- Year-end 2017 Is Almost Here!
Dear Valued Client,
Advantage is committed to providing you with the highest level of customer service. To help ensure accurate processing of you year-end package, we are providing this year-end newsletter. Please review it carefully, as it contains a wealth of information that can help make your year-end tax and payroll reporting easier, as well as accurate. For your convenience, the final page of the newsletter is a Fringe Benefit Payroll Worksheet, which will help you report any fringe benefits and other special processing requests. Simply complete the worksheet and email/fax to your payroll specialist before you process you last payroll of 2017. If you use our On-line Instant Payroll® product to submit your payroll, please contact our Instant Payroll® Support Team if you need assistance in posting your fringe benefits.
Please note that our offices will be closed on Monday, December 25, 2017 and Monday, January 1, 2018 in observance of the Christmas and New Year’s Day holidays. Please share this information with your Tax Advisor. It has been our pleasure serving your payroll and tax needs in 2017 and we look forward to an outstanding year-end. If you have questions regarding this information, please call our office: 978-637-2266.
Advantage Payroll Services
- Verifying Social Security Numbers/Names
There are two Internet options you can use to verify that your employee names
and Social Security numbers (SSN) match Social Security Administration’s (SSA) records. You can logon to www.socialsecurity.gov/employer/ssnv.htm
- Verify up to 10 names and SSNs (per screen) online and receive immediate results. This option is ideal to verify new hires.
- Upload overnight files of up to 250,000 names and SSNs and usually receive results the next government business day. This option is ideal if you want to verify an entire payroll database or if you hire a large number of workers at a time. You can also verify 1 to 5 names/SSNs by calling SSA’s toll-free number for employer, 1-800-722-6270, Monday to Friday 7 a.m. to 7 p.m. Eastern Time or SSA’s general toll-free number 1-800-772-1213, Monday to Friday 7 a.m. to 7 p.m. local time. Verification will be given over the phone.
- 2017 Payroll Reporting Deadlines
In order for us to produce timely and accurate payrolls for your final processing of the year, we ask that you observe our deadlines for reporting payroll information.
The payroll check date determines the year in which the payroll is reported – payroll period start and end dates do not. To avoid tax reprocessing and amendment charges, all payroll information for 2017 should be reported by Friday, December 29, 2017 or before a payroll with a January 2018 check date is processed. Please note that once a payroll has been processed with a 2018 check date, any changes to your 2017 files will be processed as adjustments. Please see the section “Adjustments to Tax Year 2017” for more detailed information.
Please contact your payroll specialist for specific cut-off times. Please also remind your accountant to report payroll adjustments no later than the cut-off date. Please review and verify your check dates carefully when reporting payroll at year end.
Thank you for your cooperation and understanding.
- Changes to Agency Filing of Forms W-2 and 1099
Starting in 2016, Forms W-2 and 1099 will be due on January 31 of the following year, rather than February 28 as they have in the past. Many state and local tax agencies are also following this change.
In December 2015, President Obama signed into law a provision in the Consolidated Appropriations Act passed by Congress. Part of this provision changes the filing date for employer copies of Forms W-2 and 1099 from February 28 (March 31 if filed electronically). Now all Forms W-2 and 1099 are due on January 31, including electronic filing. In addition to SSA filing, these forms are now being filed with the IRS.
The W-2 filing deadline is only changing for employers. The deadline for employees to file with the Internal Revenue Service will remain April 15.
- Adjustments to Tax Year 2017
Advantage will close all client payroll accounts on Friday, December 29, 2017. Reporting changes to payroll information after Friday, December 29 could result in amended / revised tax returns. Both amended and revised returns may be subject to additional processing fees and late deposit penalties from the IRS. Please contact your payroll specialist for an estimate of these additional fees.
Please note that should corrections be needed, the original Form W-2 should be submitted to the Internal Revenue Service (IRS) WITH the Form W-2C for any changes.
Should you have any questions, please contact your payroll specialist.
- Magnetic Media Forms W-2
Employers who submit 250 or more employee Forms W-2 for the calendar year are required by the Social Security Administration (SSA) and some state and local agencies to file this information electronically. Failure to comply could result in costly penalty assessments.
