Vision Payroll

This week’s question comes from Beverly, a small-business owner. We pay health insurance costs for our employees. I heard there was a change in reporting health insurance costs under the new law. Are health insurance costs required to be reported on Form W-2? Answer: Under the Patient Protection and Affordable Care Act (PPACA), beginning in the 2011 tax year (reported to Social Security Administration (SSA) in 2012), employers will be required to start including the aggregate cost for “applicable employer-sponsored coverage” for each employee on that employee’s Form W-2, Wage and Tax Statement. There is no requirement to include this information on the 2010 Form W-2, to be reported to the SSA in 2011. Contact Vision Payroll if you have any further questions on Form W-2.

The Internal Revenue Service (IRS) recently released revised 2010 Form W-2, Wage and Tax Statement, and revised 2010 Form W-3, Transmittal of Wage and Tax Statements. The revised 2010 Instructions for Forms W-2 and W-3 indicate that employers should:

Report the amount of wages and tips paid to the qualified employee for which you claimed the payroll tax exemption in Box 12, using code CC. This will include wages and tips paid to the qualified employee from April 1, 2010, through December 31, 2010, for which you claimed the payroll tax exemption, plus wages and tips paid to the qualified employee from March 19, 2010, through March 31, 2010, for which you claimed a credit in the second quarter of 2010. The amount may not exceed $106,800 (2010 maximum social security wage base).

The box on the Form W-3 to report deferred compensation was moved from box 12 to box 12a. In addition, a new box 12b was added to report HIRE exempt wages and tips. Contact Vision Payroll if you have any questions on the 2010 Form W-2 and revised 2010 Form W-3.

This week’s question comes from Jason, an HR director. We mailed a Form W-2 to an employee who terminated employment during 2009. The Form W-2 was returned by the post office with no forwarding address. What should we do with a returned Form W-2? Answer: If the post office returns a Form W-2 as undeliverable, the employer should keep a copy of the Form W-2 until April 15 of the fourth year after the year of issue. Therefore, an undeliverable Form W-2 for 2009 should be kept until April 15, 2013. An undeliverable Form W-2 should not be sent to the Social Security Administration (SSA). Employers who can store electronically and reproduce an undeliverable Form W-2 need not keep the undelivered form. Customers of Vision Payroll need not keep copies since they can be reproduced from their ViewChoice CD. We recommend two copies of the ViewChoice CD with one stored on-site for easy access and one stored off-site for disaster recovery. Contact Vision Payroll if you have further questions.

This week’s question comes from Madeleine, an office manager. One of our employees lost her 2009 Form W-2 and now needs it to file her tax return. How do I get a duplicate Form W-2? There are two ways to get a duplicate Form W-2. The first is to print a copy from your year-end ViewChoice CD and the second is to request a printed copy for pickup at Vision Payroll. There is a nominal fee for this service. Contact Vision Payroll if you would like to arrange for a printed copy of a Form W-2 for pickup.

This week’s question comes from Jonathan, an HR director. I compared my Form W-2 to my last pay stub and there are differences between the amounts listed on the Form W-2 and the amounts on my last pay stub. How do I reconcile my W-2 to my last pay stub? Answer: The amounts on the Form W-2 may differ from gross pay on your last pay stub for several reasons. The Vision Payroll web site contains a document that helps employees reconcile their Form W-2 to their last pay stub. Contact Vision Payroll if you have any further questions.

This is the last 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 Boxes 15 through 20, state and local income tax information.

Employers report state and local tax information in boxes 15 through 20. There is room for two states on each individual form with one state reported above the broken line and one state reported below the broken line. You should report local information in the same manner. If you must report information for more than two states or localities, use a second form. Do not complete federal information on any additional form for the same employee unless it is information that couldn’t fit on the first form or is being reported separately. For the state name, use the two-character abbreviation assigned by the United States Postal Service. The state taxing authority should have assigned the employer’s state ID number to use.

State wages reported in box 16 and local wages in box 18 must be reported according to the reporting requirements of the state or locality and may or may not equal wages reported in box 1, box 3, or box 7.

Although this ends this series on the 2009 Form W-2, Vision Payroll will continue to provide information throughout the year to assist you in the process of gathering data to help ensure an accurate and efficient 2010 year-end reporting season. 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 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 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.