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1
Year End 2013 and Year
Beginning 2014: How to
Handle Them Both with Ease
Presented Wednesday, October 23, 2013
©2013 The Payroll Advisor
2
RCH Credit
3

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

To earn RCH, you must
Stay on the webinar for the full 60 minutes
Be watching the webinar using your unique URL
Certificates delivered electronically, to email address with
which you registered
Certificates delivered no later than November 24th
About the Speaker
4
Vicki M. Lambert, CPP, is President and Academic Director of Vicki M.
Lambert, LLC, a firm specializing in payroll education and training. Known
as “The Payroll Advisor,” Ms. Lambert is Founder and Director of
www.thepayrolladvisor.com, a website that provides unique and expert
services for anyone dealing with the complexities and technicalities of the
payroll process.
As an adjunct faculty member at Brandman University, Ms. Lambert is the
creator and instructor for the Practical Payroll Online payroll training
program, which is approved by the APA for recertification credits.
What We Will Cover…
5
Due to the recent shutdown the IRS and SSA did
not releasing any information that would
normally be available to us by October 15th. The
agencies are playing catch-up at this time.
Therefore estimations will be provided until
such time as the information is released.
Attendees will be provided updated information
as it becomes available via e-mail updates.
©2013 The Payroll Advisor
What We Will Cover…
6

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IRS Update
State Update
SSA Update
Other Regulatory Updates
Best Practices
©2013 The Payroll Advisor
IRS Update-What We Will Cover
7
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Pension plan limits
Federal per diem
allowance
Standard mileage
rate
Tax Rate Changes
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Adoption Benefits
Taxation of fringe
benefits at year end
Qualified
transportation
fringe benefits
©2013 The Payroll Advisor
IRS-Pension Plans Estimations for 2014
8
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Not available due to shut down--pending
Elective Deferral limit 2013: $17,500
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Catch up contributions limit 2013: $5,500

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Not usually increased annually but would be $500
Defined Contribution Plans limitation 2013:
$51,000
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Normally rises $500 per year--$18,000
Normally rises $1,000 per year could be $52,000
Annual compensation limit 2013: $255,000

Normally rises $5,000 could be $260,000
©2013 The Payroll Advisor
IRS—Per Diems and FEIE
9

Mileage rates—2014 pending
 2013

is $.565
FY 2013 Per Diems for Standard CONUS
 Lodging– $77
 Meals
and Incidental expenses--$46
 Total $123


Delivery Services-anticipating no change
2013 Foreign Earned Income Exclusion is
$97,600—2014 Pending
©2013 The Payroll Advisor
IRS Transportation Fringe Benefits
10

Qualified
transportation fringe
benefits-2014
 Transit passes $TBA
 Parking $TBA
 Bicycles $TBA
©2013 The Payroll Advisor
IRS Earned Income Credit
11

Earned income credit
 Must still notify
employee of Earned
Income Credit on back
of copy B
 State may still require
notification
©2013 The Payroll Advisor
IRS Adoption Benefits
12
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Adoption Benefits2014
$TBA—was $12,970 in
2013
©2013 The Payroll Advisor
Supplemental Tax Rates—2014
13
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Withholding up to $1
million up 25%
Withholding on wages in
excess of $1 million
39.6%
Back up withholding—
28%
©2013 The Payroll Advisor
Active Duty Military Pay
14
Payments made after 2008 to
former employees while they
are on active duty for more
than 30 days in the Armed
Forces or other uniformed
services are now treated as
wages. Report these payments
in box 1 of Form W-2.
©2013 The Payroll Advisor
Voluntary Classification Settlement
Program (VCSP)
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Launched on September 21, 2011 and still going
Enable employers to resolve past worker
classification issues
Employers have opportunity to come into
compliance by making minimal past payroll tax
obligation payment
Uses Form 8952
Info on program: http://www.irs.gov/Businesses/SmallBusinesses-&-Self-Employed/Voluntary-ClassificationSettlement-Program
©2013 The Payroll Advisor
Taxation of Fringe Benefits
16
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Taxation of fringe benefits at year
end including:
 awards and prizes
 moving expenses
 personal use of company cars
 gift certificates
 Cell phones
 Educational Assistance
Best practices for gathering the
data
©2013 The Payroll Advisor
Reporting for Health Care Act
17
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Affordable Care Act required all employers to report the
cost
of coverage under
an employer-sponsored
Reporting
Health
Insurance forgroup
2011
health plan—Box 12 code DD
Requirement optional for small employers at least for 2013
(filed less than 250 W-2s in 2012)
This reporting is for informational purposes only
Show employees the value of their health care benefits so
they can be more informed consumers
The amount reported does not affect tax liability—still not
taxable wages
©2013 The Payroll Advisor
Form 940 for 2013
18


