www.Harperspayroll.com
2014 Year End Guide
Table of Contents
Introduction Check List
Harpers Holiday Schedule Year End Processing Schedule Year End Topics
As another year is coming to a close we would like to thank you, our clients, for your continued loyalty. We appreciate you choosing Harpers Payroll to support your payroll needs.
To help with the additional responsibility and work that comes with Year End we have prepared a guide to help promote a successful year end. The complete guide can be found on our website at
http://www.harperspayroll.com/downloads/yearendguide.pdf Key Dates:
November 27th (Thursday)* - Thanksgiving Day - Closed
November 28th (Friday) – The day after Thanksgiving Day – Closed December 24th (Wednesday) – 12:00pm Closing – Christmas Eve December 25th (Thursday)* – Christmas Day – Closed
January 1st (Thursday)* – New Year’s Day – Closed
*Reminder: Thanksgiving, Christmas and New Years are also bank holidays so please consider this when preparing and submitting payroll on those weeks. Please allow 48 hours from processing date to check date to ensure timely funding of direct deposit into your employees’ accounts.
Deliveries: Please be aware that delivery delays may occur due to higher than normal delivery volume during the short holiday weeks. Alternative delivery options such as Client Pick-Up (at Harpers office), Federal Express or UPS overnight or priority service are available if needed to meet your needs.
Year End Processing Schedules:
Schedule 1 – Last Day for Adjustments is Tuesday, December 30th. W2s will begin to be processed on January 7th for delivery by January 23rd.
Schedule 2 – Last Day for Adjustments is Friday, January 16th. W2s will begin to be processed on January 17th for delivery by January 30th.
Schedule 2 is recommended for 1st Year Clients and clients that expect to have additional 2014 adjustments after December 30th (cutoff for Schedule 1).
Also, we want to take a moment to wish you a very special Holiday season. We hope that your holiday season and the New Year are filled with celebration, family, friends and community.
Keep up to date with the latest Harpers news and the latest payroll changes: Visit our website at http://www.Harperspayroll.com/
Visit us on Facebook www.facebook.com/Harperspayroll Visit us on Twitter http://twitter.com/Harperspay
Please contact your Client Service Representative at 508-753-2385 with any questions. Best Regards,
Jay Hanson Senior Director
Check List
Verify active and terminated employees’ addresses, social security numbers, date of birth and gender. o Harpers can submit your employee data electronically to SSA for SSN verification
o Gender is becoming increasingly important as tax agencies require statistical data based on this information.
Verify all calendar check dates for the end of 2014 and for the 2015 calendar year
Determine if your business will have any type of fringe benefit or 3rd party sick pay that must appear on the 2014 W2. If your business will need to process this data after December 30th, you will want to elect processing schedule 2 (see schedules below)
Harpers Holiday Schedule Key Dates:
November 27th (Thursday)* - Thanksgiving Day - Closed
November 28th (Friday) – The day after Thanksgiving Day – Closed December 24th (Wednesday) –12:00pm Closing – Christmas Eve December 25th (Thursday)* – Christmas Day – Closed
January 1st (Thursday)* – New Year’s Day – Closed
* Reminder: Thanksgiving, Christmas and New Years are also bank holidays so please consider the bank holidays when preparing and submitting payroll on those weeks.
Holiday Schedule Guidelines
Timely Direct Deposits – submit payroll by 2:00 PM two business days prior to check date o Banking holidays may have an impact on the availability of funds for your employees Deliveries done via courier are scheduled to be completed by 5:00 PM the day after submission
o Harpers does not guarantee a time for delivery other than by 5:00 PM.
