2016

Payroll The process used by an organization to pay its employees accurately and on time

Payroll Challenges Complexity Communication Technology Accuracy Monitor and implement federal, state, and local tax laws FPC Testing is based on Federal Law Communication Paychecks, paycards, vouchers – must be timely, accurate, and easily understood – must be clear and concise Technology Software, equipment, and web-based applications can automate and enhance the process of payroll, timekeeping, and record storage Accuracy Required for tax filing, management reports, and paychecks Payroll Challenges

New Hires – Getting Started We hired someone… What’s next? New Hires – Getting Started

Worker Status Employees… Independent Contractors… Need to provide SSN and W-4 Nonexempt ees subject to FLSA standards Taxes withheld and paid by the employer Receive a W-2 Independent Contractors… Need to provide an ITIN and W-9 Taxes paid by themselves Receive a 1099-MISC Temporary/Leased Employees Agency and company have a contractual agreement Workers are employees of the AGENCY but subject to company policy AGENCY bears the burden of paying, withholding, reporting, and administering taxes and benefits for these workers Worker Status

The IRS imposes fines and penalties when employees are mistakenly classified as independent contractors. Treat the worker as an employee to avoid non-compliance and penalties and… Seek public ruling information Request private ruling from the IRS (Mis)Classification

New Hires – Eligibility and Identity My new hire is an employee. What’s the next step? New Hires – Eligibility and Identity

Determine Employment Eligibility Immigration Reform and Control Act of 1986 I-9 Employment Eligibility Verification Required to prove identity and right to work Employers can face stiff penalties for knowingly hiring workers not eligible for employment: from $375 to $16,000, or if repeat offender, criminal charges Determine Employment Eligibility

Obtain and Verify SSN Form W-4 Federal Employee Withholding Allowance Certificate Employee completes W-4 during hire process Employer can request SS card to verify SSN SSNVS Social Security Number Verification System Obtain and Verify SSN

Completing the I-9 Upon Hire Date: Employee completes Section 1 By first day of work Employer reviews and completes Section 2 Within 3 days of employee’s first day of work Retention of I-9 3 years from date of hire OR 1 year after termination, whichever is later Completing the I-9

The “W” Forms W4 – Federal Employee Withholding Allowance Certificate Requested when hired and for life changes Default is Single with 0 exemptions Alterations, flat dollar amounts, and percentages are invalid Exempt status – filed annually, earns less than tax exemption No need to send to IRS unless notified Retain for 4 years from last 1040 filing or 1 year from termination

W4P - Withholding Certificate for Pension or Annuity Payments Default is Married with 3 exemptions Additional amount is allowed

W4S - Request for Federal Income Tax Withholding from Sick Pay Third party wage payment for illness or injury that is non-job related Minimum withholding is $20/week Must be adjusted to net at least $10 Many states require tax withholding