WAGE AND TAX STATEMENT CORRECTIONS(W-2c) INDIANAPOLIS PAYROLL OFFICE Integrity - Service - Innovation

Integrity - Service - Innovation AGENDA TAXABLE INCOME CODES EARNINGS SUBJECT TO WITHHOLDINGS EMPLOYER CONTRIBUTIONS PAY CALCULATIONS CALCULATION EXAMPLES FORM W-2, WAGE AND TAX STATEMENT YEAR TO DATE SCREEN VERSUS W-2 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation AGENDA LES VERSUS W-2 CORRECTED WAGE AND TAX STATEMENT A CORRECTED W-2 IS REQUIRED NAME CHANGE REQUEST MOST COMMON ‘NAR’ REMEDY TICKETS MOST COMMON QUESTIONS WEBSITES QUESTIONS 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation TAXABLE INCOME The Internal Revenue Service Publication 15 Circular E states “Wages subject to federal employment taxes generally include all pay you give to an employee for services performed. The pay may be in cash or in other forms. It includes salaries, vacation allowances, bonuses, commissions, and fringe benefits. It does not matter how you measure or make the payments.” 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation CODES The following codes are reported on the W-2 Earnings Subject to VC – Federal Taxes VD – State Taxes (if applicable) VE – Local Taxes (if applicable) VF - Medicare VI – OASDI (if applicable) (2017) $127,200.00 Withholdings WB – Medicare WD – Fed Taxes WE – State Taxes (if applicable) WF – Local Taxes (if applicable) WM - OASDI (if applicable) Maximum (2017) $7,886.40 XV - TSP (if applicable) Maximum $18,000.00 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation EARNINGS SUBJECT TO ASK SUPPORT IF THEY HAVE NEW CHART 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation WITHHOLDINGS 10/14/2018 Integrity - Service - Innovation

EMPLOYER CONTRIBUTIONS ASK SUPPORT IF THEY HAVE NEW CHART 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation PAY CALCULATIONS WA (CSRS Employees) Retirement Code “1” 7% of earnings Not subject to deductions for OASDI WA (CSRS OFFSET Employees) Retirement Code “C” Regular Employee: 7% of subject to CSRS less OASDI rate Law Enforcement Officer, Firefighter, Congressional Employee: 7.5% of subject to CSRS less OASDI rate Congress, US Magistrate, Military Appeals or Bankruptcy Judge: 8% of subject to CSRS less OASDI rate When maximum OASDI deduction is met, deduction rate reverts to full CSRS employee withholding rate (7, 7.5, or 8 percent). CSRS Offset employee: Generally, an employee having five or more years of CSRS coverage prior to Jan. 1, 1984, a break in service exceeding 365 days, and was rehired by the government following the break (after Dec. 31, 1983) 10/14/2018 Integrity - Service - Innovation

PAY CALCULATIONS (Con’t) WD Fed Taxes Utilize 80 hour pay history Verify the hourly rate hasn’t changed from MER Verify filing status and exemptions have not changed Use the Federal Tax amount from Pay history WE State Taxes Use the State Tax amount from Pay history WF Local Taxes Use the Local Tax amount from Pay history 10/14/2018 Integrity - Service - Innovation

PAY CALCULATIONS (Con’t) WM OASDI Percentage varies 2017 6.2% Verify employee does not exceed MAX ( 2017- $7,886.40) WB MEDICARE 1.45% 2016 & 2017 Less than $200,000.00 1.45% Over $200,000.00 additional .90% Percentage based items should balance with the Subject to tax (V code) 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation CALCULATION EXAMPLES CALCULATION 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation Example 10/14/2018 Integrity - Service - Innovation

FEDERAL TAX CALCULATION (Example) 10/14/2018 Integrity - Service - Innovation

FEDERAL TAX CALCULATION (Example) 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation YTD PAYMENTS 10/14/2018 Integrity - Service - Innovation

FEDERAL TAX CALCULATION FOR ONE PAY PERIOD 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation https://www.irs.gov./pub/irs-pdf/p15.pdf 1 2 3 1 3 2 10/14/2018 Integrity - Service - Innovation

