Module 1: Payroll Concepts Introduction to Payroll in the United States... 1-2 Documents Employers Request... 1-2 Social Security Numbers... 1-2 Methods of Paying Employees... 1-3 Withholding Taxes... 1-3 Social Security... 1-4 Medicare... 1-4 Unemployment Insurance Tax... 1-4 Disability Insurance Tax... 1-5 Employee Benefits... 1-5 Introduction to Payroll... 1-5 Challenges... 1-6 The Payroll Process... 1-6 1.1 Employee/Independent Contractor... 1-6 Employee Classification... 1-7 Backup Withholding... 1-15 Statutory Employee/Nonemployee... 1-16 New Hire Reporting... 1-19 Social Security Numbers... 1-21 1.2 Fair Labor Standards... 1-23 Fair Labor Standards: Concepts... 1-23 Exempt/Nonexempt Employees: Concepts... 1-24 Exempt/Nonexempt Employees: Definition... 1-25 Minimum Wage... 1-35 Tips... 1-37 Regular Rate of Pay... 1-39 The Workweek... 1-42 Overtime... 1-49 Work Hours... 1-50 Other FLSA Provisions... 1-55 1.3 Employment Forms... 1-65 Employee Forms... 1-65 PayTrain 2015 1
Module 2: Payroll Calculations 2.1 Calculation of Regular Pay... 2-2 Calculate Regular Rate of Pay... 2-2 Calculate Tip Pay... 2-3 Calculate Pay for Time Worked... 2-4 Calculate Other Pay... 2-5 2.2 Calculation of Overtime Premium... 2-7 Calculate FLSA Overtime Premium Pay... 2-7 Calculate Overtime Using a Weighted Average... 2-8 Calculate Salaried Overtime Premium Pay... 2-9 Calculate Commission Overtime Premium Pay... 2-10 Calculate Piecework Overtime Premium Pay... 2-11 2.3 Calculation of Gross Pay... 2-13 2.4 Calculation of Federal Income Tax... 2-14 Taxable Wages... 2-14 Federal Income Tax Withholding... 2-17 2.5 Calculation of Social Security and Medicare Taxes... 2-24 Employee Taxes... 2-25 Employer Taxes... 2-40 Other FICA Tax Issues... 2-42 2.6 Calculation of Voluntary Deductions... 2-47 Calculate Other Deductions... 2-47 Non-Tax Deduction Reporting... 2-48 2.7 Calculation of Involuntary Deductions... 2-49 Withholding Orders... 2-49 Child Support... 2-50 Federal Tax Levy... 2-63 Creditor Garnishment... 2-69 Other Withholding Orders... 2-74 Federal Agency Garnishments... 2-79 PayTrain 2015 2
2.8 Calculation of Net Pay... 2-87 Calculate Total Deductions... 2-87 Calculate Total Payroll... 2-87 Calculate Net Pay... 2-88 PayTrain 2015 3
Module 3: Fringe Benefits 3.1 Fringe Benefit Rules... 3-3 IRS Regulations Impacting Payroll... 3-4 IRS Requirements... 3-4 Special Accounting Rule... 3-7 3.2 Nontaxable Benefits... 3-8 Section 132 (Income Exclusion Basics)... 3-8 No-Additional-Cost Fringe Benefits... 3-8 Qualified Employee Discounts... 3-9 De Minimis Fringe Benefits... 3-10 Working Condition Fringe Benefits... 3-12 Cell Phones Working Condition Fringe Benefits... 3-13 Qualified Transportation Fringe Benefits... 3-14 On-Premises Athletic Facilities... 3-17 Qualified Retirement Advice... 3-18 Qualified Moving Expenses... 3-18 3.3 Employer-Provided Benefits... 3-20 Awards and Prizes Income/Exclusion... 3-20 Personal Use of Company Vehicles... 3-22 Group-Term Life Insurance... 3-27 Whole-Life Insurance... 3-31 Split-Dollar Life Insurance... 3-32 Personal Use of Company Aircraft... 3-34 Educational Assistance... 3-35 Business Travel Expenses... 3-38 Meals and Lodging... 3-51 3.4 Other Payments... 3-53 Advances and Overpayments... 3-53 Back Pay Awards... 3-57 Bonuses... 3-62 Commissions... 3-63 Death Benefits... 3-64 Disaster Relief Payments... 3-64 Jury Duty Pay... 3-65 Leave-Sharing Plans... 3-66 PayTrain 2015 4
Retroactive Wage Payments... 3-67 Taxable Tips... 3-68 Repayment of Employer-Provided Loans... 3-73 Loans to Employees... 3-73 Sick Pay... 3-75 Reporting Responsibilities... 3-79 Stock Options/Purchases... 3-83 Stock Awards... 3-90 Workers Compensation... 3-92 Dependent Care Assistance... 3-93 Severance... 3-94 Golden Parachute... 3-95 Club Memberships... 3-96 Adoption Assistance... 3-98 Differential Military Pay... 3-101 3.5 Cafeteria Plans... 3-102 IRC Section 125 Components... 3-102 IRC Section 125 Elections... 3-104 Flexible Spending Arrangements... 3-117 3.6 Retirement Plans... 3-120 Qualified Plans... 3-121 Calculate Deferred Compensation Contributions... 3-122 Deferred Compensation Regulations... 3-127 Deferred Compensation Regulations (401(k), 403(b), 457(b))... 3-128 Tax-Sheltered Annuities (403(b) Plans)... 3-135 Deferred Comp Plans for Public Sector, Tax-Exempt Entities... 3-138 Nondiscrimination Testing 401(k) Plans... 3-141 Nonqualified Plans... 3-144 3.7 International Payments... 3-159 Expatriates/Resident Aliens... 3-159 Foreign Earned Income Exclusion/Expatriate Taxation... 3-161 Totalization Agreements Social Security/Medicare Taxes... 3-164 Resident/Nonresident Alien Taxation... 3-166 Tax Treaties... 3-172 Purpose of Form 8233... 3-173 Form 8233 Requirements... 3-174 Impact of Visa Status on Taxation... 3-174 Employer Tax Reimbursement Policies... 3-177 Currency Conversion... 3-180 Managing International Relationships... 3-180 PayTrain 2015 5
