Payroll Reminders for a Successful Year-End
The Social Security
Administration's newsletters often include some truly
helpful tips. We thought we'd re-list them here:
In DECEMBER:
Remind any workers who have had "life changes" such as marriage, divorce, or a change in number of dependents to make the appropriate changes to their withholding via form W-4.
Remind employees that those who wish to continue claiming exemption from withholding must submit a new W-4 by February 15th of the new year; and those who wish to continue receiving Advance Earned Income Credit payments must submit a new W-5 by December 31st of the current year.
collect benefit and payroll adjustment information and post to employees' payroll, including relocation, educational assistance, group-term life insurance, company cars, manual checks, and void checks.
DECEMBER-JANUARY:
Obtain new forms, withholding tables and publications. Review the new Social Security wage base, deferred compensation limits, mileage rates, and state unemployment wage bases.
Notify employees of applicable changes and any steps they must take.
JANUARY 1st:
Reset all year-to-date balances to zero.
Reset all wages bases, rates, and limits according to your research.
Discontinue payments of Advance Earned Income Credit to any employee who has not given you a Form W-5 for the current year.
JANUARY:
Reconcile W-2 totals against the four Forms 941 for the current year.
Run a report to verify W-2 information before printing the forms. Make sure you have a Social Security number for each employee. Review employees with wages higher than the Social Security wage base, benefits that must be reported in box 10 or 12, or statuses that must be checked in box 13.
Buy postage for mailing Forms W-2.
If your company offers any pre-tax deductions, prepare a notice for employees that explains the calculations of the numbers in boxes 1, 3, and 5.
BY THE END OF THE DAY, JANUARY 31st (or the following Monday if the 31st is on a weekend)
Deliver or mail Forms W-2 ("Wage and Tax Statement") to all employees.
File Form 941 (943 for agricultural employers), "Employer's Quarterly Federal Tax Return."
File Form 940 (940-EZ for certain one-state employers), "Employer's Annual Federal Unemployment (FUTA) Tax Return."
For each of Forms 941, 943, 940 and 940-EZ, if all taxes have been deposited when due, the deadline is usually extended an extra week.
MID-FEBRUARY:
For any employee who claimed exemption from withholding last year, but has not submitted a W-4, begin withholding based on a marital status of "single" and zero withholding allowances.
By the END of February (or MARCH 1st if February 28 falls on a weekend)
File Forms W-2 (Copy A) with the Social Security Administration. If you file electronically, you have an extra month (until March 31) to file. (See: http://www.socialsecurity.gov/employer)
MARCH
While your year-end experience is still fresh in your mind, review the process and evaluate its strengths and weaknesses. Note changes you should make for next year.
Note: This article was supplied by the American Payroll Association (http://www.americanpayroll.org) in stakeholder partnership with the IRS and SSA.