A PRO RATE CALCULATIONS FOR FEDERAL TAX EXCEL FORMULA Federal: (WD/(VCRR+VCRS+VCSR+VCSS))*VC = WD WD = $1,136.28 /VC= $6,189.00 = .18359% VC = $6,189.00 X .18359% = $1,136.238 10/14/2018 Integrity - Service - Innovation

STATE TAX CALCULATION (Example) 10/14/2018 Integrity - Service - Innovation

STATE TAX CALCULATION (Example) 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation YTD PAYMENT 10/14/2018 Integrity - Service - Innovation

STATE TAX CALCULATION FOR ONE PAY PERIOD 10/14/2018 Integrity - Service - Innovation

STATE TAX CALCULATION FOR ONE PAY PERIOD 10/14/2018 Integrity - Service - Innovation

A PRO RATE CALCULATIONS FOR , STATE AND LOCAL TAXES EXCEL FORMULA State (WE/VD)*VD = WE % WE = $ 339.33/VD=$6,189.00 = .054827% VD = $6,189.00 * .54827% = $339.32 You will use the same formula with local taxes Local (WF/VE)*VE = WF 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation MEDICARE CALCULATION 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation YTD PAYMENT 10/14/2018 Integrity - Service - Innovation

PAY CALCULATIONS - MEDICARE WB Medicare – Employee 1.45% less than $200,000.00 0.90% additional over $200,000.00 (total of 2.35%) Example Total YTD VF = $200,836.80 First $200,000.00 x 1.45% = $2,900.00 Over $ 836.80 x 2.35%(1.45%+.90%) = $ 19.66 WB Medicare = $2,919.66 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation OASDI CALCULATION 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation YTD PAYMENT 10/14/2018 Integrity - Service - Innovation

PAY CALCULATIONS - MEDICARE WB Medicare – Employee 6.20% Of Max OASDI deduction $127,200.00 Max deduction $127,200.00 x 6.20% = $7,886.40 10/14/2018 Integrity - Service - Innovation

FORM W-2, WAGE AND TAX STATEMENT A required form provided by every employer who pays for services performed by an employee The official form for reporting the amount of earnings subject to and withholdings for Income, Social Security, or Medicare tax. 10/14/2018 Integrity - Service - Innovation

FORM W-2, WAGE AND TAX STATEMENT 10/14/2018 Integrity - Service - Innovation

NAME AND SSN MATCHING MISC/ADDRESS/NET CHECK AND ALLOTMENT SCREEN MIS/ADDRESS/NET CHECK Box a Box e Box e MIS/ADDRESS/NET CHECK 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE SCREEN VERSUS W-2 BOX 1 WD TAX FEDERAL VC SBJ FED TAX BOX 2 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE SCREEN VERSUS W-2 VI SBJ OASDI WM OASDI BOX 3 BOX 4 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE SCREEN VERSUS W-2 BOX 5 VF SBJ MDCR WB MEDICARE BOX 6 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE SCREEN VERSUS W-2 BOX 12 VP FEHB/EYR PTX BOX 12 XV TSP SAVINGS 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE SCREEN VERSUS W-2 BOX 14 K JF DENTAL + JG VISION BOX 14 V WG FEHB 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE SCREEN VERSUS W-2 BOX 16 BOX 17 VD SBJ ST TAX WE TAX, STATE 10/14/2018 Integrity - Service - Innovation

NAME AND SSN MATCHING MISC/ADDRESS/NET CHECK AND ALLOTMENT SCREEN MIS/ADDRESS/NET CHECK Box a Box e Box e MIS/ADDRESS/NET CHECK 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation LES VERSUS W-2 BOX 1 TAXABLE WAGES TAX FEDERAL BOX 2 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation LES VERSUS W-2 BOX 3 GROSS PAY – NON TAXABLE WAGES OASDI BOX 3 BOX 4 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation LES VERSUS W-2 BOX 5 BOX 5 GROSS PAY – NON TAXABLE WAGES MEDICARE BOX 6 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation LES VERSUS W-2 BOX 12 DD FEHB–EMPLOYEE + EMPLOYEER CONTRIBUTION BOX 12 D BOX 12 DD TSP SAVINGS 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation LES VERSUS W-2 BOX 16 BOX 17 VD SBJ ST TAX WE TAX, STATE 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation LES VERSUS W-2 BOX 14 V DENTAL + VISION BOX 14 K FEHB BOX 14 K 10/14/2018 Integrity - Service - Innovation

