IRS Payroll Taxes, W-2s, 1099s and W-9s. Payroll Taxes

Transcription

1 IRS Payroll Taxes, W-2s, 1099s and W-9s Presented by Jani Zweber, Accounting Services Manager 1 Payroll Taxes It is the employer s responsibility to comply with the law State law applies where the employee actually works - not where he/she lives Federal vs. State Law Use the law which provides the greater benefit to the employee 2 1

2 Payroll Taxes Taxable Benefits Nontaxable Benefits Overtime pay Back pay Bonuses Absences: vacation, holiday, etc. Pay for vacation time not taken Tips Commissions Sick pay and disability Personal use of company vehicles Severance pay Gifts, prizes, and awards Group term life insurance over $50,000 Education expenses not job-related Most noncash fringes Group legal services Non-accountable reimbursed business expenses Loans below federal interest rate and forgiven loans Medical, dental, and health plans No-additional-cost services Qualified employee discounts Working-Condition fringes De minimis fringes Qualified moving expense reimbursement Business use of company vehicle Life insurance premiums (group plans under $50,000) Wages paid after death in a new calendar year Child-care assistance (up to $5,000) Educational assistance (up to $5,250) Accountable reimbursement business expenses under an accountable plan Mileage Reimbursement (special rules) 3 Payroll Taxes Employers must deposit the federal income taxes withheld from employees checks as well as both the employer and employee social security and Medicare taxes Deposits are made according to the monthly or semiweekly deposit schedules If you accumulate $100,000 or more in taxes on any day, you must deposit tax by the next business day regardless of your deposit schedule 4 2

3 Payroll Taxes The deposit schedule for a calendar year is determined from the total taxes reported on Form 941, line 10, in a 4-quarter lookback period Lookback period begins July 1 and ends June 30 Calendar Year 2015 Lookback Period July 1, 2013 Through Sept 30, 2013 Oct 1, 2013 Through Dec 31, 2013 January 1, 2014 Through March 31, 2014 April 1, 2014 Through June 30, Payroll Taxes If the total taxes on Form 941, Line 10 (total taxes after adjustments), for the 4 quarters in your lookback period were $50,000 or less you are a monthly depositor Under the monthly deposit schedule, deposit employment taxes on payments made during the month by the 15 th day of the following month 6 3

4 Payroll Taxes If the total taxes on Form 941, Line 10 for the 4 quarters in your lookback period were more than $50,000 you must deposit using the semiweekly deposit schedule Semiweekly Deposit Schedule IF the payday falls on a.. Wednesday, Thursday and/or Friday Saturday, Sunday, Monday and/or Tuesday THEN deposit taxes by the following. Wednesday Friday * Payments must be scheduled via EFTPS at least one day in advance of payment due date 7 Payroll Taxes If you are a monthly schedule depositor and accumulate a $100,000 tax liability on any day, you become a semiweekly depositor on the next day and remain so for at least the rest of the calendar year and for the following calendar year 8 4

5 Form 941 Form 941 reports the following information Wages you have paid Tips your employees received Federal income tax you withheld Both the employer and employee s share of social security and Medicare taxes Additional.9% Medicare withheld from employees wages in excess of $200,000 in a calendar year (employee only tax) Current quarter adjustments fractions of cents, sick pay, tips and group-term life insurance 9 Form 941 Quarter Includes Quarter Ends Form 941 Is Due January, February, March March 31 April 30 April, May, June June 30 July 31 July, August, September September 30 October 31 October, November, December December 31 January 31 * If all deposits have been made timely and in full, Form 941 may be filed by the 10 th day of the second month that follows the end of the quarter 10 5

6 Cafeteria Plans (Section 125 Plan) Separate written plan maintained by the employer which must specifically describe all benefits and establish rules for eligibility and elections Provides participants an opportunity to receive certain benefits on a pretax basis Contributions usually made pursuant to salary reduction agreements between employer and employee where employee agrees to contribute a portion of their salary on a pre-tax basis to pay for the qualified benefits 11 Cafeteria Plans (Section 125 Plan) Employee contributions are not considered wages for federal income tax purposes and are generally not subject to FICA taxes. Group-Term life insurance that exceeds $50,000 of coverage is subject to FICA taxes but not income tax withholding Adoption assistance benefits provided in a cafeteria plan are subject to FICA taxes but not income tax withholding If an employee elects to receive cash instead of a qualified benefit, it is treated as wages and subject to all employment taxes 12 6

