1. Preparing for Year End and The New Year
Presented by
Richard Whipple, CPP

2. Topics to Cover Wage and tax Reconciliation Reporting Fringe Benefits
FUTA Credit Reduction
Year End Project
Updates – Recently Released
Useful Information

3. Wage and Tax Reconciliation
At the end of Q3 make sure all three quarters are reconciled to your W3 reports for the same period.
Best practice
Keep an accounting of wages and taxes by payroll processed in an electronic spreadsheet.
Reconcile the totals to the system generated reports for the quarter.
Resolve discrepancies.
Balance to your 941/940/W2 and W3 totals for the quarter.
Balance your State taxable wages and taxes
Prepare a reconciliation of the taxable earning and employee taxes withheld each pay period to verify that tax calculation are appropriate and MTD, QTD and YTD amounts are in balance.
Make sure your G/L has been reconciled regularly, if not, try to do that soon.

4. Reporting W2 Reporting dates 2014 Q4 941 – due by 1/31/15
W2’s to employees no later than February 2, 2015
W2’s to Social Security Administration (SSA)
Filing with Business Services Online by 3/31/15
Filing paper forms with SSA by 3/2/15
2014 Q4 941 – due by 1/31/15
940 – due by 1/31/15
By December 1st, send out a notice to your employees now requesting that they update their addresses and their W4’s.
Remember, it is required that all employees with a W4 status of Exempt submit a new W4. If no W4 submitted by 2/17/15 then change their status to Single and 0.
For both forms 941 and 940, if you have made all of your deposits you may take advantage of filing up to 2/10/15.

5. Fringe Benefits No dollar limit on De Minimis Fringe Benefits
Example: Gift Cards
Supplemental wages
Moving Expenses
Personal Use of Company Cars
Group Term Life
Qualified Transportation
It’s that time of year again where gift cards will be abundant. Remember, gift cards are taxable the same as cash and there is no dollar limit. Excludable from Gross Wages are items like: Coffee, Doughnuts, Local telephone calls and occasional cocktail parties.
Supplemental Wages are those items calculated outside of regular wages, i.e. bonuses and gift cards. Federal tax rate = 25% when under 1mm; don’t forget about state supplemental tax rates, i.e. California = 10.23%
Keep up with moving expenses, especially if you advance money to cover moving expenses. Make sure that you process the taxable/non-taxable items so that they appear on the employee’s W2. Moving expenses reimbursed to the employee is reported on the W2 box 12 with code P.
Be sure to calculate the Fair Market Value of an employee’s personal use of a company car – Use Commuting Valuation Method; Annual Lease Valuation Method or Cents-per-Mile Method. (pg 1-20)
Be sure to include Group Term Life on the W2, Box 12 code C
2014 Qualified transportation benefits $130 a month for transit (transit passes, tokens, vouchers or fare cards; $250 per month for parking. Unchanged for 2015.

6. FUTA Credit Reduction
The Federal Unemployment Tax Act (FUTA) tax rate is normally 0.6% of wages paid up to a limit of $7,000 per worker.
Seven states have a higher rate due to outstanding loans.
These states are: California, Connecticut, Indiana, Kentucky, New York, N. Carolina, Ohio and the Virgin Islands.
California’s 2014 credit reduction rate is 1.2% (the rate increases by 0.3% each year the loan is outstanding) vs. .09% for The state with the highest rate is Connecticut with a 1.2% credit reduction and also has a BCR Add-on Tax for 2014 for a total of 1.7%
These rates are made available to you on our chapter’s website.

7. Year End Project Key items to manage in the project:
Communications to departments/Employees
Processing and tax payment dates
Reconciliation of taxes and wages by quarter
Filing deadlines
Testing of changes affecting your 1st payroll of the new year.
Other business processes impacting payroll during this time.
Refer to hand out for a sample year end project plan
Don’t forget about other business processes that impact payroll during this time too. Put them on the schedule to make sure your not short on resources.

8. Updates
Tax rates: the highest tax rate is 39.6 when income exceeds $413,000 for single tax payers and $464,850 for married tax payers.
Personal Exemption is $4,000 up from $3,950
Foreign Earned Income Exclusion is $100,800 up from $99,200
Adoption Assistance is now $13,400 up from $13,190
Health FSA’s tax free amount is: $2,550 up from $2,500

9. Updates Continued
Medial Saving Accounts (MSA) limit is $4,450 up from $4,350; for family $8,150 up from $8,000.
Dependent Care Spending Account, the limits are the same at $5,000
401k deferral limits increase to $18,000 from $17,500; Catch up contribution are now $6,000 up from $5,500.
OASDI (FICA) Taxable Wage Base is $118,500 up from $117,000.

10. Other Useful Information
Tax Calendars – Publication 509
Sources:
American Payroll Association – Are you a member?
ADP
Bloomberg
**Do you have any helpful tips or resources to share?

11. Questions??