o If you have concerns regarding delivery times you may consider using alternative delivery methods such as UPS Overnight, FedEx Overnight or Pickup
Harpers Payroll is closed on Friday, November 28th
o Please plan accordingly if you transmit or pickup on Friday, November 28th o Delivery of payrolls is not impacted
Year-End Processing Schedule
Harpers Payroll Services has designed two year-end schedules to accommodate the different needs and circumstances of our client base. The schedules are as follows:
Schedule 1:
Last date for processing Year-End Adjustments Dec 30 Last Payroll Pay Date of 2014 Dec 31 Distribute Qt4 Quarterlies and W2’s Jan 8-23 Schedule 2:
Last date for processing Year-End Adjustments Jan 16 Distribute Qt4 Quarterly and W2’s Jan 23-30
If you elect Schedule 2 – please be aware of the following items:
You will receive an email confirming that you have elected Schedule 2
Once all adjustments have been processed and verified for accuracy, notify your Client Service Representative so that the year-end processing can begin on your account. If you do not contact us, your account will automatically be closed out to begin the year-end processing on January 16th at 2:00 PM.
Any penalties and interest assessed on late payments as a result of year-end adjustments is the client responsibility and not the responsibility of Harpers Payroll Services.
Electing schedule 2 will allow your office the necessary time needed to prepare year-end adjustments such as Group Term Life, 3rd Party Sick Pay, Car Allowances, Fringe Benefits, Etc. These types of compensation are determined by the IRS to be taxable compensation to the employee. The deposits for these adjustments would be due no later that the due date of the last payroll of the year. Please be prepared for the assessment of Penalties and Interest by both the Federal and State governments, due to late tax payments made on year-end adjustments submitted after the 2:00 PM deadline on December 30th. Harpers Payroll Services will not be responsible for Penalty and Interest on these items.
If it is determined that additional adjustments are necessary after your year-end processing has begun (the official closing date for your elected schedule has passed) a minimum fee of $200.00 will apply. Please contact your Client Service Representative to assist you.
Year End Topics
Items that may generate an adjustment run include but are not limited to the following:
Manual and voided checks not entered into payroll
Earning or deduction coding discrepancies
Bonus or Adjustment Payrolls
Health Premium Reporting on W2’s
Third Party Sick Pay
COBRA
Employer contribution to an HSA plan
Group Term Life Insurance (GTL) **
Personal use of company vehicle **
Employee Business Expense reimbursements **
Company paid: health club membership, parking, transportation, etc. **
Awards, gifts, etc. **
Auto Allowance **
** This type of adjustment must be entered on a payroll when the employee is being paid to avoid tax out-of-balances on the 941. All adjustment runs done after December 30, 2014 may result in additional penalty and interest.
Health Premium Reporting on W2’s
Effective 2013 employers that report 250 or more W2’s in a calendar year are required to report the total cost of health care premiums on the W2’s. If you have 250 or more W2’s in 2014, contact your Client Service
Third party sick pay must be reported to the IRS and Social Security Administration during the same tax year that the employee received the disbursement. Employers receive a copy of each disbursement when the employee is paid by the third party vendor. We strongly recommend that third party sick pay be entered into payroll when received to avoid last minute year-end adjustment runs. The third party sick pay carrier will send an annual reconciliation of benefits, but unfortunately this usually arrives to the client after the filing deadlines of the IRS. The annual reconciliation can be compared to payroll reports to ensure accuracy. If any of your employees received a disbursement from a third party sick policy in 2014, those disbursements must be posted to payroll no later than December 30, 2014. Make sure your third party sick pay vendor knows that you need the data to report on your payroll or to Harpers Payroll Services. Late reporting of income and tax deposits due to late receipt of information from your vendor is not an acceptable explanation to the IRS. If you know that your third party vendor will not have the data before the year-end deadline, please contact your Client Service Representative by phone or email to be placed on Schedule 2.
Please make sure that you are aware of your filing requirements when entering third party sick pay into
payroll. There are several different methods accepted for reporting Third Party Sick Pay, and it will be necessary to know who will be responsible for issuing the W2 for the wages paid by the vendor. In some instances the vendor issues the W2’s and the employer is only responsible for reporting the wages and paying the employer portion of taxes. This information is extremely important to ensuring accurate filings. Please contact your customer service representative for assistance.
