096 Printing in the Year End / Quarter End Manual. Make sure Processor Options are correct for the printer type. Make sure your printers and stuffers have been properly maintained. Test the Year End Process Choose a small group of companies to test the year-end process and print configurations. Do this AFTER the 4 th Quarter/Year-End PayChoice Update has been released. Process 4 th Quarter End, Year End and print W-2 s and 1099 s for these companies. Review results and adjust where necessary. _

31 WEBSITES / PHONE NUMBERS PayChoice - and the link to the Support Call Center is support.paychoice.com American Payroll Association Department of Labor Social Security Administration Employer Reporting Instructions & Information or Social Security Administration How to File. Social Security Administration Business Services Online Welcome: BSO Handbook: E-Filing Handbook: Social Security Administration General W-2 Filing Information. Social Security Administration Where to File. Social Security Administration Magnetic Media W-2 Questions & Answers. Social Security Administration Paper Form W-2 Questions & Answers. Social Security Administration AccuWage and AccuW2c Question & Answers. Social Security Administration Other Government Sites. Social Security Administration Software Downloads Zip Program Internal Revenue Service 2013 Instructions for Form W-2 and W-3.

32 Internal Revenue Service 2013 Instructions for Form 1099-MISC. Internal Revenue Service 2013 Instructions for Form 1099-R and Internal Revenue Service 2013 General instructions for Forms 1099, 1098, 5409 and W-2G. Internal Revenue Service Filing Information Returns Electronically (FIRE) for 1099 shttp:// U.S. Business Advisor

33 Where to File Magnetic Media W-2/W3 o SSA WILL NOT ACCEPT MAG MEDIA DISKETTS FOR TAX YEAR o E-file due March 31, 2014 Paper Forms W-2/W-3 o U.S. Postal Service Social Security Administration Data Operations Center Wilkes-Barre, PA (for Certified Mail use ZIP Code ) o Private Delivery Service (FedEx, UPS, etc) Social Security Administration Data Operations Center Attn: W-2 Process 1150 E. Mountain Drive Wilkes-Barre, PA

34 2013 Year End Journal Week of October 14, 2013 Year-End tasks this week: Review the Year-End / Quarter End Manual, Chapter 3 Quarterly Processing and Earnings and Deduction Base Accumulator Guide Earnings & Deductions & W-2 Print Info Completed Schedule a meeting with Payroll, Accounting, Human Resources and Tech/IS, etc. Project target dates for quarterly, W-2, 1099, etc.processing Schedule any year-end training classes for service bureau employees if necessary. **Refer to the PAYCHOICE Customer Support Website for future Year-End PayChoice Classes and Advanced Classes. Schedule and plan for year-end overtime and additional customer service coverage Create 2014 global scheduling calendars. Send to all your clients for verification. Request a return date of November 16. Due from client / notes:

35 Week of October 21, 2013 Year-End tasks this week: Order W-2, W-3 and 1099 Forms **NOTE: SSA does not require RED forms for tax year 2013 for W-2/W-3. Red forms are still required for 1099s. Completed Order Diskettes for Magnetic Media W-2 s, 1099 s and Quarterly State UC processing Order Envelopes, Mailing Labels and Postage Order tapes for FULL system backups. Order the necessary supplies for your printer(s) Start processing Quarterly Reports 3rd Quarter October 14 Columbus Day N/A Due from client / notes:

36 Week of October 28, 2013 Year-End tasks this week: Select a small group of companies to run through the yearend process. Choose clients with W-2 and 1099 employees and various year-end earning codes. Completed Continue processing quarterly reports 3 rd quarter Prepare to send out all quarter end tax information to your clients and tax authorities. Prepare to send out State UC Magnetic Media Report any software related issues to PAYCHOICE to ensure they are addressed in the 4 th quarter PayChoice release. Install PayChoice Sub-Release and along with Tax Tables Setup check stub messages to have all employees verify their name, address and social security numbers All 3rd quarter reporting is due October 31 to clients and tax authorities State UC Magnetic Media is due October 31 Due from client / notes:

37 Week of November 4, 2013 Year-End tasks this week: Setup billing codes for W-2 s, 1099 s and year end processing. Completed Print the Tax ID & Rate Verification Report and send to all clients for verification. Print the Missing SSNO & Address Listing and sent to all clients for verification. Verify that 1099 employees do not have W-2 earnings. Notify clients of Year-End billing charges and any increases for 2014 Due from client / notes:

38 Week of November 11, 2013 Year-End tasks this week: Veteran s Day, November 11 Federal Holiday Completed N/A Print 4 th quarter variance reports for all clients Process adjustment payrolls if necessary to correct variances. (Refer to Chapter 3, Quarterly Processing in the Year-End/Quarter End Manual) Review and enter changes to clients 2014 scheduling calendars Review Tax ID & Rates Report returned from clients **NOTE: UC RATE changes cannot be done until the first pay of Tax Account # s should be updated. Due from client / notes:

39 Week of November 18, 2013 Year-End tasks this week: Take your test group clients that you ran through yearend the week of October 28 and run them through yearend again. This will test any additional releases for PayChoice from PayChoice. Completed Enter any employee name, address and social security number changes Due from client / notes:

40 Week of November 25, 2013 Year-End tasks this week: Schedule Year End Bonus Payrolls. Completed Request Year End Information such as auto fringes, third party sick pay, Group Term Life Ins., etc. Schedule adjustment runs for this information OR process with the next live payroll. Register with the Social Security Administration for Online Wage Reporting Services (OWRS). **NOTE: This service is called Business Service Online (BSO). (Refer to SSA Employer Reporting Instructions and Information Booklet). If you registered in a previous year, change your password. This must be done once every 60 days or you will need to register again. Request any 2014 W-4 changes. Thanksgiving Day, November 28 Federal Holiday PayChoice CLOSED Day after Thanksgiving, November 29 PayChoice CLOSED N/A N/A Due from client / notes:

41 Week of November 25, 2013 Year-End tasks this week: Update pension indicator box (Retirement Plan) for W-2 s Completed Process adjustment payrolls for W-2 and 1099 earning and deduction code information. Prepare and process an Business Services Online (BSO) test file for the Social Security Administration (Refer to SSA Business Services Online 2013 Handbook) Update 2 nd screen of company options to retain or drop terminated employees. Complete on a company level. Update 2 nd screen of deduction options to carry over or clear vacation, sick and personal balances. Due from client / notes:

42 Week of December 2, 2013 Year-End tasks this week: Print a second set of 4 th quarter variance reports and run adjustment payrolls if necessary. Completed Print a Master File Analysis Report to ensure all Prior Qtr FUTA/SUI has been entered. Enter where necessary. Verify magnetic media switches are correct on 2 nd screen of company federal level. Verify magnetic media switches are correct on the Tax Id & Information Screen state level. Schedule time to process and prepare 4 th quarter returns Compose a client Year-End / Year-Begin Letter. IE: Review 4 th qtr returns, W-2 Pre-List, when they can expect their W-2 s etc. Perform a FULL system tape backup before running any first quarter live payrolls for SAVE THIS BACKUP. Due from client / notes:

43 Week of December 9, 2013 Year-End tasks this week: Run adjustment payrolls due to any changes from the clients W-2 Pre-List. Completed Review the Production Control Quarterly Processing Screen. Enter any UC rate changes and W-4 changes for clients who have finished their last payroll of the year. Review the Processor Options Screen prior to last payroll of the year. Perform a FULL system tape backup before running any first quarter live payrolls for SAVE THIS TAPE. December 9, you can start submitting W-2 Information to SSA via the BSO, Business Services Online (Refer to SSA-BSO Handbook). Deadline for transmission is March 31, Due from client / notes:

44 Week of December 16, 2013 Year-End tasks this week: Enter any UC rate changes and W-4 changes for clients who have finished their last payroll of the year Completed PayChoice Year-End Weekend Emergency Customer Support coverage starts. December 31 thru January 30 Review the Productions Control Quarterly Processing Screen. Review the Processor Options Screen Target a date to print W-2 s and 1099 s Test your printer configurations for W-2 s and 1099 s Setup any new earnings and deduction codes after the last payroll of the year. If they are new pre-tax deductions, ensure they are sequenced properly. Due from client / notes:

45 Week of December 23, 2013 Year-End tasks this week: Start processing 4 th quarter returns and W-2 Pre-List Completed Start sending completed W-2 s and 1099 s to your clients Install 4 th PayChoice Release along with Tax Tables Tentative release date December 19, 2013 Christmas Day, December 25 Federal Holiday PayChoice CLOSED N/A Due from client / notes:

46 Week of December 30, 2013 Year-End tasks this week: New Year s Day, January 1 Federal Holiday PayChoice CLOSED Completed N/A Due from client / notes:

47 Week of January 6, 2014 Year-End tasks this week: Start processing quarterly returns 4 th quarter Completed Prepare to send out State UC Magnetic Media Continue sending completed W-2 s and 1099 s to your clients Due from client / notes:

48 Week of January 13, 2014 Year-End tasks this week: Continue process quarterly reports and magnetic media 4 th quarter Completed Continue sending completed W-2 s and 1099 s to your clients Due from client / notes:

49 Week of January 20, 2014 Year-End tasks this week: Martin Luther King JR BD, January 20 Federal Holiday Completed N/A Send all completed W-2 s and 1099 s to your clients Install PayChoice Sub-Release x.xxx along with Tax Tables Tentative release date of January 23, 2014 Due from client / notes:

50 Week of January 27, 2014 Year-End tasks this week: All 4 th quarter tax returns are due January 31 to clients and all tax authorities Completed State UC Magnetic Media is due January Employer s Annual Federal Unemployment (FUTA) Tax Return due January Annual Return of Federal Withholding due January Annual Return of Federal Withholding due January 31 W-2 s, 1099M s and 1099R s are due to all employees January 31 Due from client / notes:

51 MONTH of February 2014 Year-End tasks this week: President s Day, February 17 Federal Holiday Completed N/A Paper W-2 s, W-3 s, 1099 s and 1098 s due to SSA February 28 Install PayChoice Sub-Release x.xxx along with Tax Tables Tentative release date of February 20, 2014 Due from client / notes:

52 MONTH of March 2014 Year-End tasks this week: Online Internet W-2 s, W-3 s, 1099 s and 1096 s due to SSA/IRS March 31. (Refer to SSA BSO Handbook) Completed Review the 2013 year-end process.the good, the bad and the ugly!! Note changes for 2014 year end Gear up for 1 st quarter end Install PayChoice 1 st Qtr Release x.xxx along with Tax Tables Tentative release date of March 20, 2014 HAVE A YEAR END PARTY Due from client / notes:

53 MONTH of April 2014 Year-End tasks this week: Process 1 st quarter tax return and send to clients and tax authorities by April 30. Completed Install PayChoice Sub-Release x.xxx along with Tax Tables Tentative release date of April 17, Due from client / notes:

54 State Unemployment Mag Media- Non E-file The following steps are an overview for processing and creating Quarterly State Unemployment Magnetic Media information. STEP 1: Set the EOQ Unemp switch on the 2 nd Screen of Company Options to G - Group Filer or D - Individual Filer.

55 The Company Tax ID Screen must also have the UC MAG MED switch set to I for Individual Files and G for Group filers.

56 STEP 2: Go to the State UC Mag Media program. From the Main Menu choose [Q] Quarterly Processing Menu then [5] Quarterly UC Mag Media Menu then [1] Select Company for Quarterly Process. This step MUST be done prior to creating the diskettes. This step creates the Mag Media files. STEP 3: After your companies have been selected for the quarterly process, choose item [2] Create Qtrly Mag Media Diskette. The below Main Menu Quarterly Magnetic Media Menu will appear.

57 STEP 4: Press ENTER on the menu item marked Transmitter Data. Enter the transmitter number under the 2-character branch code that the company was originally built. The transmitter number would be equivalent to the branch number /processor number setup in Service Bureau Options. If filing as a Group, the Service Bureau Branch Information will be used. If filing individually, the client s company information will be used from the 1 st screen of Company Options.

58 Enter the company Name, Address, Fed ID number, telephone numbers and contact name. The Transmitter ID would be the same as their Federal EIN unless the state issues an authorization number for the transmitter ID. CTRL Enter to save your changes and hit escape back to the Quarterly Magnetic Media Main Menu.

59 STEP 5: The State Data Menu is used only for lookup purposes since all states currently programmed for UC mag media have the database information provided based on the information entered on the Company Tax & ID Screen.

60 Employer Data: You can view the name and address of a specific client and change Tax ID # s if necessary prior to creating the mag media. This will NOT change the ID # s in the client s Tax ID Screen. Employee Data: You can view name and address of a specific employee and changes wages if necessary. BE VERY CAREFUL CHANGING WAGES AT THIS POINT. IF THEY ARE CHANGED, PAYROLL ASSOICATES CANNOT BE RESPONSILBE FOR THE CHANGES MADE. This will NOT change the employee s file for W-2 purposes, only the State UC Mag Media File.

