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 2, federal income tax withheld.

Box 2 shows the amount employees must enter on line 62 of Form 1040, US Individual Income Tax Return. Employers determine the amount of withheld federal income tax each pay period by the amount of taxable wages, the pay frequency, and the number of withholding allowances claimed on Form W-4, Employee’s Withholding Allowance Certificate. Spanish-speaking employees may complete Formulario W-4(SP), Certificado de Exención de la Retención del Empleado. Employers may use either the percentage method or the wage bracket method to calculate the amount of tax to withhold. Both methods are explained in Publication 15, (Circular E) Employer’s Tax Guide. Employers should not accept “reverse withholding” where employees write checks to the employer to pay withholding tax. Employees should make such payments using Form 1040-ES. Also, any amounts that employers pay toward an employee’s withholding to “gross-up” non-cash payments such as taxable fringe benefits must also be included as wages in boxes 1, 3, 5, and 7 as required.

The next topic in this continuing series will be Box 3, social security wages. Contact Vision Payroll with any questions on 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 1, wages, tips, other compensation.

Box 1 shows the amount employees must enter on line 7 of Form 1040, US Individual Income Tax Return. It may be, but is not necessarily, equal to gross wages. Common adjustments that increase or decrease gross wages include the following:

• Employee elective deferral to qualified retirement plans such as §401(k) plans, SIMPLE plans, and §403(b) plans (decrease).
• Amounts withheld for non-taxable benefits elected under §125 plans (decrease).
• Taxable non-cash fringe benefits, such as personal use of company automobile (increase).
• Certain clergy housing allowances (decrease).
• Reported tips (increase).
• Expense reimbursements paid under a non-accountable plan (increase).
• Accident and health insurance premiums for so-called 2% S corporation shareholders (increase).
• Cost of group-term life insurance in excess of $50,000 (increase).

The next topic in this continuing series will be Box 2, federal income tax withheld. 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 general information regarding Form W-2.

Forms W-2 should be typed or machine-printed in black ink, using 12-point Courier font. Dollar signs and commas must be omitted, but decimal points and cents, even if zero, must be included. Forms W-2 must be prepared on a calendar year basis using pay dates, not work dates. Wages for work performed in 2008 and paid in 2009 are included and wages for work performed in 2009 and paid in 2010 are excluded.

Report the employee’s social security number (SSN) in box a. Employees who have applied for, but not received, an SSN should be reported with all zeroes and corrected on a Form W-2c. Enter in box b the employer’s employer identification number, not the owner’s SSN. Box c must contain the employer’s address as shown on Forms 941, 943, 944, CT-1 or Schedule H of Form 1040. Box d is an optional box for employer use to identify individual forms. Box e should report the employee’s name exactly as shown on the social security card. Suffixes such as Sr. or Jr. should only be included if on the social security card. Do not include professional and academic titles and degrees such as CPA or Ph.D. as part of the employee’s names. Names should not be changed on Form W-2 unless the employee has received a revised card from the Social Security Administration. The Address in box f should be the address where the employee receives mail. Foreign country names are not to be abbreviated.

The next topic in this continuing series will be Box 1, wages, tips, other compensation. Contact Vision Payroll with any questions on 2009 Form W-2.

The Rhode Island Department of Labor and Training has announced an increase in the taxable wage base for 2010. The wage base will increase from $18,000 for 2009 to $19,000 for 2010. Contact Vision Payroll if you have any questions on the Rhode Island unemployment taxable wage base or visit our Unemployment Taxable Wage Base page.

This week’s question comes from Sherri, a payroll director. We have many employees with levies on their paychecks, I know we need to change the calculation if an employee provides a change in exemptions. Where can I find the levy exemption amounts for 2010? Answer: 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 2010, 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.

According to the US Department of Labor, in the week ending December 19, the advance figure for seasonally adjusted initial claims was 452,000, a decrease of 28,000 from the previous week’s unrevised figure of 480,000. The 4-week moving average was 465,250, a decrease of 2,750 from the previous week’s revised average of 468,000.

The advance seasonally adjusted insured unemployment rate was 3.9% for the week ending December 12, unchanged from the prior week’s unrevised rate of 3.9%.

The advance number for seasonally adjusted insured unemployment during the week ending December 12 was 5,076,000, a decrease of 127,000 from the preceding week’s revised level of 5,203,000. The 4-week moving average was 5,233,000, a decrease of 90,000 from the preceding week’s revised average of 5,323,000.

The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.673 million.

2009 is quickly coming to a close and many small business owners and executives like you are reflecting on the performance of the current year and already planning for 2010 and beyond. With the recent economic challenges and the myriad of employment law changes, businesses have been taking a much closer look at their existing workforce. As you assess new best practices to help advance the goals and success of your company, consider how strategic HR plays a key role.

There are three keys questions concerning strategic HR that must be addressed. They are:

• What is Strategic HR?
• Where Does Your Business Stand in Terms of Strategic HR?
• How Can You Apply Strategic HR to Your Small Business Environment?

To learn more about how the answers to these questions can help you implement a strategic HR program in your business, be sure to read the featured article by the HR pros at MyHRSupportCenter, A Little Strategic HR for Bigger Business Success. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

The Illinois Department of Employment Security has announced an increase in the taxable wage base for 2010. The wage base will increase from $12,300 for 2009 to $12,520 for 2010. Contact Vision Payroll if you have any questions on the Illinois unemployment taxable wage base or visit our Unemployment Taxable Wage Base page.

Friday, January 1, 2010 will be New Year’s Day, a federal holiday. The offices of Vision Payroll will close New Year’s Eve, December 31 at 2 pm EST and re-open Monday January 4. Most banks will also be closed in observance of the holiday. Payroll changes and hours must be submitted before the processing deadlines as listed below.

Payrolls dated January 1 will be paid December 31 unless a previous change in schedule has been submitted.

Due to heavy USPS and UPS delivery requirements, we strongly recommend submitting payrolls during this time as early as practicable. UPS does not ship ground deliveries received on December 31 until January 4 so we do not recommend submitting payrolls on that date. The next federal holiday will be January 18, 2010, the Birthday of Martin Luther King, Jr. Contact Vision Payroll as soon as possible to make changes to or for questions on your processing schedule.

The Idaho Department of Labor has announced an increase in the taxable wage base for 2010. The wage base will increase from $33,200 for 2009 to $33,300 for 2010. Contact Vision Payroll if you have any questions on the Idaho unemployment taxable wage base or visit our Unemployment Taxable Wage Base page.