3.8 Health Benefits... 3-182 Health Benefits Basics... 3-182 Health Savings Accounts... 3-189 Health Reimbursement Arrangements... 3-190 COBRA Continuation... 3-194 Employer Shared Responsibility... 3-197 Information Reporting by Applicable Large Employers Under the ACA... 3-205 W-2 Reporting of Cost of Employer-Provided Health Coverage... 3-211 PayTrain 2015 6
Module 4: Payroll Reporting and Employment Taxes 4.1 Tax Deposit Requirements... 4-2 Lookback Period... 4-2 Tax Deposit Frequency... 4-4 Calculate Federal Tax Deposits... 4-9 Tax Deposit Methods... 4-10 Federal Tax Forms (An Overview)... 4-13 4.2 Quarterly Returns... 4-15 Purpose of Form 941... 4-15 Form 941 Reporting/Filing Requirements... 4-15 Form 941 Line-By-Line Reporting Requirements... 4-19 Employment Tax e-file System for Forms 940 and 941... 4-25 Schedule B (Form 941) Reporting/Filing Requirements... 4-27 Schedule B (Form 941) Line-By-Line Requirements... 4-27 Multiple Worksite Reporting... 4-32 4.3 Annual Returns... 4-34 Information Reporting Requirement for H-2A Workers... 4-34 Forms W-2, W-3, and Electronic Filing... 4-36 Federal Unemployment Tax... 4-61 Forms 1099... 4-79 Other Annual Returns... 4-83 4.4 Correcting Returns... 4-90 Purpose of Form W-2c... 4-90 Form W-2c Reporting/Filing Requirements... 4-91 Purpose of Form W-3c... 4-96 Form W-3c Reporting/Filing Requirements... 4-96 PayTrain 2015 7
Purpose of Form 941-X... 4-98 Form 843 Purpose and Reporting/Filing Requirements... 4-117 4.5 Other Reporting Requirements... 4-119 Taxation and Reporting of Wages Paid to Deceased Employees... 4-119 Calculate Withholding for Wages Paid to Deceased Employees... 4-120 Purpose of Form 4070... 4-120 Form 4070 Requirements... 4-120 Form 8027 Requirements... 4-121 Purpose of Form SS-4... 4-121 PayTrain 2015 8
Module 5: Record Keeping and Payroll Practices 5.1 Payment Methods... 5-2 Payment by Check or Cash... 5-2 Payment by Direct Deposit... 5-4 Payment by Payroll Card... 5-12 Escheat... 5-14 Other Payment Regulations... 5-15 5.2 Payroll Practices... 5-16 Payroll Processing... 5-16 Confidentiality... 5-28 Legislation Impacting Payroll... 5-31 Procedures and Practices... 5-46 Business Continuity Plans... 5-50 5.3 Record Keeping... 5-58 DOL Record Keeping Regulations... 5-59 IRS Record Keeping Regulations... 5-64 USCIS Record Keeping Regulations... 5-68 HIPAA Record Keeping Regulations... 5-69 5.4 Systems... 5-76 System Processes... 5-76 System Selection and Implementation... 5-83 Other System Issues... 5-95 5.5 Penalties... 5-98 DOL Penalties... 5-98 IRS Penalties... 5-99 PayTrain 2015 9
Module 6: Payroll Accounting 6.1 Accounting Terminology... 6-1 Accounting Principles... 6-2 Accounting Periods... 6-7 Balance Sheet and Income Statement... 6-8 Accounting Entries... 6-13 6.2 Account Classification... 6-16 Account Classifications... 6-16 6.3 Journal Entries... 6-18 Purpose and Recording of Payroll Journal Entries... 6-18 Recording and Posting Payroll Transactions... 6-20 Purpose and Recording of Accruals and Reversals... 6-23 6.4 Reconciliations... 6-27 Repayment of Wages... 6-27 Reconcile General Ledger Payroll Accounts... 6-30 Reconciliation of Output Reports... 6-31 6.5 Internal Control... 6-31 Internal Controls... 6-31 Audits External and Internal... 6-36 Sarbanes-Oxley Compliance/SSAE 16... 6-37 PayTrain 2015 10
Module 7: Management and Administration 7.1 Customer Service... 7-2 Definition... 7-2 Responding Efficiently to and Resolving Customer Requests... 7-2 7.2 Communication... 7-7 Communicate Effectively... 7-7 Effective Communication Techniques... 7-9 Effectively Manage Interpersonal Relationships... 7-15 7.3 Procedures and Policies... 7-15 Develop, Implement, and Organize Department Processes... 7-16 Documenting Processes... 7-16 The Payroll Department s Objective... 7-18 7.4 Management... 7-19 Basic Management Skills (An Overview)... 7-19 Planning and Organizing... 7-20 Staffing... 7-42 Time Management Techniques... 7-45 Directing Employees... 7-48 Payroll Staff s Skills and Abilities... 7-54 Prepare Job Descriptions... 7-56 Interviewing Job Candidates... 7-59 Training Resources... 7-60 Strategic Planning... 7-60 Budgeting... 7-62 Business Planning Concepts, Methods, and Resources... 7-64 Team Building Techniques (adapted from Tuckman s team development model)... 7-66 Management Theories and Skills... 7-69 PayTrain 2015 11