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Posts published in “W-2”

Are Your Employees Mismatched? SSA is Cracking Down – Penalties May Follow

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The Social Security Administration has announced that they will begin mailing Educational Correspondence (EDCOR) notices in the middle of next year to businesses and employers who submit wage and tax statements (Form W-2) that contain name and Social Security number (SSN) combinations that do not match their records.  There are a number of reasons why reported names and SSNs may not agree with their records, such as typographical errors, unreported name changes, and inaccurate or incomplete employer records. If they cannot match the name and SSN reported on a Form W-2 to their records, they cannot reconcile employer wage reports and…

Spring Cleaning? Record Retention Guidelines to Help Clear the Clutter

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A question I am often asked is ‘How long must I maintain my payroll records?’, and the answer is; “it depends”.   Reason being is that there are many different documents that are maintained within the payroll world by a myriad of federal, state, and local agencies, and a lots of overlap.  Some people put a blanket retention policy of seven years across all documents, but in some cases as we will see, even that may not be long enough.  Namely if the records are for an active employee. Let’s take a look at the more popular forms and documents, and bring some order to…

The 123s and ABCs of Reading a W-2

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Over the next few weeks as your employees start to receive their 2017 W-2 form, they will most likely have questions as to what all those numbers mean.  For example, it is not uncommon for a salaried employee who earns $50,000 per year question why their Box 1 Wages only reflects $45,000.  The response is, ‘do you contribute to a pension plan or have pre-tax insurance, then if so those amounts reduce your “taxable” wage, which is what appears in Box 1’. To assist you with those questions, here is an explanation of what is in each box and what…

Beware of W-2 Phishing Scams

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While one should always be vigilant about suspicious emails, this time of the year I recommend an even heightened scrutiny. It is not uncommon to receive requests this time of the year from employees who have not received or lost their W-2 form, and in the old days, this request came in person.  Nowadays, it is not uncommon to receive a request via email that you may fulfill via replying.  It certainly cuts down on the time that it used to take to find the employer’s hard copy,  photo copy the copy, and mail  the copy to the employee.  …

W-2 Box 9 is Back as a Crimefighter

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Ever since the IRS did away with the Advanced Earned Income Credit (EIC) in 2010, Box 9 on the W-2 form has sat there unused and neglected as a greyed out box.   The instructions simply read “Do not enter an amount in box 9.” Now, six years later, the IRS has an idea to help combat tax-related identity theft and refund fraud.  Their objective is to utilize this box to verify that the W-2 data submitted by taxpayers on e-filed returns is legitimate.   This year, the IRS will run a pilot program where a limited number of W-2s…

Deciphering the W-2 – A Handy Guide

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Over the next few weeks as employees start to receive their 2016 W-2 form, they may likely have questions as to what all those numbers mean.  For example, it is not uncommon for a salaried employee who earns $50,000 per year question why their Box 1 Wages only reflects $45,000.  The response is, ‘do you contribute to a pension plan or have pretax insurance, then if so those amounts reduce your “taxable” wage, which is what appears in Box 1’. To assist you with those questions, here is an explanation of what is in each box and what all of…

W-2 and 1099 Filing Deadline Accelerated

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One of the items passed in The Protecting Americans from Tax Hikes (PATH) Act of 2015, which was signed into law by President Obama on December 18th, 2015, was an effort to prevent tax return fraud.  The Act accelerated the filing deadline for businesses for year-end informational returns such as forms W-2 and 1099-MISC* by 60 days to January 31st of the year following the tax year of the form.  This makes the SSA and IRS filing deadline of their respective forms the same as the deadline for their distribution to employees and contractors.  This new deadline of January 31st…

Death of an Employee and Wages

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The death of an employee is a difficult time for any business.  Grieving co-workers, loss of productivity, and finding and training a replacement are just a few of the factors a business will need to deal with, but one area that is often mishandled is the treatment of wages and payroll. How payroll is handled is all about timing, and I can break it down into three distinct parts. Part 1 – Wages earned and paid prior to the death For wages paid to the employee prior to the death, where the payroll check remains uncashed, a stop payment should…