7 Cafeteria Plan (Section 125 Plan) Qualified Benefits Accident and health benefits (but not Archer medical savings accounts or long-term care insurance) Adoption Assistance (W-2 Box 12 Code T) Dependent Care Assistance Group-Term Life Insurance (W-12 Box 12 Code C) Health savings accounts, including distributions to pay long-term care services 13 Dependent Care Employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year (limit reduced to $2,500 for married employee filing separate returns). The exclusion cannot be more than the smaller of the earned income for either the employee or the employee s spouse Total dependent care benefits the employer paid to the employee or incurred on their behalf (including amounts from a Section 125 plan) should be reported in Box 10 of Form W-2 Any amount over $5,000 should be included in Boxes 1, 3, and 5 as wages, social security wages and Medicare wages 14 7

8 Dependent Care Example. Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. In addition, it provides occasional on-site dependent care to its employees at no cost. Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. In addition, Emily used the on-site dependent care several times. The fair market value of the on-site care was $700. Emily's Form W-2 should report $5,200 of dependent care assistance in box 10 ($4,500 flexible spending arrangement plus $700 on-site dependent care). Boxes 1, 3, and 5 should include $200 (the amount in excess of the nontaxable assistance), and applicable taxes should be withheld on that amount 15 South Dakota Retirement System 401(a) defined benefit public retirement plan Participation is mandatory for all permanent, full-time employees of a participating unit Both the employee and the employer must make contributions to SDRS Class A service category includes general employment with participating counties and municipalities 16 8

9 South Dakota Retirement System Class A contributions are 6% of salary from the member, matched by the employer W-2 Reporting o Box 1 (wages subject to federal income tax) is reduced by the 6% employee contribution o Check Box 13 Retirement Plan o Optional Box 14 amount of employee s 6% contribution for the year o Does not go in Box SDRS Supplemental Retirement Plan Employee decides how much to contribute to SDRS-SRP account Contributions are deducted pre-tax Employee contributions reduce Box 1 W-2 Wages Report employee contributions in W-2 Box 12 Code G 18 9

10 SDRS Roth 457 (b) Roth contributions are made after-tax, meaning taxes are withheld when the contribution is made and are included as taxable income on the employees W-2 Elective deferrals and employer contributions (including non-elective deferrals) are reported on the W-2 in Box 12 Code EE 19 Health Insurance W-2 Reporting Transitional Relief applies for employers filing fewer than 250 Form W-2s for the previous year (until further notice) If more than 250 W-2s were filed Report both the portion paid by the employer and the portion paid by the employee in Box 12 of Form W-2 with Code DD This is an informational number only in order to provide employees useful and comparable consumer information on the cost of their health care coverage 20 10

11 Reconciling Payroll Reports 21 W-2 and 1099 Due Dates The due date for giving the recipient forms W-2 and 1099 is January 31 Paper filing file Form W-3/W-2s and Forms 1096/ due date is the last day of February Electronically filing Forms W-3/W-2 and 1096/ due date is March 31 E-Filing is required if you have 250 or more W-2s or 1099s 22 11

12 Form W-9 Used to Request Taxpayer Identification Number, Name and Address W-9s should be requested from vendors to certify they are not subject to backup withholding W-9s are needed to meet 1099 reporting obligations Miscellaneous File this form for each person to whom you paid during the year: At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest At least $600 in rents, services (including parts & materials), prizes and awards, other income payments, medical and health care payments Gross proceeds of $600 or more paid to an attorney Withheld any federal income tax under the backup withholding rules regardless of the amount of the payment 24 12

13 1099 Miscellaneous Payments that do not need reported on Form 1099 Payments to a corporation (except for medical and health care payments, attorney s fees, veterinarians, gross proceeds paid to an attorney) Payments for merchandise, telegrams, telephone, freight, storage and other similar items Payments of rents to real estate agents Business travel allowances paid to employees 25 Form 1099 Miscellaneous Partial list of payments requiring 1099s Accounting, Architects, Attorney Fees, Bands & Entertainers, Cleaning & Laundry Services, Computer Fees/Support, Contractors, Engineers, Equipment Rent, Exchange of Services, Loggers, Medical & Health Care Payments, Outside Services, Prizes and Awards, Rent, Repairs, Royalties, Services Performed, Website Design 26 13

14 W-2 Sample 27 Questions Contact Information: Jani Zweber Traci Hanson