61 STEP 6: From the Quarterly Magnetic Media Menu chose Create Export File and Summary Report. This procedure will format all state records into the proper format and print a summary totals report to compare to the state wage listings. In addition, this program will consolidate all employers with the same ID number from multiple client numbers into 1 state UC mag media file, if filed as a group. This menu will prompt the user for the state TAX AUTHORITY, the client EMPLOYER CODE and the TRANSMITTER ID. Remember, the transmitter ID is either the service bureau, the client Fed ID or some other state assigned number.

62 Individual vs. Group Filer: When you create the export file you need to enter an Employer Code. If filing as an Individual Filer, enter the Client s Company Number. If filing as a Group, enter 9999, Batch Mode. This will INCLUDE ALL companies for the UC tax authority setup as a GROUP filer on the 2 nd screen of Company Options. IMPORTANT: If you set a client up as a Group Filer on the 2 nd screen of Company Options and actually the file a client as an individual filer, then do the remainder of your clients as a group, ALL clients setup as a group will be included in the group (9999 batch). In this example, the client s UC Mag Media would have been reported twice to the state. Once on the individual diskette and a second time on the group diskette.

63 STEP 7: After the state formatted files have been created and the summary totals balanced to the hard copy paper quarterly returns, you may write out the newly formatted file to diskette. YOU MUST CREATE THE DISKETTE FOR EACH BATCH BEFORE YOU CREATE THE NEXT FORMATTED FILE FOR THE NEXT EMPLOYER!!! The file name is XXWAGES.DAT. XX=State Code. For example, PAUC file will be PAWAGES.DAT. If you create the file via the modem option, the file will be stored in \PAYCHOIC\MAGMEDIA\. Some file names may differ due to state requirements; however, this is how the majority of the state files are named. IMPORTANT: DO NOT SEND THE FILES CREATED AS DISKETTES VIA THE INTERNET TO THE STATES. IF YOU ARE GOING TO FILE VIA A MODEM/INTERNET, CREATE THE FILES USING THE MODEM OPTION. Place a blank formatted diskette into the A: drive and select the menu item MAKE DISKETTE FROM EXPORT FILE.

64 STEP 8: Repeat the process for Step 7 and Step 8 for each transmitter. NOTE: IF MULTIPLE COMPANIES WITH THE SAME FED/STATE ID NUMBERS ARE TO BE CONSOLIDATED ONTO THE SAME MAGNETIC MEDIA FILE, PAYCHOICE WILL AUTOMATICALLY CONSOLIDATE ALL EMPLOYEES UNDER THE SAME STATE ID NUMBER AND USE THE LEGAL COMPANY NAME OF THE FIRST COMPANY IN THE CONSOLIDATION GROUP. WHEN THE MAG MEDIA FILE CREATION PROGRAM IS RUN, THE FIRST EMPLOYER IS SELECTED FOR CONSOLIDATION.

65 Quarterly E-file Returns Introduction To successfully complete and upload e-file versions of quarterly returns you must: 1. Research the tax authority requirements and apply for vendor status as necessary. 2. Verify which tax returns are currently supported by PayChoice, and by which method. 3. Maintain Service Bureau data including Agent ID, PIN numbers and other data required by the tax authority. 4. Maintain correct data for the companies you are reporting for including ID numbers, rates if applicable, and any other items required to be included in the e-file return. 5. Create the e-file returns via the appropriate PayChoice method. 6. Upload the file to the tax authority as specified by the tax authority. Most unemployment returns are still handled via the older UC Magnetic Media system and will not be covered in this document. Please review the applicable document in the knowledge base for details on how that is done. This document concerns the newer e-file system. While there are a limited number of returns currently covered by the e-file system, it is our intention to bring on as many as possible into this newer e-file system as quickly as development resources allow. Instructions Step 1 Research Tax Authority requirements It is your responsibility to become familiar with the tax authority requirements. Most of them are published on the tax authority s web site and are generally available to the public. Some tax authorities require a complicated registration process, some are much easier to work with, and others require no pre-registration at all. In any case you must complete whatever steps they require and obtain any Agent IDs or PIN numbers that may be necessary. Step 2 Verify if the Tax Return is supported by PayChoice Determine how PayChoice can generate the e-file in the correct format. Most unemployment files are still generated via the UC Magnetic Media system where you would generate a single file instead of diskettes. Please refer to the UC Magnetic Media documentation for details on that method. The easiest way to obtain a current listing of which returns are covered by the e-file system is to continue to step 3 which will list each one in the maintenance table.

