2009 W-2 Set-Up and Processing Instructions. Set-Up: (steps 1-7)

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Dec. 2009 Add-On for Windows Software – W2 & PR Year-End Procedure Notes 1of 15

The 8.0.1 Patch must be loaded prior to Printing W-2’s or Creating

Magnetic Media to reflect the 2009 Regulatory Changes

2009 Year End Procedure Notes – Payroll

For Add-On Software Payroll W2 & Year-End Processing

2009 W-2 Set-Up and Processing Instructions

Set-Up: (steps 1-7)

1. Select the “Tax Code Maintenance” option located on the Payroll Maintenance Menu (PRM). Where applicable, you will need to review the tax codes identified in items 2 thru 4 below. Verify that setup is correct per instructions for each tax code where applicable.

2. Enter your State Disability Insurance Tax Code to verify that the Jurisdiction Name is SDI, Jurisdiction Type is set to “L” for Local and the State I.D. Code is your 2 character state abbreviation.

3. Enter each Local Tax Code to verify that the Jurisdiction Name is the Tax Code description. The

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Dec. 2009 Add-On for Windows Software – W2 & PR Year-End Procedure Notes 2of 15 4. Enter each State tax code and verify that the Jurisdiction Type is set to “S” for state and that the

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Dec. 2009 Add-On for Windows Software – W2 & PR Year-End Procedure Notes 3of 15 5. Select the W-2 Configuration Hard Copy option on the W-2 Processing Menu (PRW) which can be accessed from the PR Quarterly and Year-End Menu(PRY). Print the W-2 hard copy report.

B o x # L in e I D B o x D e s c ri p ti o n L in e D e s c ri p ti o n S ta te C o d e L o c a l C o d e T y p e C o d e O p e ra to r C o lu m n

1 Wages, Tips & other Compensation C FE + 2

2 Federal Income Tax Withheld C FE + 3

3 Social Security Wages C FI + 2

4 Social Security Tax Withheld C FI + 3

5 Medicare Wages & Tips C ME + 2

6 Medicare Tax Withheld C ME + 3

7 Social Security Tips 8 Allocated Tips

9 Advanced EIC Payment C EI - 3

10 Dependent Care Benefits B DC + 1

11 Nonqualified Plans 12 Special Fields

12 A Special Fields Uncollected FICA/RRTA Tax on Tips 12 B Special Fields Uncollected Medicare Tax on Tips

12 C Special Fields Employer paid Group Life over 50K A GL + 1

12 D Special Fields 401(k) B 4K + 1

12 E Special Fields 403(b) B 4B + 1

12 F Special Fields 408(k) B 48 + 1

12 G Special Fields 457(b) B PS + 1

12 H Special Fields 501(c) B 5C + 1

12 J Special Fields Nontaxable Sick Pay 12 K Special Fields Golden Parachute

12 L Special Fields Employee Expense Reimbursements 12 M Special Fields Uncollected FICA Former Emp LI 12 N Special Fields Uncollected Medicare Former Emp LI

12 P Special Fields Excludable Moving Expense A MV + 1 12 Q Special Fields Military Housing & Combat Zone Comp

12 R Special Fields Employer Contributions to MSA 12 S Special Fields Simple Retirement 408(p) 12 T Special Fields Adoption Benefits

12 V Special Fields Income from Nonstat Stock Options 12 W Special Fields Employer Cont to a Health Savings Acct

12 AA Special Fields Roth Cont to a section 401(k) Plan AA + 1 12 BB Special Fields Roth Cont under a section 403(b) BB + 1 13 1 Employee Status & Specials Statutory Employee

13 2 Employee Status & Specials Retirement Plan 13 3 Employee Status & Specials Third Party Sick Pay

14 1 Other UNDUE – Union Dues B UD + 1 14 2 Other HLINS – Health Insurance B HI + 1 14 3 Other UNFRM – Uniform Payments A UN + 1

15 State CA

16 State Wages CA C CA + 2

17 State Income Tax Withheld CA C CA + 3

18 Name of Locality CA SD

19 Local Wages SD C SD + 2

20 Local Tax Withheld SD C SD + 3

a Employee’s Social Security Number

a 1 Void Flag

b Employers Federal ID number c 1 Employers Information c 2 Employers Information c 3 Employers Information c 4 Employers Information c 5 Employers Information d Control Number e Employee’s Name

f 1 Employee’s Information Address Line 1

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Dec. 2009 Add-On for Windows Software – W2 & PR Year-End Procedure Notes 4of 15 5. Making Changes to the W-2 configuration file: Verify the boxes listed on previous page (box #, line

ID and description) are present. It is not required that the descriptions are changed for W-2 printing or MM. You should also verify that the appropriate tax code is entered in the ID column for each applicable box used in your facility. If either the box numbers and descriptions or the tax code (ID column) is

incorrect, you will need to update this table, as described in step 7. Select the W-2 Configuration option #3 on the PRW menu. If your configuration file is outdated, the system will display the prompt below. Answer Yes to update the configuration file and then re-print the W-2 configuration hard copy (see item 5 above). If this prompt is not displayed, then your configuration file is current and you may proceed to step 7 to update the file as needed.