Bonus or Adjustment Payrolls
Please notify Harpers in advance of changes to your processing dates and any special instructions for additional payrolls. Due to the substantial increase in adjustment and bonus payrolls Harpers receives from clients in November and December, for Harpers to maintain the high level of client service that you are accustomed to, we require that all clients adhere to the following specifications:
Your normal payroll transmission time is a minimum of 2 business days before check date. Due to time constraints, all adjustments must be completed before your last payroll of the year.
Remember, no matter how early you submit your adjustment or bonus payrolls; the check date activates the money movement from your account. Payrolls must be processed in date order (example: payroll with check date of 12/31 cannot process before payroll with a check date of 12/30).
Note: Your bonus or adjustment payroll, either by itself or in combination with a payroll with the same check date, may generate federal tax liabilities in excess of $100K. The tax deposit becomes due the next business day after the check date. Please make sure all payrolls are submitted on time so tax deposits can be paid within federal and state guidelines.
Additional Year End Topics Company Policy Changes
Changes to company policies that are intended to affect payroll in 2015 should be submitted to your Harpers Client Service Representative no later than December 3, 2014. These changes include but are not limited to: pay
frequencies, insurance rate changes, time off policies, general ledger, 401k, etc. This gives our Client Service Team time to setup and test changes before implementation. We cannot guarantee the implementation of policy changes for the first payroll of 2015 on requests received after December 3, 2014.
Banking Changes
Your payroll calendar automatically updates each time you process payroll. A one year calendar is kept at all times. This means that as you process a check date, your scheduling rules setup in our system will add a new check date one year in advance. Currently the calendar year 2015 has been produced through early November 2015. At the end of December, if you need to review the calendar setup for 2015, please contact your Client Service
Representative via email and the calendar will be printed and emailed to you. If changes are required or if known bonus/commission payroll dates are to be added, please note them on the calendar and return them to your Client Service Representative.
W2 Printing
We will produce multiple W2’s for any employee that has paid taxes in more than one state or local jurisdiction during the year. All W2’s will be filed with the Social Security Administration electronically for all clients. Correcting W2 data
Harpers Payroll Service emphasizes the importance of verifying all employee demographic information for year-end. Please review all employee information carefully. Fax and Autopay clients should send any changes with payroll before your last payroll of the year. Verifying employee Social Security numbers is extremely important to the employee and you, the employer. Correct numbers as well as names will ensure accurate Federal (SSA), State unemployment reports, accurate records for your employees’ retirement and will avoid possible penalties for you. Social Security Numbers (SSN) and W2 Reporting
According to the Internal Revenue Service (IRS) “General Instructions for Forms W-2” the following is noted: “If you do not provide the correct employee name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. For more information, see Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs (SSN)”.
SSN: Social Security Number
An SSN will NEVER begin with 000-XX-XXXX, 666-XX-XXXX or a range of 900-999-XX-XXXX The fourth and fifth digits will never be 00 (XXX-00-XXX is an example of an invalid SSN) The last four digits will never be 0000 (XXX-XX-0000 is an example of an invalid SSN)
The IRS further states: “Do not accept an ITIN in place of an SSN for employee identification or for work. An ITIN is only available to resident and nonresident aliens who are NOT ELIGIBLE for U.S. employment and need
identification for other tax purposes.”
ITIN: Individual Taxpayer Identification Number An ITIN begins with a “9”
It’s format is similar to an SSN 9XX-XX-XXXX Deferred Comp/Retirement Plan Box 13 box on the W2
(1) Any employee that contributes to a deferred compensation plan by payroll deduction will have the Retirement Plan box marked on their W2 automatically. This process is transparent to the client.
(2) If the company has a qualified pension plan that does not run through payroll, the Retirement Plan box should be marked for any individual that you have made contributions. This is not automated. It is the employer’s responsibility to indicate what applies in these circumstances. The “retirement plan” box is located on the employees’ miscellaneous tab in the employee module. Fax clients must notify us in writing before the W2’s are printed if they need these boxes marked.
