Vision Payroll

The US Citizenship and Immigration Services (USCIS), a component of the Department of Homeland Security (DHS), in conjunction with the Social Security Administration (SSA) operates an electronic system that allows employers to verify the employment eligibility of newly hired employees. The system, which is free of charge, is known as E-Verify. Effective with new contracts awarded after September 8, 2009, most federal contractors and sub-contractors will be required to use E-Verify to confirm the employment status of newly hired employees and current employees who are classified as “employees assigned to the contract.” Contact Vision Payroll if you have any questions on this process.

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.

If you got married or divorced and changed your name, be sure to give the changes to your payroll or HR department and to the Social Security Administration (SSA). This is true if you’ve changed your name to your spouse’s name, hyphenated your name with your spouse’s name, or changed your name to a previous name after a divorce or separation. If the name on your Form W-2 doesn’t match the name on file with the SSA, there may be a problem posting your earnings record to your social security account. Also, be sure not to include titles such as Dr. or Atty. and suffixes such as Jr. or Sr. with the name you provide to payroll or HR unless they are also listed on your social security card.

To change your name with SSA, file Form SS-5, Application for a Social Security Card, with the SSA. This is also a good time to make sure your spouse files Form SS-5, if necessary and also that any children who may have changed their name due to the marriage or divorce do so as well.

Vision Payroll strongly recommends 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.

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 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 2008 because the deferrals and earnings were no longer subject to a substantial risk of forfeiture, but only if the amounts were for services before 2008 and no distributions were made in 2008. These amounts must also be reported in box 3, up to the $102,000 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 2008.

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 2008, less any payments from the nonqualified plan.

Assume Cameron retired during 2008. 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 2008, 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 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 7, social security tips.

Box 7 shows the amount of tips reported by employees. In many situations, the cash wages paid are insufficient to collect the entire amount of social security and Medicare tax. Reported tips must still be shown in this box, even if social security or Medicare tax was not withheld on them. For 2008, the combined total of Boxes 3 and 7 cannot exceed $102,000. The reported tips should be included with amounts reported in Box 1, wages, tips, other compensation and Box 5, Medicare wages and tips. Since social security benefits are based on the amount of social security tips 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 8, allocated tips. 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 4, social security tax withheld.

Box 4 shows the total amount of employee social security tax withheld, including the amount withheld on tips. It does not include any employer contribution toward social security on the employee’s behalf. Since the 2008 rate was 6.2% and the taxable wage base was $102,000, the amount in this box should not exceed $6,324. If the employer paid the employee’s share of such taxes rather than withholding them, the tax must be grossed up and included in boxes 1, 3, and 5.

The next topic in this continuing series will be Box 5, Medicare wages and tips. 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 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.

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 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 2007 and paid in 2008 is included and wages for work performed in 2008 and paid in 2009 is 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 2008 Form W-2.

The Social Security Administration (SSA) announced a new online calculator that will provide immediate and personalized benefit estimates to help people plan for their retirement. According to the SSA, the calculator produces estimates that are based on your actual Social Security earnings record. You will need to provide your name, Social Security number, date and place of birth, and mother’s maiden name. You will be provided an estimated monthly benefit for an early retirement, full retirement, and a late retirement based on certain earnings assumptions.