Final version is
pending
Added boxes for:
Foreign country
name
 Foreign
province/county
 Foreign postal code

©2013 The Payroll Advisor
Form 940 for 2013
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FUTA Credit Reduction for 2013
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There were 18 states and one territory for 2012
For 2013 it appears there will be at least 17 states and
one territory. These are:
Arizona, Arkansas, California, Connecticut, Delaware,
Georgia, Indiana, Kentucky, Missouri, Nevada, New
Jersey, New York, North Carolina, Ohio, Rhode Island,
South Carolina, and Wisconsin and the Virgin Islands
Looks like Florida and Vermont are off the list and
Arkansas and Wisconsin have already announced they
will be on the list
Confirmation still pending—Due Nov. 10th
©2013 The Payroll Advisor
FUTA Credit Reduction for 2013
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Arizona and Delaware face a possible 0.6%
credit reduction due to failure to repay loans for
three consecutive years
13 states and Virgin Islands face possible 0.9%
credit reduction due to failure to repay loans for
four consecutive years
Indiana and South Carolina face possible 1.2%
credit reduction due to failure to repay loans for
five consecutive years
©2013 The Payroll Advisor
Form 941 for 2014
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• Draft Form for 2014
• No later than 3-1-14
• Added:
• Foreign country
name
• Foreign
province/county
• Foreign postal code
©2013 The Payroll Advisor
Form 941 for 2014-Line 11 Change
23
2013
2014
• Line 11 now lists the 941-X and 944-X for PR
©2013 The Payroll Advisor
Form 941 for 2014-Lines 12 & 13
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2013
2014
• Lines 12a, 12b are gone
• Line 12 is now balance due
• Line 13 is now for overpayments
©2013 The Payroll Advisor
Form 941 for 2014
25
2013
What were
lines 14,
15 & 16 in
2013
2014
Are Now
Lines 12,
13 & 14
2014
©2013 The Payroll Advisor
Form 941 for 2014
26
2013
What were
Part 3
lines 17 &
18 in 2013
Are Now
Lines 15 &
16 in 2014
2014
©2013 The Payroll Advisor
Form 944 for 2013
27
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Small employers or small
payrolls within a larger
company
Only if IRS notifies you to do
so
IRS has created a page on
IRS.gov for information
about the form.
www.irs.gov/form944
©2013 The Payroll Advisor
Form 944 for 2013-Changes
28
Form 944 for 2013-Changes
29
Foreign country name,
providence/county and
postal code added
Outdated Verbiage removed
now blank area
Line 4d added for Additional
Medicare Tax withholding
PR forms added to list
©2013 The Payroll Advisor
Form W-2c
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Revised in
February 2009
©2013 The Payroll Advisor
Form W-3c
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Revised 9-2013
Used to transmit
Forms W-2c
Employer contact
information area
changed to include
the word employer
and boxes for fax
number and e-mail
switched
©2013 The Payroll Advisor
Form W-4 for 2014
32
No changes except to
add new year 2014
and applicable
calculations
©2013 The Payroll Advisor
941X Form Series
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Use for errors discovered after Dec. 31, 2008
Is a stand alone form
Has series to match 941 series
Updated as of 4/13 to allow for new items in 2013
such as the Additional Medicare Tax withholding
©2013 The Payroll Advisor
State Update-2014
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SUI wage bases
Minimum wage increases
Withholding Tables and
calculations
Meals and lodging updates
State laws new for 2014
©2013 The Payroll Advisor
Increases in State Minimum Wage
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Arizona to $7.90 on 1-1-14
California to $9 on 7-1-14 and $10 on 1-1-16
Connecticut to $8.50 as of 1-1-14 and to $9.00 on 1-1-15
New York: $8.00 as of 12-31-13; $8.75 as of 12-31-14;
$9.00 as of 12-31-15
Ohio: $7.95 for non-tipped employees; $3.98 for tipped
employees eff. 1-1-14
Oregon to $9.10 as of 1-1-14
Rhode Island to $8.00 per hour as of 1-1-14
Washington to $9.32 as of 1-1-14
©2013 The Payroll Advisor
Changes to State Wage Hour Laws
36