W2 Billing
Year End Client package will include the following: One set of pressure sealed employee W2’s. One set of employer W2’s (four to a page). Includes Total Record (in lieu of Form W3). Additional Year End Services Offered:
W2s on CD
Quarterly Returns on CD
We will begin shipping W2’s and 1099’s on or about January 8, 2015. W2 reprints will be processed after all first run W2’s are completed. There will be an additional charge for W2 reprints resulting from late adjustment runs, as well as name, address, and social security number changes.
Wage reporting errors will require amendments to the IRS and State taxing agencies. Harpers will file amendments per the clients’ request. The total of all W2’s and W2C’s must equal the total of all 941’s & 941C’s filed for the calendar year. The smallest variance will generate a notice from the SSA and other tax agencies.
1099M and 1099R
Harpers can provide employee/employer copies of forms 1099M and 1099R. All information pertaining to 1099’s must be submitted no later than your last payroll processing in December 2014. All 1099’s will be sent by courier directly to the client for distribution to the recipient.
Harpers Payroll Service does not provide red copies of the 1099 or 1096. If we are printing the recipient copies of form 1099M or 1099R, we will file your 1099M and 1099R forms with the IRS electronically. This service is available only for those clients that process 1099 information prior to the last payroll processed for the year.
2015 Federal and State Tax Changes Mandated Changes for 2015
The following guidelines were in effect as of the date of this printing. It is always recommended that you check with your tax professional.
Social Security Wage Base
The Social Security taxable wage base for 2015 will increase from $117,000 to $118,500 at the 6.2% rate for a maximum deduction from employees of $7,347. The Medicare deduction remains the same with no limit at a rate of 1.45% and an additional .9% for wages paid above $200,000.
W4 Exempt Status
W4 Exempt Status must be resubmitted annually. By February 15th, those employees who submitted a form W-4 with an exempt status for 2014 must file a new form W-4 for 2015 to continue their exempt status. Begin
withholding for any employee who previously claimed exemption from withholding, but has not given you a new form W-4 by this date. If the employee does not give you a new form W-4, withhold tax as if he or she is single, with zero withholding allowances.
FUTA Tax
FUTA Tax Credit Reduction (As of October 24, 2014)
The following states currently are FUTA Tax Credit Reduction States. These states have until November 10, 2014 to prevent them from being a Credit Reduction State. For example, if South Carolina remains a Credit Reduction state the effective FUTA rate would be 1.5% [6% less (5.4%-.9%)] = 1.5%
STATE
INITIAL DATE OF
LOAN
BECAME CREDIT REDUCTION
STATE
FUTA CREDIT
REDUCTION
California
Jan-09
2011
1.2%
Connecticut
Oct-09
2011
1.7%
Indiana
Dec-08
2010
1.5%
Kentucky
Jan-09
2011
1.2%
New York
Jan-09
2011
1.2%
North Carolina
Feb-09
2011
1.2%
Ohio
Jan-09
2011
1.2%
Virgin Islands
Aug-09
2011
1.2%
www.workforcesecurity.doleta.gov/unemploy/budget.asp#tfloans
2015 Unemployment rate changes and withholding deposit frequency changes
You will start receiving the 2015 federal, state, and local tax pay frequency changes and unemployment tax rate notices shortly. These must be forwarded to our office immediately upon your receipt. Harpers’ timely receipt of these notices ensures the accurate collection and filing of payroll tax. Harpers will continue to use the 2014 rates and frequencies on file in 2015 until new ones are received. If we use the 2014 rate to calculate unemployment during 2015, prior to receiving the updated information, any under/over collection will be adjusted during the quarter end process. We will not be responsible for client penalties resulting from our late receipt of
unemployment, federal, state or local tax notices. Please fax tax rate notices and frequency changes to our tax department at (508) 421-3904. You may also email them directly to the tax department at
[email protected]. New coupon books should be forwarded by U.S. mail directly to our office. SUTA Unemployment Wage Base Limit
Many states have already determined the wage base limit for unemployment insurance. Many of these wage bases remain unchanged.
