1. Gerald Whittmore, CPP Xerox Business Services
Year End Preparation
Gerald Whittmore, CPP
Xerox Business Services

2. Year End Preparation Plan/Design Execute Build, Unit Testing Testing
Creating Year End Task List Project Plan
Plan/Design
Requirements – this would include any type of documentation, forms, interfaces
Execute Build, Unit Testing
For any system changes – benefit, rate changes, 2014 limits and taxes
Testing
Validation – review testing results with team members
Deploy
Migration – move all changes to your production systems and any training this would be required
Validation
Reconciliation of W2’s
Reporting
Printing of W2’s, mailing to employees
Filing with Federal and State

3. Year End Preparation Creating Year End Task List Project Plan
Preparing for year-end is a process that continues throughout the year.
Action items completed throughout the year.
Wage and Tax Reconciliations
Stock Reconciliation
HSA Reconciliation
Verification of employee data (name, address, work addresses)
Worksheets (Annual Reconciliations, W2 filing Due Dates)
Action items completed for Year-End Preparation.
System enhancements to print W-2’s.
Review Magnetic media specifications for Federal and States
Enroll SSA’s Business Services Online / reset password

4. Year End Preparation Items that may be on your task list.
Establish a year-end committee
Identify all processing dates for task list
Request an exception report for negative amounts in any applicable field reports on the W-2 form
Verification of Employee’s Name and SSN
Testing of W-2’s processing
Request IRS Publication 509 for compliance calendar, provides federal legal holiday and tax calendar to help you build your tax deposits schedule for 2017

5. Year End Preparation
Estimated tax deposits if required for Federal and States
Information from Accounts Payable for any taxable and nontaxable payments made to employees
Employees claiming “exempt” for withholding on their W-4 must submit new W-4 by February 15, 2017.
Prepare a state and local annual reconciliation chart that indicates when the individual states and local authorities require their reconciliation returns

6. Year End Preparation
Verify your system reflects the changes to dollar limits associated with employee deductions and compensation limits for deferred compensation arrangements
Notify the mail room of the scheduled distribution date for your W-2’s

7. Year End Preparation Social Security Wage Base and Tax Rates
Employer portion SS Tax 6.2%
Employee portion SS Tax 6.2%
Medicare taxes continue to be 1.45%
EE Medicare taxes over $200,000 additional 0.9%
Compensation Plans
401k Plan Compensation limit $265,000.00
401k Deferral $18,000.00
401k catch up contribution $6,000.00
State Unemployment Insurance Wage Base and your employer tax rates

8. Year End Preparation Additional Limitations to review
Qualified Transportation Fringe Benefits
Transit Passes $ per month
Parking $ per month
Bicycle Commuters $20.00 per month
Minimum Wage per State
Review any changes in Minimum wages where you have business

9. Year End Preparation
Action Item Completed for the First Payroll of the New Year
Set up and test all new tax updates including the employer wage bases and tax percentage rates for social security, Medicare, Federal unemployment, state disability, state unemployment and local taxes
Set up and test your company’s benefits package
Prepare electronic W-2 file for filling with the SSA

10. Year End Preparation AccuWage 2016
What is AccuWage?
AccuWage is a free software from Social Security Administration.
AccuWage is for use with Electronic Filing W-2/W-2C - EFW2 or EFW2C
The software allows you to check W-2 (Wage and Tax Statement) and W-2c (Corrected Wage and Tax Statement) reports for correctness before you send them to Social Security Administration.

11. Year End Preparation Action Items Completed After Year-End Process
Schedule year-end meeting to review successes and failures
Document lessons learned that have occurred during the current year-end process.

12. Sample Project Plan

13. Sample Completed Project Plan

14. Sample Annual Reconciliation and W2 Filing

15. Sample Annual Reconciliation and W2 Filing

16. W-2 Reporting Due Dates Employee Copies Paper Forms W-2 to SSA
Tuesday, January 31, 2017
Paper Forms W-2 to SSA
Electronic Forms W-2 to SSA (New Requirements)
*** January 31st is the deadline to file W-2s using Business Services Online or to submit paper Form W-2. If this date falls on a Saturday, Sunday, or legal holiday, the deadline will be the next business day.