New York updated its wage deduction rules on
October 9, 2013
©2013 The Payroll Advisor
State Update: Be sure to check…
37
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Check all new SUI rates and
wage bases
Check for EFT changes
 Did your tax deposits
increase in 2013?
 What about EFT for child
support?
©2013 The Payroll Advisor
SSA Update-What We Will Cover
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Update on year-beginning annual changes for
social security wage base and new Medicare
Review of EFW-2 record changes for tax year
2013
Review of filing deadlines
Electronic delivery of W-2s to employees
When to use the Form W-2c and when to correct
the W-2 itself
Using SSA’s BSO to file W-2s and W-2c
electronically
©2013 The Payroll Advisor
Social Security
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OASDI Wage Base 2013–
$113,700
2014 rate pending due to
shutdown
Estimate comes in at
$115,500
©2013 The Payroll Advisor
Medicare
40
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Additional Medicare Tax began in 2013—
appear to be no changes for 2014
Rate is 0.9%
Requires employer to withhold additional
amount on wages in excess of $200,000 in
calendar year
No employer matching
All wages currently subject to
Medicare subject to this additional
tax
©2013 The Payroll Advisor
Changes to 2013 Form W-2
41
©2013 The Payroll Advisor
The History of 2013 Form
42


The final 2013 version of
the Form W-2 was
released by the IRS as of
March 7th without going
through the draft process
first
It is stated by the IRS that
this is the final version of
the form for 2013
©2013 The Payroll Advisor
Changes to 2013 Form
43


Physical Changes:
 There are no physical changes to the Form W-2
for 2013
 The Form is identical to the 2012 version
 The instructions to the employee had some
items to note which we will discuss on the next
slide
Not anticipating any code changes at this time
©2013 The Payroll Advisor
Employee Instruction Changes
44
Changes to the instructions to the employee:
 The Notice To Employee was revised by
changing the paragraph titled “Refund” to “Do
You Have to File”
 Earned Income Credit (EIC) and Credit for
Excess Taxes paragraphs were updated for
2013
 Paragraph on “Corrections” includes:
“Be sure to get your copies of Form W-2c from your employer for all
corrections made so you may file them with your tax return”
©2013 The Payroll Advisor
Employee Instruction Changes
45

Instructions for Employee on the back of Copy C
includes a couple of new paragraphs:

Form 8959 is in draft form on IRS website
©2013 The Payroll Advisor
Employee Instruction Changes
46
Box 14 mentions the Additional Medicare Tax
withheld
 Wording change for Box 8 to make it clearer
 Wording added for Box 11:


Deferral limits updated for Box 12
©2013 The Payroll Advisor
Changes to 2013 Instructions
47

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
The instructions are on the IRS website
IRS has created a webpage on its website to assist
employers in tracking developments or changes
to the Form W-2 or the instructions
www.IRS.gov/W2
FAQs on Additional Medicare Tax are found at:
http://www.irs.gov/Businesses/Small-Businesses-&-SelfEmployed/Questions-and-Answers-for-the-AdditionalMedicare-Tax
©2013 The Payroll Advisor
Changes to 2013 Instructions
48

What’s New includes:
$2,500 limit on FSA for health
 Additional Medicare Tax basic information
 Update on the 2013 social security tax rate for
employees
 New charts in the instructions to aide in reporting
Box 13 as well as nonqualified deferred
compensation

©2013 The Payroll Advisor
Changes to 2013 Form W-3
49

As of 10-16 the 2014 version is posted but the
2013 version is not on the IRS website and is
not in draft version
©2013 The Payroll Advisor
Draft of 2013 Form W-3
50
©2013 The Payroll Advisor
EFW-2 Record Changes for 2013
51
Not available due to government shutdown as of 1016-13
©2013 The Payroll Advisor
Electronic Forms W-2
52
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Software or website specs will
vary
Employee must consent—
electronic consent even if
consenting on paper
Big stumbling block is
disclosure requirements
Statement can be furnished on
the web if employee given
access info
©2013 The Payroll Advisor
Disclosure Requirements
53
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
May get paper if they want it
How long will the consent last
Procedure for paper copy after giving consent
How to withdraw consent and how it is confirmed
Conditions on when electronic Form W-2 is not
available
Procedures for updating contact info for employee
Employer must notify if changes in contact info for
employer
©2013 The Payroll Advisor
Correcting the Form W-2
54



If prior to processing
 then correct the original
If prior to disbursement to the employee
 Then correct the original
If after given to employee but not yet submitted
to SSA
 Then replace the original and correct the
“employer submission version”
©2013 The Payroll Advisor
When to Use Form W-2c
55