Hawaii $40,900 $40,400 $500 Idaho $36,000 $35,200 $800 Illinois $12,960 $12,960 $60 Indiana $9,500 $9,500 $0 Iowa $27,300 $26,800 $500 Kansas $12,000 $8,000 $4,000 Kentucky $9,900 $9,600 $300 Louisiana $7,700 $7,700 $0 Maine $12,000 $12,000 $0 Maryland $8,500 $8,500 $0 Massachusetts $15,000 $14,000 $1,000 Michigan $9,500 $9,500 $0 Minnesota $30,000 $29,000 $1,000 Mississippi $14,000 $14,000 $0 Missouri $13,000 $13,000 $0 Montana $29,500 $29,000 $500 Nebraska $9,000 $9,000 $0 Nevada $27,800 $27,400 $400 New Hampshire $14,000 $14,000 $0 New Jersey $32,000 $31,500 $500 New Mexico $23,400 $23,400 $0 New York $10,500 $10,300 $200 North Carolina $21,700 $21,400 $300 North Dakota $35,600 $33,600 $2000 Ohio $9,000 $9,000 $0 Oklahoma $17,000 $18,700 -$1,700 Oregon $35,700 $35,000 $700 Pennsylvania $9,000 $8,750 $250 Puerto Rico $7,000 $7,000 $0 Rhode Island $21,200 / $22,700 $20,600 / $22,100 $600 South Carolina $14,000 $12,000 $2,000 South Dakota $15,000 $14,000 $1,000 Tennessee $9,000 $9,000 $0 Texas $9,000 $9,000 $0 Utah $31,300 $30,800 $500 Vermont $16,400 $16,000 $400 Virgin Islands $22,500* $22,500 $0 Virginia $8,000 $8,000 $0 Washington $42,100 $41,300 $800 West Virginia $12,000 $12,000 $0 Wisconsin $14,000 $14,000 $0 Wyoming $24,700 $24,500 $200
*2015 Rate not released by the individual state at time of publishing this guide.
Minimum Wage
State Minimum Wage Alabama $8.75 (effective 2/24/15) Alaska $7.75 Arizona $8.05 Arkansas $7.50 (effective 1/1/15) California $9.00 Colorado $8.23 Connecticut $9.15 Delaware $7.75 District of Columbia $9.50 Florida $8.05 Georgia* $7.25 Hawaii $7.75 Idaho $7.25
Illinois November Ballot $10.00
Indiana $7.25 Iowa $7.25 Kansas $7.25 Kentucky $7.25 Louisiana* $7.25 Maine $7.50 Maryland $8.00 Massachusetts $9.00 Michigan $8.15
Minnesota $7.25 small employers / $8.00 large employers
Mississippi* $7.25
Missouri $7.65
Montana $8.05
Nebraska $8.00
Nevada $8.25 / $7.25 w/Health Benefits
Ohio $8.10 Oklahoma $7.25 Oregon $9.25 Pennsylvania $7.25 Puerto Rico $7.25 Rhode Island $9.00 South Carolina* $7.25 South Dakota $7.25 Tennessee* $7.25 Texas $7.25 Utah $7.25 Vermont $9.15 Virginia $7.25 Washington $9.47 West Virginia $8.00 Wisconsin $7.25 Wyoming* $7.25
*Indicates that either the state has no mandated minimum wage or the mandated minimum wage is less than the Federal minimum wage and therefore, the higher Federal minimum wage of $7.25 must be paid.
Mileage Rate
The standard mileage rates for 2015 is 57.5 cents per mile. Transportation Fringes
The amounts that may be excluded from gross income for employer-provided "qualified transportation fringe benefits" for 2015 are as follows: $250 per month for "qualified parking" and $130 per month for "transportation in a commuter highway vehicle and any transit pass."
