Vision Payroll

This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. 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 14, other.

Box 14 is used to provide additional information that employees may want or need for their tax records. Employers must report the lease value of a vehicle reported in box 1 either here or in a separate statement provided to the employee. The following are examples of items that employers may want to disclose in box 14:

• State disability insurance taxes withheld
• Union dues
• Uniform payments
• Health insurance premiums deducted
• Nontaxable income
• Educational assistance payments
• Clergy’s parsonage allowance and utilities
• Nonelective employer contributions to a pension plan on behalf of an employee
• Voluntary after-tax contributions to a pension plan that are deducted from an employee’s pay (not including Roth contributions)
• Required employee contributions to a pension plan
• Employer matching contributions to a pension plan

Employers may also report prior-year makeup amounts for nonelective employer contributions, voluntary after-tax contributions, required employee contributions, and employer matching contributions made under the Uniformed Services Employment and Reemployment Rights Act of 1994, also known as USERRA. Such amounts should be reported separately for each year.

Amounts included in box 14 should include a separate label for each item.

The next topic in this continuing series will be Boxes 15 through 20, state and local income tax information. Contact Vision Payroll with any questions on the 2009 Form W-2.

This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. 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 13, checkboxes.

There are three checkboxes that must be completed in certain circumstances. First is a checkbox for statutory employees. Statutory employees are independent contractors who are legally classified as employees for certain purposes. Employers must withhold social security tax and Medicare tax from statutory employees. Employers do not withhold federal income tax from statutory employees.

The second checkbox is for retirement plan participation. Employers must check the box for active participants in certain retirement plans. Generally, employees are active participants in defined benefit plans if they are eligible to participate for that tax year. Employees are generally active participants in defined contribution plans for any tax year that either the employer or employee makes a contribution, including forfeitures added to the employee’s account.

The final checkbox is for third-party sick pay. This box is used either by payers of third-party sick pay filing on behalf of an insured or by employer’s reporting payments made by the insurer.

The checkbox for deceased employees was eliminated after the year 2000 reporting period and is no longer required.

The next topic in this continuing series will be Box 14, other. Contact Vision Payroll with any questions on the 2009 Form W-2.

This week’s question comes from John, a homeowner. I read about the need for household employers to file Schedule H. I own a home and hire people to do work there, but am not sure if I need to file Schedule H. How do I know if someone is a household employee? Answer: According to the Internal Revenue Service (IRS), “If you hired someone to do household work and you were able to control what work he or she did and how he or she did it, you had a household employee. This is true even if you gave the employee freedom of action. What matters is that you had the right to control the details of how the work was done.” The IRS also lists the following types of workers who commonly do household work:

• Babysitters
• Caretakers
• Cleaning People
• Drivers
• Health Aides
• Housekeepers
• Nannies
• Private Nurses
• Yard Workers

Furthermore, “[i]f a worker is your employee, it does not matter whether the work is full or part-time or that you hired the worker through an agency or from a list provided by an agency or association. Also, it does not matter if the wages paid are for work done hourly, daily, weekly, or by the job.”

Publication 926, Household Employer’s Tax Guide contains further information. Consult Publication 926 or contact Vision Payroll if you have further questions.

According to the US Department of Labor, in the week ending January 23, the advance figure for seasonally adjusted initial claims was 470,000, a decrease of 8,000 from the previous week’s revised figure of 478,000. The 4-week moving average was 456,250, an increase of 9,500 from the previous week’s revised average of 446,750.

The advance seasonally adjusted insured unemployment rate was 3.5% for the week ending January 16, a decrease of 0.1 percentage point from the prior week’s revised rate of 3.6%.

The advance number for seasonally adjusted insured unemployment during the week ending January 16 was 4,602,000, a decrease of 57,000 from the preceding week’s revised level of 4,659,000. The 4-week moving average was 4,669,250, a decrease of 94,250 from the preceding week’s revised average of 4,763,500.

The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.404 million.

The US Department of Labor (DOL) has released updated COBRA model notices to help employers meet the notification requirements created by the passage of the Department of Defense Appropriation Act, 2010 (2010 DOD Act). The notices are the Updated General Notice, the Premium Assistance Extension Notice, and the Updated Alternative Notice.

Plans subject to the Federal COBRA provisions must provide the Updated General Notice to all qualified beneficiaries (not just covered employees) who experienced a qualifying event at any time from September 1, 2008 through February 28, 2010, regardless of the type of qualifying event, and who have not yet been provided an election notice. This model notice includes updated information on the premium reduction as well as information required in a COBRA election notice.

Plan administrators must provide notice to certain individuals who have already been provided a COBRA election notice that did not include information regarding the American Recovery and Reinvestment Act of 2009 (ARRA), as amended. This model Premium Assistance Extension Notice includes information about the changes made to the premium reduction provisions of ARRA by the 2010 DOD Act. Listed below are the affected individuals and the associated timing requirements.

• Individuals who were “assistance eligible individuals” as of October 31, 2009 (unless they are in a transition period – see below), and individuals who experienced a termination of employment on or after October 31, 2009 and lost health coverage (unless they were already provided a timely, Updated General Notice) must be provided notice of the changes made to the premium reduction provisions of ARRA by the 2010 DOD Act by February 17, 2010;
• Individuals who are in a “transition period” must be provided this notice within 60 days of the first day of the transition period. An individual’s “transition period” is the period that begins immediately after the end of the maximum number of months (generally nine) of premium reduction available under ARRA prior to its amendment. An individual is in a transition period only if the premium reduction provisions would continue to apply due to the extension from nine to 15 months and they otherwise remain eligible for the premium reduction.

Insurance issuers that provide group health insurance coverage must send the Updated Alternative Notice to persons who became eligible for continuation coverage under a State law. Continuation coverage requirements vary among States and issuers should modify this model notice as necessary to conform it to the applicable State law. Issuers may also find the model Premium Assistance Extension Notice or the Updated General Notice appropriate for use in certain situations.

Vision Payroll recommends employers consult with their benefit broker, COBRA administrator, and labor law attorney to ensure compliance with the updated notice requirements.

According to the California Employment Development Department (EDD), employers in the county of San Bernardino directly affected by the damage resulting from the severe winter storms may request up to a 60-day extension of time from EDD to file their State payroll reports and/or deposit State payroll taxes without penalty or interest. This extension may be granted under Section 1111.5 of the California Unemployment Insurance Code (CUIC). Written request for extension must be received within 60 days from the original delinquent date of the payment or return to file/pay. Contact Vision Payroll if you’ve been affected and need to file the extension request.

According to the California Employment Development Department (EDD), employers in the counties of Los Angeles, Orange, Riverside, San Francisco and Siskiyou directly affected by the damage resulting from the severe winter storms may request up to a 60-day extension of time from EDD to file their State payroll reports and/or deposit State payroll taxes without penalty or interest. This extension may be granted under Section 1111.5 of the California Unemployment Insurance Code (CUIC). Written request for extension must be received within 60 days from the original delinquent date of the payment or return to file/pay. Contact Vision Payroll if you’ve been affected and need to file the extension request.

This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. 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 12, codes.

Enter codes and amounts in boxes 12a, 12b, 12c, and 12d. The letters a, b, c, and d do not relate to the codes, but are strictly for identification purposes. If an employee has code C for $100 and that is the only code for that employee, the employer may enter code C in box 12a; it does not need to be entered in box 12c. If filing copy A on paper, enter only four codes on one Form W-2. Employers should use multiple forms for employees with more than four codes. There is no limit on the number of codes on any other copy of Form W-2. Enter the code and amount without dollar signs or commas.

The codes and their descriptions are as follows:

Employers should combine elective deferrals and elective catch-up contributions into one sum and report under the appropriate elective deferral plan code.

The next topic in this continuing series will be Box 13, checkboxes. Contact Vision Payroll with any questions on the 2009 Form W-2.

This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. 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 11, nonqualified plans.

Box 11 shows the amount of distributions from a nonqualified plan or a nongovernmental §457(b) plan. These distributions should also be reported in box 1. Distributions from governmental §457(b) plans are not reported in this box.

Box 11 should show deferrals and earnings that became taxable for social security and Medicare purposes in 2009 because the deferrals and earnings were no longer subject to a substantial risk of forfeiture, but only if the amounts were for services before 2009 and no distributions were made in 2009. These amounts must also be reported in box 3, up to the $106,800 wage limit, and box 5.

Box 11 should not be used for deferrals that are included in box 3, up to the wage limit, and box 5 and that are for services performed in 2009.

Box 11 should also not be used when payments are made from a nonqualified plan and deferrals are included in box 3, up to the wage limit, and box 5. Employers should use Form SSA-131, Employer Report of Special Wage Payments. Generally the employer should report the amount from box 1 of Form W-2, plus any amounts deferred during 2009, less any payments from the nonqualified plan.

Assume Cameron retired during 2009. He earned $50,000 in wages, but deferred $35,000 of that amount in a nonqualified deferred compensation plan. Since he retired, he also received $75,000 in payments from the plan. Since there are both distributions and deferrals in 2009, no amount is reported in box 11. Box 11 should also not be used to report special wage payments earned in a prior year such as accrued sick pay or vacation pay. These amounts should be reported on Form SSA-131, however, so that the Social Security Administration may accurately calculate the recipient’s social security benefits.

The next topic in this continuing series will be Box 12, codes. Contact Vision Payroll with any questions on the 2009 Form W-2.

This week’s question comes from Rachael, a receptionist. I just filed my 2009 tax returns. Usually I get a big refund, but this year my refund was a lot less. My income and deductions are pretty much the same as in 2008. Why did my federal income tax refund go down? Answer: Your income tax refund is based on many factors, but one important factor to consider is the amount of federal income tax withheld. Last February, the Internal Revenue Service released revised withholding tables that increased most taxpayers’ take-home pay by reducing the amount of federal income tax withheld. These tables reflected changes mandated by the American Recovery and Reinvestment Act of 2009, including the Making Work Pay Credit. Contact Vision Payroll if you have any questions.