Clients who do not use our Tax Filing Service received a letter in November regarding out Tax Reconciliation option that reports and reconciles year-end information in accordance with federal, state, and local requirements. Please contact your payroll specialist if you did not receive this letter.
- Critical Due Dates for 2017 Taxes
Please note the following deadlines for tax payments for tax year 2017. Due date for undeposited tax liability of $100,000 or more is Tuesday, January 2, 2018. Final 2017 due date for monthly depositors is Tuesday, January 16, 2018 Please contact your payroll specialist for details.
- Reporting Health Coverage on 2017 Forms W-2
Federal regulations require employers who filed 250 or more Forms W-2 for the prior tax year to report the total aggregate cost of certain types of health care coverage.
The reporting is informational only and must be reported as a single item in Box 12 on Form W-2, labeled with code “DD”. Please report this amount to your Payroll Specialists so that it can be properly reported on Form W-2.
Certain employers are not subject to this reporting, including Indian tribal governments and small employers-defined as fewer than 250 Forms W-2 in the prior tax year.
- Taxpayer Identification Numbers
An individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the IRS to individuals who are resident or non-resident aliens, who are NOT eligible for a Social Security Number (SSN) because they do NOT have work eligibility granted by the U.S. Bureau of Citizenship and Immigration Services (BCIS). ITINs are also issued to their spouses and dependents. ITINs are a nine digit number formatted like a SSN but with the first digit of “9”. ITIN’s are only used for Federal income tax purposes.
The issuance of an ITIN does not: Entitle the recipient to Social Security benefit or the Earned Income Tax Credit (EITC), create an inference regarding the individuals’ immigration status or give the individual the right to work in the U.S.
Do not accept an ITIN in place of a SSN for employee identification or for work eligibility. An individual with an ITIN who later becomes eligible to work in the United States must obtain a SSN.
- Missing Agency ID Numbers
Many state and local agencies are moving toward requiring electronic filing of payments and returns. Some state agencies will not allow payments to be made or returns to be filed without a valid ID. You may be responsible to remit tax payments and returns until Advantage receives a valid ID.
Tax agencies do not send ID numbers to Advantage, so we rely on you to report this information to us with acceptable documentation of your ID number, such as a copy of any pre-printed agency correspondence or a tax return that includes you ID number.
As a reminder, it is important that you always forward any payroll related notices, forms, coupons, or other correspondence that you receive from any federal, state or local agency. This allows us to verity that we have the most up to date information for your account.
Our goal is to obtain missing information so that we can process your tax returns and payments correctly. If you are unsure how to contact an agency to register for an ID, please talk with your payroll specialist.
- 2018 Federal Tax Deposit Frequency
Each fall, the Internal Revenue Service (IRS) mails Tax Deposit Frequency letters to all employers, notifying them of their deposit frequency for the next year. Your tax deposit frequency will either be semi-weekly or monthly, based on your company’s total federal tax liability for the look-back period of July 1, 2016 to June 30, 2017.
This notice contains important information for Advantage to correctly calculate due dates for your federal tax liability. Please forward a copy of the notification letter to your payroll specialist as soon as you receive it.
Please note: If you are a monthly depositor and your tax liability exceeds $100,000 within one deposit period the associated deposit is required the next business day and your filing frequency change to semi-weekly for the remainder of the calendar year.
- 2018 Rate and Filing Frequency Changes
Most State review and update employers’ unemployment insurance (SUI) rates effective January 1 for the New Year. You should receive a new rate notice in late 2017 from each state in which you are registered.
You may also receive notification of revised state and local filing frequencies for your 2018 tax payments via agency communication.
Please forward copies of rate notices and agency letters to your payroll specialist so that we have the most current information. Advantage may not receive updated information from the different tax agencies.
- Verifying Company and Employee Information
The Social Security Administration (SSA) requires that all Forms W-2 are complete and accurate. Please help us by Verifying the accuracy of your company name, address, and all tax identification numbers on file. This information is listed on the cover sheet of your third quarter 2017 tax returns. The cover sheet in your third quarter tax package also lists the employer name that will be reported on your Forms W-2 and 1099 and verifies the address to which the forms will be sent. If you find a discrepancy in your employer name and/or address, please contact your payroll specialist as soon as possible.
Prior to year-end, please request an Employee Status report from your payroll specialist. This report contains each employee’s name, address, and social security number. Please take a few minutes to verify that this information is correct and report any changes to your payroll specialist before December 29, 2017. The SSA may issue penalties for each Form W-2 submitted with an incorrect social security number or employee name. W-2C’s required to correct information that is reported after December 29 may be subject to additional fees.
Most state tax agencies are mandating electronic upload process at year end. To ensure that your returns are filed successfully and timely, it is crucial that the company and employee data is accurate. Some tax agencies edit employee information including Social Security numbers (SSN’s) and addresses. Missing SSN’s and now missing employee address can cause a return to be rejected from an agency. Filing returns on paper may result in penalties issued by the state.
- Fringe Benefits
Please review your fringe benefit requirements with your accountant or tax adviser. If you use our On-line Instant Payroll® product to submit your payroll, please contact our Instant Payroll Team if you need assistance in posting your fringe benefits.
Some examples of fringe benefits:
- Personal user of a company vehicle
- Dependent care assistance (non-Section 125 Plans)
- Employee business expense
- Group term life insurance over $50,000
- Moving expenses
- S-Corp health insurance
- Pension Plan
- Employer Contributions to HAS
The taxation of fringe benefits varies by state and how it is reported on Form W-2. Due to taxation requirements, fringe benefits must be reported to Advantage and processed on or before December 29, 2017.
Ask you payroll specialist about reporting your fringe benefits during the year to eliminate the last-minute rush.
- Bonus Payrolls
Bonus checks can be produced along with your scheduled payroll; however, if you want separate paperwork or you want checks issued for a date other than your normal payroll date, bonus checks must be processed separately. Please specify how the bonus checks are to be taxed, if any voluntary deductions should be withheld and whether you want checks to be live or direct deposited. If you have any questions about how your bonus checks should be taxed, contact your accountant. Report all bonus payroll in writing by faxing or emailing the information to your payroll specialist. Please provide 48 hours advance notice for exception processing.
- Forms 1099
If you have independent contractors who were paid through our payroll system in 2017, Advantage will automatically prepare Form 1099-MISC for all individuals who are properly coded, regardless of the amount paid. Please notify us before December 29, 2017, if you do not want Forms 1099 prepared for contractors with less than $600.00 to report.
If you want Advantage to prepare your off-system Forms 1099, simply provide the year-to-date payment information to your payroll specialist before December 29. Be sure to include the contractor name, Address, valid tax identification number, amount paid and the specific earnings type, ie: Rent, Non-Employee Compensation.
Advantage will automatically prepare Form 1099-R (Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc) if we process checks to individuals during the year. Please be sure to provide your payroll specialist with specific distribution code reporting. If you do not want Form 1099-R prepared and/or filed, please contact your payroll specialist.
Other versions of the Form 1099 family of reporting are not offered at this time.
- Reporting Amounts on Form W-2, Box 14
The Internal Revenue Service allows employers to use Form W-2, Box 14 (Other) to report certain earnings or deductions to an employee’s pay (for example, charitable contributions and union dues). Use of this box is optional, but many employers find it beneficial to note or clarify information for an employee. Let you payroll specialist know if you want to use this feature and provide the four-character description you would like printed on the Forms W-2.
- Form W-2 Delivery
Advantage payroll Services understands how important your year-end tax forms and employee Forms W-2 are to you, your business and your employees. With this in mind, we have partnered with United Parcel Services (UPS) to deliver your Forms W-2 by two-day air delivery service. Please note, a signature is not required for residential locations. However, a signature is required if delivery is made to a commercial address. UPS has an unparalleled reputation for quality service and on-time deliveries.
In order to bring you this efficient services with tracking information, we ask all clients to review the street address we have on file for delivery of your tax forms. This will not affect the address to which payroll or other materials are sent. If you would like to have your Forms W-2 delivered to a P.O. Box, we can accommodate your with U.S. Express Mail for an additional fee.
Please note that deliveries outside of the United State will be charged fees based on a case-by-case basis.