Medical Savings Account Plans
Contribution and Out-of-Pocket Limits for Health Savings Accounts (HSA) and High-Deductible Health Plans (HDHP)
2015 2014
HSA contribution limit (employer and employee)* Individual: $3,350 Family: $6,650
Individual: $3,300 Family: $6,550 HSA catch-up contributions (age 55 or older) $1,000 $1000
HDHP minimum deductibles Individual: $1,300
Family: $2,600
Individual: $1,250 Family: $2,500 HDHP maximum out-of-pocket amounts
(deductibles, co-payments and other amounts, but not premiums)
Individual: $6,450 Family: $12,900
Deferred Compensation Limits Chart of Selected Limits
401k Plan Limits for Plan Year 2015 2014 2013 2012 2011 2010 2009 401k Elective Deferrals $18,000 $17,500 $17,500 $17,000 $16,500 $16,500 $16,500 Annual Defined Contribution Limit $53,000 $52,000 $51,000 $50,000 $49,000 $49,000 $49,000 Annual Compensation Limit $265,000 $260,000 $255,000 $250,000 $245,000 $245,000 $245,000 Catch-Up Contribution Limit $6,000 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 Highly Compensated Employees $120,000 $115,000 $115,000 $115,000 $110,000 $110,000 $110,000
Non-401k Related Limits 2015 2014 2013 2012 2011 2010 2009
403(b)/457 Elective Deferrals $18,000 $17,500 $17,500 $17,000 $16,500 $16,500 $16,500 SIMPLE Employee Deferrals $12,500 $12,000 $12,000 $11,500 $11,500 $11,500 $11,500 SIMPLE Catch-Up Deferral $3,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
SEP Minimum Compensation $600 $550 $550 $550 $550 $550 $550
SEP Annual Compensation Limit $265,000 $260,000 $255,000 $250,000 $245,000 $245,000 $245,000 Social Security Wage Base $118,500 $117,000 $113,700 $110,100 $106,800 $106,800 $106,800 NOTE: All deferral limits will be in the system for 2015.
Unemployment Interest Assessments
Interest is normally due annually on federal loans to state UI trust funds, but the American Recovery and Reinvestment Act of 2009 (“ARRA”) waived interest payments through 2010. Employers can expect to receive separate assessments from their quarterly UI contribution returns. These assessments should be provided to the person responsible in your company for processing payments, in most instances this would be your Accounts Payable department.
2015 Federal Information
Minimum Wage $7.25
Maximum Tip Credit $5.12
Social Security Wage Base $118,500 Social Security Rate (EE & ER) 6.2%
Medicare Wage Base No Limit
Medicare Rate (EE & ER) 1.45% Medicare Rate > $200,000 (EE Only) 2.35%
FUTA Wage Base $7,000
FUTA Effective Rate* .6%
*FUTA Effective Rate unless credit reduction exists
Transit Pass $130
401(k), 403(b), 457 $18,000
Catch-Up Age 50 and Over $6,000 FSA Contribution Limit Medical $2,550 Dependent Care Assistance $5,000
Adoption Assistance $13,400
Foreign Earned Income Exclusion $100,800 Per Diem Rate – High Cost $259 Per Diem Rate – Low Cost $172 Medical Savings Account Plan
Single $3,350 Out-of-Pocket $6,450
Family $6,650 Out-of-Pocket $12,900
Legal Holidays (Banking) Observed
New Year’s Day January 1 Martin Luther King Jr Birthday January 19 Washington’s Birthday February 16
Memorial Day May 25
Independence Day July 3
Labor Day September 7
Columbus Day October 12
Veterans’ Day November 11
Thanksgiving Day November 26
Christmas Day December 25
Taking time now to address above items will assure a smooth year-end and avoid late tax deposits and penalties. Harpers Payroll Service will begin processing quarter-end and year-end returns after your last regularly scheduled check date for December 2014. If your last regularly scheduled payroll is not the final processing, please let us know as possible to set up Schedule 2.
Regards,