If the Form W-2 has been
given to employee and
submitted to SSA then
issue Form W-2c
If given to employee but
the file is not correctable
Be sure to use 2-2009
version
©2013 The Payroll Advisor
Review of Filing Deadlines for 2013
56
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
To employee: January 31, 2014
Paper filers to SSA: February 28, 2014
Electronic filers to SSA: March 31, 2014
Paper filers can use BSO and file electronically for
the later deadline
If employment ends before December 31, 2013 and
employee asked for Form W-2 they must receive
the completed copies within 30 days of the request
or within 30 days of final wage payment, whichever
is later
©2013 The Payroll Advisor
Filing Requirements
57
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
Electronic or Paper only to SSA and they really don’t
want the paper!
States may require or accept magnetic media such as
CD, diskette (still!) or electronic filing
Some states do not require filing
Using SSA’s BSO to File

W-2s
 For smaller companies or EINs do it online
 Larger companies can upload file

W-2cs
 Can file them independent of W-2s
©2013 The Payroll Advisor
Filing Reminders
58
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
RA Submitter Record Information: It is
imperative that the submitter’s telephone
number and E-mail address be entered in the
appropriate positions. Failure to include
correct and complete submitter contact
information may, in some cases, make it
necessary for SSA to reject your submission.
The file is generally within 120 days.
You are not notified when the file is processed
but you can view the status on BSO (not paper
filers)
©2013 The Payroll Advisor
Best Practices Review
59


Best time to take a good look
around
 Taxation practices
 Wage and hour laws
 Independent contractors
 Watch out for state as well as
federal
Self audit is better than the
alternative!
©2013 The Payroll Advisor
Social Security Number Verification
Service (SSNVS)
60

The Social Security Number
Verification Service (SSNVS) is
one of the services offered by
Social Security’s Business
Services Online (BSO). It
allows registered users
(employers and certain thirdparty submitters) to verify the
names and Social Security
Numbers (SSNs) of employees
against Social Security
Records.
©2013 The Payroll Advisor
SSNVS Continued…
61
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With SSNVS, you may:
Verify up to 10 names and
SSNs online and receive
immediate results, and upload
batch files of up to 250,000
names and SSNs and usually
receive results the next
government business day.
Can key multiple screens
©2013 The Payroll Advisor
SSNVS Continued…
62
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Cannot be used to verify for
I-9 or prior to hiring
4 (was 6) possible “NoMatch Codes” are returned
Provides an indicator if
Social Security number
belongs to a deceased
person
©2013 The Payroll Advisor
Mismatch Codes
63
1 = SSN not in file (never issued to anyone)
2 = Name and DOB match, gender code does not match
3 = Name and gender code match; DOB does not match
4 = Name matches, DOB and gender code do not match
5 = Name does not match, DOB and gender code not
checked
6 = have employee contact the local security office for more
information
If Social Security records indicate any of the names and SSNs belong to
a deceased individual, page will display table with information
pertaining to these requests
©2013 The Payroll Advisor
Sample Letter Employers Can Give to
Employees
64
We verified the following information with Social Security on this date: _______________.
Name _____________________________
Social Security Number ________________
According to Social Security, the information above does not match Social Security’s records. You should:
Check to see if the information above matches the name and Social Security Number on your social security card.
If it does not match, please provide me with the exact information as it is shown on your Social Security card.
If the information above matches your card, please check with any local Social Security office to resolve the issue.
Once resolved, please inform me of any changes. Go to www.ssa.gov or call 1-800-772-1213 to find the office
nearest you.
NOTE: This notice does not imply that you intentionally provided incorrect information about your name or
Social Security Number, nor does this adversely affect your employment.
©2013 The Payroll Advisor
Their Reconciliation Process of Your
Forms
65
The following slides demonstrate the IRS’s and
the Social Security Administration’s process of
reconciling your submitted forms to their
records…
©2013 The Payroll Advisor
66
67
SSA Reconciliation Points
68
Compare the amounts to be reported to SSA on Form W-3
to the sum of the amounts you reported to IRS on Forms
941, 943, 944, or Schedule H for the tax year. The following
amounts on the IRS and SSA report should match:
Item
W-2
Block
941
Line
944
Line
Social Security Wages
3
5a
4a
Social Security Tips
7
5b
4b
Medicare Wages/Tips
5
5c
4c
Additional Medicare
Wages/Tips
5
5d
4d
Federal Income Tax Withheld
2
3
2
©2013 The Payroll Advisor
SSA Reconciliation Points
69




