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 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.

This week’s question comes from Elizabeth, a small business owner. I need to give copies of my quarterly tax returns to my CPA so I can finish my income tax return. I can’t find my copies anywhere. How can I get copies of my quarterlies? Answer: Vision Payroll offers a CPA Reporting Service that will deliver electronic or paper copies of your quarterlies to your CPA. Your CPA will appreciate always having your file up-to-date and you’ll appreciate the timesavings for both of you at year-end. And there’s no charge for this valuable service. Send us the name and address of your CPA and we’ll get you the paperwork to enroll. Contact Vision Payroll today to get started.

In the recently released, Working Draft Directive 09-XX, Requirements for Employers Filing Year-end Withholding Information, the Massachusetts Department of Revenue (DOR) proposes changes to the definition of “machine-readable form”. Employers who file fifty or more Forms W-2 in a calendar year are required to file them in machine-readable form. For 2009 and later, the definition of machine-readable form will no longer include diskette, magnetic tape, or cartridge 18-track magnetic media. Filing must be done through WebFile for Business or electronic data transfer. Contact Vision Payroll if you have any questions on the proposed changes.

The Internal Revenue Service (IRS) has released Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a payroll tax credit on their Form 941 to be reimbursed for the assistance provided.

In recently issued guidance, the IRS confirmed that employers, multiemployer plans, and insurers are not required to report on Form W-2 or Form 1099 any premium subsidies provided to Assistance Eligible Individuals (AEIs). They are requited to keep records and supporting documentation for any such payments to AEIs and to support any credit claimed on Form 941. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.

The third and final deadline applicable to federal filing of Forms W-2 is approaching. The first deadline, January 31, 2009, was the deadline for providing copies of Form W-2 to employees. The second deadline, February 28, 2009 (extended to March 2, 2009 because of the weekend), was the deadline for filing paper copies of Forms W-3 and Forms W-2 with the Social Security Administration. The final deadline, March 31, 2009, is the deadline for electronic filing of Forms W-3 and Forms W-2 with the Social Security Administration. In addition to the later deadline, electronic filing offers the following benefits to employers:

1. It is free, fast and secure.
2. It saves time and reduces filing burden.
3. It provides an immediate receipt for proof of filing.

Vision Payroll uses electronic filing for all filing of Forms W-3 and Forms W-2 with the Social Security Administration. Contact Vision Payroll if you have further questions on these forms.

This week’s question comes from Kelly, a business owner. I already gave my employees their W-2s. Do I still need to file Form W-3? Answer: Anyone required to provide a Form W-2 to an employee must file Form W-3, Transmittal of Wage and Tax Statements. Employers may file Form W-3 on paper if transmitting fewer than 250 Forms W-2. Transmit Copy A of Form W-2 with Form W-3 to the Social Security Administration (SSA). Employers transmitting 250 or more Forms W-2 must file them electronically. All employers are encouraged by the SSA to file electronically, even if not otherwise required, to reduce costs and increase accuracy. Vision Payroll files Forms W-3 for all clients electronically with the SSA.

Employers must file the 2008 Form W-3, Transmittal of Wage and Tax Statements, on or before March 2, 2009 if filing by paper or March 31, 2009 if filing by an approved electronic means.

Employers should check only one box in section b, Kind of Payer. The only exception is for Third-party sick pay, which should be checked along with one other box if third-party sick pay is reported on the Form W-3.

Box c should include only the total number of valid Forms W-2 filed, not including voids.

Box h should contain other EINs (employer identification numbers) used on Form 941, Form 943, Form 944, or Form CT-1 during the year. An example is a prior owner for whom the filer is a successor.

Boxes 1 through 11 should contain a simple arithmetic sum of all the Forms W-2 filed with this Form W-3 for the respective box.

Box 12 should also contain a sum of all the Forms W-2 filed with this Form W-3, but should be totaled irrespective of and without reference to any code.

Box 14 should contain the “federal income tax withheld on third-party payments of sick pay” even though the amount was already reported in box 2.

Box 15 should contain the two-character abbreviation for the state being reported, but if more than one state is reported, only an X should be entered. Likewise, boxes 16-19 should include the total for all such boxes, regardless of how many are reported.

Employers should reconcile Forms W-3 not only to the individual Forms W-2, but also to the sum of Forms 941, Forms 943, Forms 944, or Forms CT-1 filed for the year.

Vision Payroll files Forms W-3 for all clients electronically with the Social Security Administration. Contact Vision Payroll if you have any questions on Form W-3.

This is the last 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 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 2008 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 2009 year-end reporting season. 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 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 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 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 2008 Form W-2.