CORRECTED WAGE AND TAX STATEMENT A W-2c is a correction to the original wage and tax statement. The original W2, used to report wages and taxes paid, reflected incorrect information that was reported to the Internal Revenue Service (IRS). A copy of the W-2c is provided to the employee, IRS, State and Local taxing authorities once completed. 10/14/2018 Integrity - Service - Innovation

A CORRECTED W-2 IS REQUIRED ADS Special Pay Voucher processed after pay closes for final pay period of the year but before first day of the new tax year. Debts Check payment received after final has ran for the year but before the beginning of the new tax year. Cancelled check was either not processed, or processed incorrectly, and the employee’s year to dates are incorrect. A waiver was approved for a debt that was created in the current year. TSP The Defense Civilian Payroll System (DCPS) allowed the employee to contribute over the limit in the last pay period of the year. The difference is refunded within the new tax year but is counted as taxable income in the previous tax year. With the exemption of Overseas Debts (Hi VIS) when received a request for a w2 correction for ADS, Debt and TSP please forward Remedy to Support Team 10/14/2018 Integrity - Service - Innovation

A CORRECTED W-2 IS REQUIRED (Con’t) Processing To Correct Social Security Number or Employee’s Name Update monies earned under pseudo appointments not linked in DCPS Correct overpayment on subject to OASDI, OASDI deduction and erroneous refund of OASDI Agency LOA of accounting is used Reflects only what has been paid Debt team uses “XX” to collect through debt module or manual collection of “WM” if applicable 10/14/2018 Integrity - Service - Innovation

A CORRECTED W-2 IS REQUIRED (Con’t) For adjustments not systemically handled by DCPS For example, VSIP not subject to Alabama and Georgia State Tax Reducing Earnings Subject to Massachusetts State Taxes 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation NAME CHANGE REQUEST Scenario: CSR submits Remedy ticket and states that the Employee’s 2016 W-2 reflects incorrect spelling of his name. The W-2 reads: DONNE DAVID LE 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation NAME CHANGE REQUEST MER reads: LE DONNE DAVID To prevent future W2 correction, Personnel need to Process the name without space or insert a hyphen 10/14/2018 Integrity - Service - Innovation

MOST COMMON NON ACTION REMEDY TICKETS Requests for state tax corrections (Exception- State of GA & AL provides a maximum $25k tax exclusion for severance and VSIP payments) It’s the employee’s responsibility to ensure his/her state tax election is correct. Employee believes W2 is incorrect because they are not subtracting the pretax earnings from their Gross pay to obtain their subject to earnings for IRS. Debt repayments for prior year TurboTax informs employee that OASDI/Medicare are overstated. 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation MOST COMMON QUESTIONS 10/14/2018 Integrity - Service - Innovation