When filing reports electronically, the total of all
employee wage ("RW") records should agree
with the amount entered in the "RT" record.
Reconcile on a quarterly basis
Errors are discovered in a timely manner
3 ways to reconcile
 Reconcile
against payroll
 Reconcile Form W-2 against Form(s) 941
 Reconcile Form W-2 against itself
©2013 The Payroll Advisor
Reconciliation of Form 941 to Form W-2
70
Lines on Form 941
2—Total Wages and tips and
other compensation
3—Total income tax withheld
from wages, tips and other
compensation
5a – Taxable Social Security
wages column 1
5a column 2
T
o
T
o
T
o
Boxes on Form W-2
1—Wages, tips other
compensation
2–Federal income tax withheld
T
o
3—Social security wages
T
o
4 – Social security tax withheld
T
o
5 – Medicare wages and tips
T
o
6 – Medicare tax withheld
5c –Taxable Medicare wages
and tips column 1
5d—Taxable wages & tips
subject to Additional
Medicare Tax withholding
5c & 5d column 2 combined
©2013 The Payroll Advisor
Reconciliation
71
In addition to these totals, there are other boxes
that must be verified before the Forms W-2 can
be processed. These include box 12 that show
listing for benefits as required by the IRS. These
should be reviewed against the payroll records to
make sure that the benefits have been recorded
correctly.
©2013 The Payroll Advisor
Reconciliation
72
A very important box that must be reviewed is
box 13. This box is for reporting whether or not
the employee is covered by a retirement plan. It
is critical that this box be marked correctly. The
definition of retirement plan can be found in the
instructions for the Form W-2 on the IRS website.
Penalties can be assessed if this box is marked
incorrectly.
©2013 The Payroll Advisor
Notifying the Employees Memo…
73




Inform the employees of what
is going on in payroll for year
end and year beginning
No more than 2 pages
On or before Dec 1
What should you include?
©2013 The Payroll Advisor
Action Item Checklists
74
Year End
Form W-2
Year
Beginning
©2013 The Payroll Advisor
Year End
75





Set up committees
Set up systems needed
Verify all information
Set up spreadsheets or
files needed
After the final payroll…
©2013 The Payroll Advisor
New Year
76






Set up calendars
Before the first payroll
run…
After the first payroll run…
Order forms and pubs
Set up files and
spreadsheets
Updates
©2013 The Payroll Advisor
Duplicate Form W-2
77



Announce procedures in
advance to employees
Create form for employees
to use
Employers are not
prohibited from charging a
fee for the issuance of
duplicate Form W-2 per
IRS Code
©2013 The Payroll Advisor
Sample Request For Duplicate Form W-2 for Tax Year: 2013
Please return this form to: Petrie Plastics Company Inc.
Payroll Department M/S 406
1402 Bonny Meadow Road
Anytown, NY 01014
Fax: 123-45-6789
E-mail: [email protected]
Please issue a duplicate copy of the Wage and Tax Statement (Form W-2) for the following employee:
Employee Name: __________________________________________________________
Social Security No: _________________
Badge # (for current employees):______________
Distribution of Form: (Circle One) Pick-Up From Payroll Mail Form
Mail Form To: ____________________________________________________________
City
State
ZIP Code
Reason For Request: (circle one) Never Received Lost/Misplaced/Destroyed
Signature of Employee: ______________________________________________________
If requesting form be mailed please provide copy of picture identification such as driver’s license (former
employees) or ID badge (current employees) along with this request form. If picking up the duplicate Form
W-2 in person, please be prepared to show picture ID such as a driver’s license (former employees) or your
ID badge (current employees). Allow five business days to process your request.
For Payroll Department Use Only:
Date request received: _________________
Date form mailed to employee: __________
Received by employee: ___________________________________
Signature of Employee: ___________________________________
78
©2013 The Payroll Advisor
Links and Websites
79
Electronic W-2 to Employees: 26 CFR §
http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi
 PDF on Filing electronically:
http://www.ssa.gov/employer/08EFW2.pdf
 Info on verifying social security numbers on line:
http://www.ssa.gov/employer/ssnv.htm
 PDF on Verifying social security numbers and names:
http://www.ssa.gov/employer/ssnvs_handbk.htm
 Social Security Administration Business Services
Online: http://www.socialsecurity.gov/bso/

©2013 The Payroll Advisor
Are There Any Questions?
80
How Can Ascentis Help Me?
81
Ascentis Payroll
 Custom reporting
 Automation of repetitive tasks
 Interface to G/L eliminates dual entry
 Real time payroll process, no batch
uploads, ever.
RCH Credit
82





To earn RCH, you must
Stay on the webinar for the full 60 minutes
Be watching the webinar using your unique URL
Certificates delivered electronically, to email
address with which you registered
Certificates delivered no later than November 24th
Download Slides? Watch again?
83
On-Demand Webinars?
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Multistate Taxation
Fringe Benefits
And many more
Watch from anywhere, at anytime,
at no cost to you!
Contact Us
85
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