P REPARING FOR Y EAR -E ND AND START 2013 Utah Chapter of the American Payroll Association November 15, 2012

S TEPS TO T AKE NOW Decide how many W-2 forms to order – multiply by 2 (two). Why? Who holds the infamous record? Order forms and envelopes. What is written on the outside of the envelope? Work with your mail room to make sure that there will be enough postage and distribution assistance. Remind employees to review their current W-4 form for changes in family status and withholdings.

A DDITIONAL S TEPS Encourage EEs to update/maintain their address with your Company. Document the complete process. Why? Develop timelines and a master calendar Responsibility for tasks, Projected and actual timelines. Add and delete tasks as needed. Hold meetings with those involved with the process. Your team Individuals and groups One big meeting to coordinate with all Stake holders.

R ECONCILING FOR 2012 – S TART FOR Rerun your 941 forms for the first three quarters. Make sure that none of the totals have changed Research any differences Verify that all payments have been received by the IRS for each payroll. This can be done at Balance and reconcile each payroll (calendar & fiscal). Pay period with month, quarter and YTD If you outsource your payroll are you still responsible to make sure all payments have been received and posted properly?

F EDERAL ITEMS TO RECONCILE Validate your year to date Federal Withholdings FICA gross FICA taxable benefits FICA taxable wages (employee and employer sides) FICA taxes payable (employee and employer sides) FIT gross FIT taxable wages FIT taxes withheld FUTA Gross FUTA taxable wages FUTA taxes payable

S TATE I TEMS TO RECONCILE State Tax Items SIT gross SIT taxable wages SIT withheld SUTA gross SUTA taxable SUTA withheld

B ENEFITS & D EDUCTIONS Review the codes for box 12 on irs.gov Make sure that your benefits and deductions are taxed appropriately ERs with more than 250 W2’s must include the value of employer paid health insurance on the W2 with code DD

C HANGES FOR 2013 Limit on Flexible Spending Medical is $2, Limit on Flexible Spending Dependent was not affected. No Change ? ? ?....

E LECTIVE DEFERRALS Effective deferral (contribution) limit for EEs who participate in 401(k), increased 403(b), from 457 plans (most) $17,000 to The government’s Thrift Savings Plan $17,500 For the above plans, the catch up contribution for EEs aged 50+ remains at $5,500.

O THER LIMITS Annual Benefit Limitations (under a defined benefit plan) for Section 415(b)(1)(A) Increased in 2013 from $200,000 to $205,000. The limitation for defined contribution plans under Section 415 C(1)(A) Increased in 2013 from $50,000 to $51,000.

O THER L IMITS Section 402 elective deferrals increased from $17,000 to $17,500. Annual compensation limit for 401(a)(17), 404(1), 408(k)(3)©, and 408(k)(6)(D)(ii) is increased from $250,000 to $255,000. Key employees remain unchanged at $165,000.

T RADITIONAL IRA The phase out limits for single and head of household have new limits For 2012, the limits were $58,000 - $68,000 For 2013, the limits are now $59,000 - $69,000 The phase out limits for married filling joint have also increased Was (2012)  $92,000 - $112,000 Now (2013)  $95,000 - $115,000.

S IMPLE A CCOUNTS Limitations raised from $11,500 to $12,000.

S OCIAL S ECURITY W AGE B ASE Wage base increased from $110,100 to $113,700 for Wages paid in excess of $200,000 in 2013 will be subject to an extra.9% Medicare tax that will only be withheld from the EEs’ wages. ERs will not pay the extra tax.

FICA T AX The FICA tax rate, which is the combined social security tax rate of 6.2% and the Medicare tax rate of 1.45%, will be 7.65% for 2013 up to the social security wage base. The maximum social security tax employees and employers will each pay in 2013 is $7, an increase of $2, for EEs an increase of $ for ERs

FICA TAX CONTINUED Note that the 2012 FICA tax rate is 4.2% for employees and 6.2% for employers under the Middle Class Tax Relief and Job Creation Act of 2011, and that the rate is scheduled to be 6.2% for both employees and employers in 2013.

W ATCH FOR UPDATES There are bills in Congress to extend the FICA tax credits into Utah has not released its taxable wage base for Income tax cuts are scheduled to expire. Brackets will go up to 15%, 28%, 31%, 36% and 39.6%. The 10% bracket is due to expire in 2013.

O THER CHANGES COMING In 2012, ERs could exclude from an EE’s taxable income $240/month for qualified parking benefits and $125/month for ER provided transit passes. This has not been extended. Adoption assistance of up to $12,650 per year is also set to expire.

E DUCATION EXPENSES Tax free education assistance of up to $5,250 per year is scheduled to end 12/31/2012. Remember, employer-provided education related to someone’s current job can generally be excluded from income as a working condition fringe benefit with no dollar limit.

F OR MORE INFORMATION IRS website &-Self-Employed/Employment-Taxes-2 Social Security website (pay special attention to page ii) 2.pdfhttp:// 2.pdf