HOW DO I ADD/CHANGE/REMOVE STATE TAXES? From CSR Main Menu Select Employee Data Menu, then Taxes (Federal/State/Local/AEIC) Employee’s Social Security Number Effective date State Taxes you can only use beginning day of current tax year NOTE : Detail information on every field can be found on PRO Manual Section D Chapter 2 Employee Data under Taxes (Federal/State/Local) Title 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation ADD 000 00 0000 R= RESIDENT, N= NON RESIDENT, X= RESIDENT THAT WORK OUTSIDE OF THE CITY, CALCULATED AS NON RESIDENT 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation CHANGE 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation DELETE 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation MOST COMMON QUESTIONS Can I correct taxes retroactively? You are only allowed to change taxes within the current pay period for Federal and some State Taxes Use “C” for change and overwrite information What is the employee authorized to change in MyPay for Taxes? Employee can add, change or delete Federal taxes Marital Status, Exemption, Additional amount State taxes 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation MOST COMMON QUESTIONS What if the employee unable to process in MyPay for Federal Taxes? File Advanced Earn Income Credit File Exempt from Federal Tax Withholding Claim more than 10 Exemptions Note: If employee needs any of the above Federal Tax Changes, they need to contact their local Customer Service Representative (You) 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation MOST COMMON QUESTIONS The employee is not allowed to process the following within MyPay for State Taxes File the initial state Withholding form File exempt from state Withholding If Geographical location code (duty Station) and state of residence are the same, employee will not be able to stop state tax deductions. Add a third state as the employee can only file two The employee is not allowed to process the following within MyPay for Local Taxes Add/delete/ change Please contact their local Customer Service Representative Does DCPS automatically update State Taxes when an employee moves? No. Employee is required to update their information through their local Customer Service Representative or MyPay 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation MOST COMMON QUESTIONS How is Locality Tax information added in DCPS? Please complete the New/Change Tax request form and send it via Fax to DFAS Columbus Call Center (CCC) Fax number (216) 367-0340 Can DCPS provide a hard copy W2? Yes, if the W2 hard copy is not Turned off in MyPay Employee can update their election in MyPay 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation MOST COMMON QUESTIONS What Is MSRRA and how does it work? On November 11, 2009, the Military Spouses Residency Relief Act (MSRRA) was enacted to extend certain protections to military spouses. Pursuant to the MSRRA, a military spouse who is present with a member in a particular State under military orders does not have to pay State income taxes on wages earned in that State as long as that State is not the spouse’s legal residence or domicile. The MSRRA does not allow a spouse to pick or choose a domicile in any State. Rather, domicile is established, which means that the spouse must have actually been present in the State, established it as his or her domicile, and maintained it by forming and maintaining the necessary contacts, such as registering to vote, owning property, registering vehicles, or indicating a State of probate in a last will and testament. Members and their spouses may seek free, confidential advice from a military legal assistance office if they have any questions.   7 States without state taxes, Alaska, Florida, Texas, Nevada, North Dakota, Washington State, Wyoming, New Hampshire and Tennessee 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation EXAMPLE #1 Employee claims a non – taxable State as the State of legal residence and is working in a non – Taxable State. No action is required Example: Employee claims Florida as the State of legal residence and is working in Texas, no action is required 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation EXAMPLE #2 If an employee claims a taxable State as the State of legal residence and is working in a non-taxable State, no action is required with regard to the State in which the employee is working. Example: Employee claims Indiana as the State of legal residence and is working in Texas. No action is required since no taxes will be withheld for Texas. No State income taxes will be withheld from the employee’s pay, unless the employee requests that taxes be withheld for Indiana. 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation EXAMPLE #3 If an employee claims a taxable State as the State of legal residence and works in a taxable State: Delete the state of employment State tax record. A State tax deduction record should be created if the employee requests that income taxes for the State of legal residence be withheld from the employee’s pay. Ensure proper effective date is used (beginning of pay year). Example: Employee transfers from Indiana to California. Delete the Indiana tax record. A State tax record for California should be created if the employee requests that California income taxes be withheld from the employee’s pay. 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation EXAMPLE #4 If the employee claims a non-taxable State and is working in a taxable State, Delete the existing line and then Add a new line. Input all fields on the new line, while adding an “N” in the State Tax Status field. Do not press enter until both lines have been entered. After pressing enter once, the user will be prompted to certify the change by entering their DCPS user id. Press enter again to finish processing the transaction. Example: 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation WEBSITES Internal Revenue Service – OASDI/MEDICARE http://www.irs.gov/pub/irs-pdf/p15.pdf Department of Defense Federal Management Regulation (DoDFMR) Volume 8 Chapter 4 http://comptroller.defense.gov/Portals/45/documents/fmr/Volume_08.pdf TSP – max amount allowed to pay into TSP www.tsp.gov. 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS (DEBTS), W2 CORRECTIONS, TAX CERTIFICATES INDIANAPOLIS PAYROLL OFFICE Integrity - Service - Innovation

Integrity - Service - Innovation TOPICS WE WILL COVER Year to date adjustments when debts are created What occurs in DCPS Current and Prior Year Are manual payments different? Debt not repaid before the end of the year Tax Certificates When are they appropriate When employees will receive Example W-2 Corrections Common reasons When are corrections appropriate FEHB Debts 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation DEBT CREATION Common reasons Overpayment due to incorrect SF-50 pay rate You will see negative adjustment of monies only Removal of hours You will see negative hours adjustment and negative monies Recall of Award Late submission of separation SF-50 Timecards submitted after employee left service If correction is processed, timecards will need to be reentered Any awards paid with effective date after separation date Debt will automatically offset with any lump sum leave payment Employees paid while on Military Furlough Deletion of Entitlements 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS- DEBT CREATION- CURRENT YEAR The Defense Civilian Payroll System (DCPS) automatically reduces current year to dates when a debt is created for the current year Employees are due year to date reduction on debts when repaid in the same year Employees taxable income should be reduced as they repaid the monies in the same year it was earned 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS – DEBT CREATION – CURRENT YEAR Taxes and some Deductions are used to offset the debt so the employees only repay the Net amount actually received in their check This is not possible with some deductions as DFAS is not able to recoup the payments from the providers TSP Loans (WO) Vision/Dental (JF-JH) Allotments (WL) Continuous Tax Levy (JJ) Involuntary Tax Levy (XG) FSA Flexible Spending Account (JS) This list is not all inclusive, it is only meant as a reference, you can check the pay history for the debt date pay period and verify the deductions when the payment was made and the pay period the debt created. 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS- DEBT CREATION- CURRENT YEAR EFT Deposit Debt Date Debt Date Net “take home” Pay Net Disposable income 15% net disposable (Involuntary Debt Deduction Amount) 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS – DEBT CREATION – CURRENT YEAR The Debt Date is the pay period date that the corrections were processed on to create the debt 02/26/11 This debt is for removal of hours (-24.00), timecard corrections occurred on 03/12/11 PPE EFT information in in the PAYEE field This check has been direct deposited in employees account If blank, a US TREASURY check is sent to the address on record Ensure that employees address is correct Especially for new employees If no address is entered DCPS will default the Agency address Encourage employees to update address in MYPAY 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS – DEBT CREATION – CURRENT YEAR Taxable amounts Deductions 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS – DEBT CREATION – CURRENT YEAR 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – CURRENT YEAR Debt Creation Date 03/12/11 Negative Gross Pay for Pay Period 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS – DEBT CREATION – CURRENT YEAR The AA shows up on the LES on 03/12/11 as a negative because there were no earnings for this pay period and a debt was created The debt creating reduces the year to date amounts and DCPS bumps all earnings together on this date This will happen even if the employee earns money in the pay period It will look as though they have negative earnings in the AA (Gross Pay) and deductions field but they will still receive a normal pay check Negative Earnings are not taken from employees pay Debt deductions are clearly marked and show up in the deductions field 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS – DEBT CREATION – CURRENT YEAR Debt Collection Improvement Act of 1996 Debts may be collected without due process under the following circumstances Debt created for any timeframe that deductions total less than $50.00 Debt created for any amount that was incurred within the last four pay periods Employee will only receive notification on LES Debt will immediately collect upon creation at 15% net disposable Other debts require full due process of 30 days to repay in full before involuntary collections commence 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS – DEBT CREATION – CURRENT YEAR Debt creation amounts split into what was offset with deductions and what is remaining “Net” Amount of debt 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS – DEBT CREATION – CURRENT YEAR 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS – DEBT CREATION – CURRENT YEAR Separate remaining amount of debt 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – CURRENT YEAR Press F7 and F8 to scroll through Debt Case Screens 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – CURRENT YEAR 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – CURRENT YEAR This is a second debt from the same debt creation This debt is an Allowance type debt for the YC (COLA) payment 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – CURRENT YEAR Why is the taxable amount 0.00% 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – CURRENT YEAR The debt was created for current year and offset with all available deductions It was split into two debts due to taxable and nontaxable income Did you notice how the letter was sent 2 months after the creation of the debt? Created 03/12/XX, Debt Letter Date 05/21/XX It was a DCIA debt and notification was on the LES The debt did not make collections within 45 days and the system will automatically send a letter for due process 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – CURRENT YEAR Debt was due to timecard corrections Employee was coded RG Should have been coded KA Corrections processed on 03/12/11 for the 02/26/11 pay period 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – CURRENT YEAR LES for 02/26/XX 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – CURRENT YEAR LES showing debt creation on 03/12/XX Full YTD Decrease Offset Debt YTD Decrease Offset 10/14/2018 Integrity - Service - Innovation