17. Returned W-2 Retention Maintain Electronically
4-year Period = 4/15/2021
Paper storage not required of kept electronically

18. Verifying Employees Social Security Numbers
Registration for Online SSN verification
Request Access and Activation Code
Activation Code is Mailed to your Employer
Login to Use the Service

19. Verifying Employees Social Security Numbers
Verify up to 10 names and SSNs online and receive immediate results
Upload batch files of up to 250,000 names and SSNs and usually receive results the next business day
Specifications for record layout, go to and click on “Submission File Format”

20. Year-End Reporting and Taxation of Fringe Benefits
Taxable Fringe Benefits
When Fringe Benefits Are Considered Paid
Withholding on Fringe Benefits
Special Accounting Rule
Supplemental Tax Rates
Federal 25% for supplemental wages
Federal % for supplemental wages over $1 million
State Supplemental Tax Rates

21. Year-End Reporting and Taxation of Fringe Benefits
More Fringe Benefits
Moving Expenses (taxable and Non-Taxable)
Personal Use of Company Cars, Aircrafts
Group Term Life Insurance

22. Year-End Reporting and Taxation of Fringe Benefits
Employer-Paid Benefits
HSA – recommend a full reconciliation
Health Coverage cost - recommend a full reconciliation
Awards and prizes
Gift cards
Educational assistance
Loans to employees
Adoption assistance
Differential military pay

23. W2 Reporting Cost of Health Coverage
Not included in amount for Box 12 Code DD
Dental or Vision Plan
W2 provided by their-party sick pay provider
Plan not subject to Cobra
Military plans
Excess reimbursements
Coverage under EAP, wellness & on-site medical clinic

24. W2 Reporting Cost of Health Coverage

25. Year-End Reporting Issues
Third-Party Sick Pay
Workers’ Compensation benefits are not included in employee’s gross income and are not subject to any employment taxes.
Overpayments and Repayments
If employees make repayments for amounts received in error, do not offset the repayments against current year payments. Repayments made in the current year, but related to a prior year or years, require special tax treatment by employees and employers

26. Third-Party Sick Pay

28. Affordable Care Act 2016 Filing Requirements
All applicable large employers are required to file Forms 1094-C and 1095-C for 2016
Forms 1094-C must be filed when an employer files one or more forms 1095-C
Generally you must file Forms 1094-C and 1095C by February 28 if filing on paper or March 31 if filling electronically.
Employee’s Form 1095-C is due to individuals by January 31, 2017

29. Federal Tax Levies Publication 1494 Form 668-W
Employee has to file a new 668-W to get the benefit of the new standard deductions.

30. Form W-2 Retirement Plan Checkbox

31. Wage & Tax Reconciliations
Develop a control matrix

32. Additional Gross-to-net Reconciliations
Best Practice: Create an electronic spreadsheet with a separate column for each pay date. Create rows for:
1. Items to add to the total gross payroll (regular, sick, vacation, overtime, bonus, etc.)
2. Total gross payroll – this should be a self-calculating field: a total of the above items
3. Pre-tax deductions (cafeteria plan, 401k plan, etc

33. Additional Gross-to-net Reconciliations
4. Taxable Gross Wages (federal, social security, Medicare, state – these should be self-calculating fields: the total gross less the appropriate pre-tax deductions 5. Taxes (federal, social security, Medicare, state, local 6. Post-tax deductions 7. Net pay – this should be self-calculating (total gross less pre-tax deductions, taxes, and post-tax deductions 8. Futa and Suta wages and taxes – calculate the taxes and compare to the system generated totals

34. Additional Gross-to-net Reconciliations
With each payroll processing, take the figures from your payroll register total and enter them into the fields for the items 1, 3, 5 and 6 above. Then, see if your spreadsheet calculates for items 2 ,4 and 7 match the calculations on your payroll register
Add more columns or worksheets for QTD and YTD figures. The fields in these columns should also be self-calculating, adding the appropriate columns together. As these numbers change every time you enter the items for a new pay period into a new column, see if your spreadsheet calculations for QTD and YTD match those in the payroll journal.

35. Avoid Reconciliation Errors
Each January or February review the prior year's Forms 941, Schedule H or 943 against your payroll records. Compare the amounts to be reported to SSA on Form W-3 to the sum of the amounts you reported to IRS on Forms 941, 943 or Schedule H for the tax year.

36. Avoid Reconciliation Errors
When filing reports electronically, on magnetic tape the total of all employee wage ("RW") records should agree with the amount entered in the "RT" record.

37. W2 Reconciliations Manually balance W2’s
Pay stub or taxable earnings report
Copy of W2

39. Helpful Hints Blank Tax Forms
Paycheck City/Symmetry offers all state withholding forms in one location.

41. Helpful Hints Using your e-mail signature
Example
Your paycheck stub will not match your W-2. The pay stub is a pay record of total GROSS wages paid to you though out the year. Your W-2 at the end of the year is a summary of TAXABLE wages only.
Example:
Box 1, 3, 5, 16 and 18 on the W-2 is your total Gross wages on your check stub minus any Sec 125 i.e. insurance deductions
Box 1, 16, and 18 on the W-2 represents your total Gross wages minus your 401k deductions.

43. Questions and Answer

44. Contact Information
Gerald Whittmore, CPP
Vice President of Payroll
Human Resources Outsourcing and Services
Xerox Business Services, LLC
1303 Ridgeview
Mailstop: R
Lewisville, TX 75057
Office: