Vision Payroll

Employers know that it’s important to keep personnel files, but do you know the answers to these questions?

1. What should go into an employee’s personnel file?
2. What shouldn’t go into an employee’s personnel file, but still must be kept on file?
3. What are the best practices in keeping the information needed both in and out of the employee’s personnel file both organized and accessible to those that need it, but not to those who don’t?

Learn the answers to these questions and more in this month’s HRCast, a recording provided by our team of HR Pros and available exclusively on MyHRSupportCenter. Visit MyHRSupportCenter regularly not only for our HRCasts, but also to get late-breaking compliance alerts, best practices to implement, and HR tools to use every day. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

This is one in a continuing series on the 2008 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 2, 2009. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 8, allocated tips.

Box 8 shows the amount of allocated tips. Large food and beverage establishments use Form 8027, Employee’s Annual Information Return of Tip Income and Allocated Tips to determine the amount of tips to report in Box 8. A large food and beverage establishment meets all three of the following criteria:

1. Food or beverage is provided for consumption on the premises.
2. Tipping is a customary practice.
3. More than 10 employees who work more than 80 hours were normally employed on a typical business day during the preceding calendar year.

The amount in this box is not to be reported in Boxes 1, 3, 5, or 7.

The next topic in this continuing series will be Box 9, advance EIC payment. Contact Vision Payroll with any questions on the 2008 Form W-2.

This is one in a continuing series on the 2008 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 2, 2009. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 7, social security tips.

Box 7 shows the amount of tips reported by employees. In many situations, the cash wages paid are insufficient to collect the entire amount of social security and Medicare tax. Reported tips must still be shown in this box, even if social security or Medicare tax was not withheld on them. For 2008, the combined total of Boxes 3 and 7 cannot exceed $102,000. The reported tips should be included with amounts reported in Box 1, wages, tips, other compensation and Box 5, Medicare wages and tips. Since social security benefits are based on the amount of social security tips reported to the Social Security Administration (SSA), it is important that employees periodically review their social security earnings record and provide the SSA with the Form W-2 to update any incorrectly posted earnings records.

The next topic in this continuing series will be Box 8, allocated tips. Contact Vision Payroll with any questions on the 2008 Form W-2.

This is one in a continuing series on the 2008 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 2, 2009. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 6, Medicare tax withheld.

Box 6 shows the total amount of employee Medicare withheld, including the amount withheld on tips. It does not include any employer contribution toward Medicare on the employee’s behalf. The 2008 rate was 1.45% and unlike social security, there is no taxable wage base. Therefore, there is no upper limit to the amount entered in this box. If the employer paid the employee’s share of such taxes rather than withholding them, the tax must be grossed up and included in boxes 1, 3, and 5.

The next topic in this continuing series will be Box 7, social security tips. Contact Vision Payroll with any questions on the 2008 Form W-2.

This is one in a continuing series on the 2008 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 2, 2009. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 5, Medicare wages and tips.

Box 5 shows the total amount of wages subject to Medicare tax. For most employees, this amount equals the sum of boxes 3 and 7, with one exception. There is no limit on the amount of Medicare wages as there is with social security wages. Additionally, depending on the date of hire, some governmental employees may have Medicare wages, but not social security wages.

The next topic in this continuing series will be Box 6, Medicare tax withheld. Contact Vision Payroll with any questions on the 2008 Form W-2.

This week’s question comes from Rick, a corporate controller. We received a notification from our state unemployment agency that we may want to make a voluntary payment toward SUTA. Should we make a voluntary additional payment?

Answer: For employers that are in states that use a system that includes contributions made by employers in calculating the unemployment rate, it may be beneficial to make such a contribution. Many such states, but not all, allow employers to make voluntary contributions. Employers should estimate their taxable state unemployment wages for 2009 and multiply that by the difference between the higher rate and the lower rate. That sum should be compared to the required payment. The greater the sum is over the required payment, the more beneficial it is to make the voluntary payment.

For example, assume that taxable SUTA wages (not gross SUTA wages) will be $1,000,000 and that the employer’s rate will decrease by 0.15% if the voluntary payment is made. The estimated savings for 2009 would be $1,500 ($1,000,000 X 0.15%). Any payment greater than $1,500 would not be beneficial for 2009 since the cost would exceed the estimated benefit. Payments significantly less than $1,500 should almost always be made due to the anticipated savings for 2009. As the payment amount approaches $1,500 it becomes less valuable to make the payment because the required outlay must generally be made early in the year.

Voluntary payments are not allowed for FUTA purposes.

Contact Vision Payroll if you have any questions on voluntary additional SUTA payments.

According to the US Department of Labor, in the week ending January 10, the advance figure for seasonally adjusted initial claims was 524,000, an increase of 54,000 from the previous week’s revised figure of 470,000. The 4-week moving average was 518,500, a decrease of 8,000 from the previous week’s revised average of 526,500.

The Internal Revenue Service (IRS) is warning taxpayers to be on the lookout for phony e-mails that appear to be from IRS employees. The e-mails attempt to get personal information such as social security numbers, account numbers, and passwords that may be used in identity theft or to gain access to financial accounts.

The IRS never sends unsolicited e-mails nor does it request personal or financial information in e-mails. The IRS has set up a special e-mail address to forward such e-mails using instructions provided by the IRS. The IRS recommends you delete such messages after you have forwarded them.

Although no system is foolproof in preventing identity theft, Vision Payroll recommends vigilance in dealing with personal information, combined with a service such as LifeLock® to help detect certain types of identity theft.

The United States Citizenship and Immigration Services (USCIS) has submitted an interim final rule to change Form I-9, Employment Eligibility Verification. The rule will become effective February 2, 2009.

There are three categories of documents that employers may use for employment verification: List A that establishes identity and employment authorization, List B that establishes identity, and List C that establishes employment authorization. The rule eliminates the ability of employers to accept expired documents, although the USCIS has invited comments on and will consider allowing employers to accept List B documents “that have expired within the last ninety days (or other limited time period).”

The interim final rule also adds passports of the Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI) to acceptable List A documents. Citizens of both the FSM and the RMI may, but are not required to, obtain Form I-766, Employment Authorization Document.

Further, the interim final rule eliminates Forms I-688, I-688A, and I-688B from acceptable List A documents since these documents are no longer issued and all issued forms are now expired.

There are numerous other miscellaneous changes, including changes to correct references to terminology that has changed. The June 5, 2007 version of Form I-9 becomes invalid February 2, 2009.

This is one in a continuing series on the 2008 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 2, 2009. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 4, social security tax withheld.

Box 4 shows the total amount of employee social security tax withheld, including the amount withheld on tips. It does not include any employer contribution toward social security on the employee’s behalf. Since the 2008 rate was 6.2% and the taxable wage base was $102,000, the amount in this box should not exceed $6,324. If the employer paid the employee’s share of such taxes rather than withholding them, the tax must be grossed up and included in boxes 1, 3, and 5.

The next topic in this continuing series will be Box 5, Medicare wages and tips. Contact Vision Payroll with any questions on the 2008 Form W-2.