DCIA DEBT COLLECTION ON LES Regular pay 2604.00 Plus OZ diff 69.59 Minus Reg. pay -51.57 Award -250.00 Routine Debt Q1 -274.47 = Gross Pay 2097.56 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation YEAR TO DATE ADJUSTMENTS –DEBT CREATION – MANUAL PAYMENTS - CURRENT YEAR Manual Payments Lump Sum Recruitment, Retention and Relocation Offline / Prior Year Payments If paid in the current year erroneously or cancelled Debt team needs to manually calculate the offset This involves a full audit and does take time Please submit “Debt Audit” Remedy ticket for resolution DCPS is not able to calculate the offset amounts systematically 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – CURRENT YEAR What happens if the debt is not repaid in the same year? The taxable income was already reduced for the debt amount On the last pay period of the year the system will increase the employees year to date taxable income by the remaining amount left to be repaid Or a percentage calculated by the system This means that the employee will be taxed on all monies received in the current year Deduction offset is not removed from debt, debt remains at net amount received 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – PRIOR YEAR For prior year debts we must follow IRS Publication 15 regulations (Page 28, under WAGE REPAYMENTS) Employee reporting of repayment. The wages paid in error in the prior year remain taxable to the employee for that year. This is because the employee received and had use of those funds during that year. The employee is not entitled to file an amended return (Form 1040X) to recover the income tax on these wages. Instead, the employee is entitled to a deduction (or credit in some cases) for the repaid wages on his or her income tax return for the year of income. This means that prior year debts will be created for the gross amount of the payment 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – PRIOR YEAR The system will create the debt for the full gross amount with no offset 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – PRIOR YEAR 10/14/2018 Integrity - Service - Innovation

YEAR TO DATE ADJUSTMENTS –DEBT CREATION – PRIOR YEAR The employee is entitled to a Tax Certificate from DFAS for all monies collected by DFAS for payroll debts that are taxable income This does not include: Non payroll debts Lost property Travel Debts Non Taxable income Separate Maintenance Allowance COLA 10/14/2018 Integrity - Service - Innovation

TAX CERTIFICATE EXAMPLE 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation TAX CERTIFICATES DFAS Civilian Pay is not able to advise employees on the use of this form Each employee has varying tax situations and the technicians are not tax experts Please direct the employees to reference IRS Publication 15, Circular E IRS Publication 525 Tax Advisors Tax Certificates are mailed by January 31 for the prior year debt payments DCPS SCR implemented to publish on MyPay awaiting MyPay to implement (projected January 2019) 10/14/2018 Integrity - Service - Innovation

W2 CORRECTIONS – DEBT TEAM The most common reason for Debt W2 corrections is the receipt of a cash payment after the last pay period of the year We are not able to correct the year to date (Gross and Net) amounts in the system after the last pay period closes out We can only correct the amounts shown on the W2 Cash payments must be postmarked before December 31 to adjust year to date taxable amounts Other Reasons Cash payments not received /applied that were paid in prior year Waiver Approvals Manual Payment debts not properly calculated Debt Team receives many requests to produce a W2 correction when a Tax Certificate is the proper course of action 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation FEHB DEBTS Federal Employees Health Benefits DCPS often refunds these to the employee when a debt has been previously created The refund is taxed upon payment to the employee The debt is still owed at the original gross amount When the debt is payroll deducted the money is once again considered pre-tax Each deduction reduces the taxable income for that pay period CASH PAYMENTS ARE NOT ELIGIBLE FOR THE PRE TAX BENEFIT If employees choose to repay in cash they will not receive the pr tax benefit and no corrections to their W-2 or Year to Dates can be performed Employees end up repaying the original amount and taxable income adjusts if the debt is repaid in the same year 10/14/2018 Integrity - Service - Innovation

Integrity - Service - Innovation Questions? 10/14/2018 Integrity - Service - Innovation