66 Step 3 Maintain Service Bureau data As we continue to add tax returns to the e-file system, we update a control table embedded in the Tax Tables to allow production of the e-file. Be sure to stay current with Tax Table downloads each time you update PayChoice with new releases as they become available. From the Main Menu, go to [S] Payroll Administrator Menu, and then select [M] Service Bureau Maintenance System and you will get the following screen: Select Processor Name/Address and you will get a selection table of Processor Branches. For each Processor Branch you select you will have the following screen:

67 Press F5-QMAG to display the Tax Returns available for e-file: Select the appropriate tax return code and complete all appropriate data fields. An example follows:

68 Enter through the last field to save your entries and repeat for all returns you will be submitting for each Processor Branch. Note: Filer Type is normally Direct Agent. Step 4 Maintain correct data for the companies You should have already entered correct Tax ID numbers, etc. on each of the companies during setup, and maintained any changes promptly. Each company must pass certain basic tests during the normal quarterly process to be available for e-file generation. Those tests differ somewhat from one tax return to another depending on the tax authority s requirements. You must have also completed the Electronic Returns Options screen outlined in step 3 above before processing quarterlies. It is during quarterly processing that qualifying companies are made available for e-file generation as outlined in step 5 below. If no companies are available for e-file in step 5, then it is likely that you did not complete all the required items outlined in step 3. In that case you must add the required information and reprocess all companies effected using either normal quarterly processing or the no-print method. There is no other work-around to this requirement. You must have your data in place before processing quarterlies. Step 5 Create the e-file returns Creating the e-file returns is a three-part process at this point: Run the companies through the quarterly process using either normal or no-print methods.

69 Generate the initial e-file(s) selecting those companies that are ready and have been run through the quarterly process. Review the results comparing the transmittal amounts to the actual returns if necessary, recheck key clients and any clients that may be problematic, be sure that all selected clients are in fact on the transmittal, and no obvious mistakes are shown. Even if you are highly confident of the results it is best to at least randomly select a few clients and verify the Tax ID, amounts and any other key data. This part can be repeated in several batches as your processing methods dictate. Generate the final file for submission by running the initial e-file(s) through the e-file Merge utility. This part must be done even if you have only one initial e-file to start with. This is because data such as PayChoice client codes that are needed in generating the transmittals are removed from this final file and header and trailer data is updated as needed. To generate the initial e-file select [Q] QUARTERLY Processing Menu, [5] Quarterly UC Mag Media Menu, then [X] Create Quarterly e-file Returns. Enter the year and quarter number and the appropriate tax return code. A tagging table of available companies will then be displayed. You can use the function keys to display INH clients only, non- INH clients only, or all clients; or to auto-tag or untag companies. The space bar individually tags or untags the highlighted company. If a company you select failed one of the basic tests during quarterly processing a warning screen will be displayed indicating the problem. You must either continue without that company; or exit and correct before proceeding. To correct the company you must correct the deficiency in the frozen quarter master files then reprocess the quarterlies using either print or no-print options, then return to this program. There is no workaround to this. Each company must have passed the basic tests during the quarterly process to be available for e-file selection. When you have completed your selections, press F9-RUN to start the process. You may optionally print actual paper returns during this process if necessary to confirm detail data, or to send to your clients as confirmation.

70 When the process has completed, a screen appears indicating the file name and path of the newly generated file. Press the enter key to clear the screen and a transmittal will automatically print. Use this transmittal to conduct your verification. Once you have created all the initial e-files, you must run them through the e-file merge utility. From the main menu select [Q] QUARTERLY Processing Menu, [5] Quarterly UC Mag Media Menu, then [M] E-File Merge Utility. Enter the year and quarter number and the appropriate tax return code. At the prompt near the top of the screen you will be asked Merge Companies with the same Tax ID together? If you choose Y the merge process will combine those companies that have the same Federal ID and the same Tax ID for this tax authority into a single record. This record will use the company data of the company with the lowest client code in standard alpha/numeric sort order, but combine all the numeric amounts together. Whether you choose Y or N in all cases if you have included the same company as identified by the PayChoice client code in more than one of the selected e-files, the merge utility will automatically throw out duplications, keeping only the most recently created record for that client code.

71 A tagging table of available e-files will be listed. Select all the e-files you want included in this final file to be submitted to the tax authority, then press F9-RUN to merge the selected files into a final single e-file. When completed a summary screen will be displayed: