Vision Payroll

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 3, social security wages.

Box 3 shows the amount wages paid subject to social security tax. It does not include social security tips reported in box 7 or allocated tips reported in box 8. Wages should be reduced by amounts withheld for non-taxable benefits elected under §125 plans, certain clergy housing allowances, and third-party sick pay after the end of six calendar months after the calendar month that the employee last worked for the employer. For 2008, the combined total of boxes 3 and 7 cannot exceed $102,000. Since social security benefits are based on the amount of social security wages 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 4, social security tax withheld. Contact Vision Payroll with any questions on the 2008 Form W-2.

Monday, January 19, 2009 will be the Birthday of Martin Luther King, Jr., a federal holiday. Although the offices of Vision Payroll will be open and payrolls will be processed, most banks will be closed in observance of the holiday.

Payrolls dated January 19 will be paid January 16 unless a previous change in schedule has been submitted. Payrolls submitted after these processing deadlines will be pushed back until the next available processing day. No changes are required for payrolls dated January 22.

The next federal holiday will be Monday, February 16, 2009, Washington’s Birthday. Contact Vision Payroll as soon as possible to make changes to or for questions on your processing schedule.

Maureen T. O’Donnell, Director of the State of Illinois Department of Employment Security announced recently that the 2009 unemployment wage base has increased from $12,000 to $12,300. O’Donnell, appointed by Governor Rod R. Blagojevich in August, had served as Acting Director since March 2007. In addition, the minimum rate, the maximum rate, and the fund building rate all decreased from 0.8% to 0.6%, from 7.2% to 6.8%, and from 0.6% to 0.4%, respectively. Contact Vision Payroll if you have any question on Illinois unemployment tax rates and taxable wage base.

The Internal Revenue Service (IRS) recently released 2009 Form W-5, Earned Income Credit Advance Payment Certificate. There are four criteria for claiming advance earned income credit (EIC) payments.

1. Taxpayer (and spouse if filing jointly) must have a valid social security number.
2. Taxpayer (or spouse if filing jointly) must have at least one qualifying child and be able to claim the credit using that child.
3. Taxpayer’s expected earned income and adjusted gross income must be less than $35,463 ($38,583 if filing jointly).
4. Taxpayer must expect to claim the EIC for 2009.

Eligible taxpayers must file a new Form W-5 for 2009. The 2008 Form W-5 expired December 31, 2008. Contact Vision Payroll if you have any question on Form W-5.

This week’s question comes from Scott, a small business owner. I have received notification from the Internal Revenue Service (IRS) that I should file Form 944. Should I file Form 944 instead of Form 941? Answer: Employers who are notified that they should file Form 944 must file Form 944 unless they opt out of filing Form 944. In TD 9440, the IRS issued revised “temporary regulations relating to the annual filing of Federal employment tax returns and requirements for employment tax deposits.” These regulations make participation in filing Form 944 voluntary, beginning in 2010. According to Rev. Proc. 2009-13, employers are eligible to opt out in 2009 if they meet one of the following conditions:

1. The employer anticipates that its employment tax liability for tax year 2009 will be more than $1,000; or
2. The employer wants to file electronically quarterly Forms 941 for tax year 2009.

Eligible employers who had previously filed Form 941 or Form 944 must either call the IRS before April 2, 2009 or have written correspondence postmarked no later than March 15, 2009 to opt out of filing the 2009 Form 944.

Businesses newly required to Form 941 or Form 944 have their due dates based on the month their first Form 941 will be due. Telephone calls must therefore be made before April 2, 2009, July 2, 2009, October 2, 2009, or January 2, 2010 if their filing requirement is effective for the first, second, third, or fourth quarter, respectively. Written correspondence must be postmarked no later than the fifteenth of the month prior to the month that the Form 941 is first due. For 2009, the postmark due dates are March 15, 2009, June 15, 2009, September 15, 2009, and December 15, 2009.

As with most federal tax deadlines, any due date that falls on a Saturday, Sunday, or legal holiday is extended to the next day that is not a Saturday, Sunday, or legal holiday. For example, the March 15, 2009 deadline is automatically extended to March 16, 2009.

Whether an employer files Form 941 or Form 944, the deposit rules are generally the same, although “the de minimis deposit amount may be different.”

Contact Vision Payroll if you have any questions on the filing of Form 941 or Form 944 and the related tax deposit requirements.

According to the US Department of Labor, in the week ended December 27, the advance figure for seasonally adjusted initial claims was 492,000, a decrease of 94,000 from the previous week’s unrevised figure of 586,000. The 4-week moving average was 552,250, a decrease of 5,750 from the previous week’s unrevised average of 558,000.

Employees who have provided a Form W-4, Employee’s Withholding Allowance Certificate claiming exemption from federal income tax withholding must file a new 2009 Form W-4 by February 16, 2009 in order to continue their exemption from federal income tax withholding. Employers must start withholding on February 16, 2009 if employees have not provided a 2009 Form W-4 claiming exemption. Even employees who are no longer claiming exemption should file a 2009 Form W-4 so that employers may calculate the proper amount of withholding. If an employee has not provided a 2009 Form W-4 by February 16, 2009, the employer should withhold based on a previously filed Form W-4 not claiming exemption, if available or using single, zero allowances, if not. Spanish-speaking employees may complete Formulario W-4(SP), Certificado de Exención de la Retención del Empleado. Upon request, Vision Payroll can provide employers with pre-printed 2009 Forms W-4 for all active employees. Vision Payroll will not automatically change any employee’s claimed withholding allowances. Employers should update the allowances claimed by logging in to their company file or providing Vision Payroll with the updated information.

The Internal Revenue Service has released an updated version of Publication 1494, Tables for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income (Forms 668-W(C), 668-W(c)(DO) and 668-W(ICS)). The table is used to calculate the amount of wages and other income exempt from levies for delinquent taxes. In addition to levies issued in 2009, employers use the revised amounts to calculate the exempt amount if the employee should provide a revised statement showing a change in filing status or exemptions. Contact Vision Payroll for assistance in automating the calculation of the exemption and levy amounts on employees’ paychecks.

The Internal Revenue Service recently released an updated version of Publication 15-B, Employer’s Tax Guide to Fringe Benefits. Publication 15-B provides an overview of fringe benefits as well as sections on fringe benefit exclusion rules and fringe benefit valuation rules. In addition, guidelines for withholding, depositing, and reporting taxable non-cash fringe benefits are also provided. Contact Vision Payroll if you any questions on Publication 15-B.

According to a recent article in the Wall Street Journal, celebrity chef Wolfgang Puck would like to eliminate the minimum wage for waiters. In a story on resolutions for 2009, Puck was asked, “What problem should your industry or professional community tackle more effectively?” Puck responded:

The industry should lobby to establish a federal law that allows restaurants nationwide to exempt waiters who earn tips from the minimum wage. Waiters would not lose money because they could work overtime, and we could use the savings to provide health care or raise the wages of dishwashers.

Currently, tipped employees must be paid a minimum wage of $2.63 per hour in cash wages and with tips must earn at least $6.55 per hour. State laws may provide rules that are more beneficial to the employee and must be followed.