The 2001 W2 Configuration update has not been done. Run it now<Y/N>:

6. Making Changes to the W-2 configuration file: After selecting the W-2 Configuration option the following screen will be displayed. See below for instructions for each field on this screen.

W2 Box Number: Type the W2 box number to be updated and press Tab. The box number is printed on the configuration hard copy report in the first column (i.e.; Federal income tax withheld is W2 box number 2). W2 Box-Line ID: Type the box-line ID and tab. Note that several W2 boxes DO NOT have a Box-line ID (i.e.; boxes 01, 02, 03), for those boxes, just press Tab in this field. The box-line id is printed next to the box number where applicable (i.e.; 12 A, Special fields uncollected social security tax on tips line ID is A).

State Code: Use this field for boxes 16 and 17 only. Enter your 2-character state id code (i.e.; CA – California, OH – Ohio).

Local Code: Use this field for boxes 19 and 20 only. Enter your local tax code in this field. Local tax codes are codes setup with an “L” entered in the “Jurisdiction Type” field in tax code maintenance.

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Dec. 2009 Add-On for Windows Software – W2 & PR Year-End Procedure Notes 5of 15 Code: Enter the appropriate code to be included in the selected box. Press F3 to look-up valid codes. The valid codes are based on the response entered in the type field. Review examples below for help with Type/Code to enter.

Example 1: In box number 2 on the W2’s you need to reflect the employee’s federal income tax withheld amount. That information is in your FEDERAL TAX CODE, so you will enter a type of C, and then use your 2- digit FEDERAL TAX CODE.

Example 2: In box 12 of your W2’s you want to show the amount deducted from the employee for their 401K contributions. That information is located in their 401K DEDUCTION CODE, so you will enter type of B, and then the 401K DEDUCTION CODE.

Description: The code description is displayed. No entry required.

Column: For pay codes and deduction codes, the system automatically displays 1 in this field. For contribution codes and tax codes, type the number of the column from the applicable code maintenance screen in Employee Master File Maintenance. Type 1 to use the gross amount, type 2 to use the taxable or basis amount, or type 3 to use the accumulated tax amount.

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W-2 Processing: Upon completion of the setup, you are ready to process the W-2’s. W-2 Calculation,

W-2 paper printing and the Magnetic Media Creation options are located on the PRW menu.

W-2 Processing – for a single company with less than 250 employees, NOT submitting Magnetic media file: Use option #7 on the PRW menu “W-2 Calculation” and follow steps 1-4 below.

W-2 Calculation – for multiple companies and/or single company submitting a Magnetic file: Do not use the W-2 Calculation option, use option #10 on the PRW menu “Magnetic Media W-2 Processing” to create both the W-2 Calculation file for printing and the Magnetic file. Follow steps 5-9 below.

1. W-2 Calculation. This program compiles the data that will print on the W-2’s, if you make any changes to the data after this option has been run you will need to rerun it to recompile any changes that were made. This option should only be used if you ARE NOT submitting Magnetic Media.

Report Current Year or Archived Year?: NOTE: This prompt will only be displayed if you have archived data, if you have not archived PR data then the system will proceed directly to the “Quarter number” field. Enter C for “Current” to calculate the W-2’s on your Current data or A for “Archive” to calculate W-2’s on your archived data and verify the correct Archived year is entered. **See information on archiving data**

Quarter number: Type 4 in this field and press tab.

Beginning/Ending Employee Number: To calculate for all employees select F1 at the Beginning Employee Number and Ending Employee Number fields.

2. Once the calculation is complete a window will display following message “calculation process is complete”. 3. W-2 Printing. To print W-2’s on laser printer, select option #9 “W-2 Printing (Laser Form)” from the PRW

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Dec. 2009 Add-On for Windows Software – W2 & PR Year-End Procedure Notes 7of 15 Report Current Year or Archived Year?: When printing W-2’s you must select the same data source as you used for the W-2 calculation, which means if you selected “Current Data” when you ran the W-2 calculation program then you need to select “Current Employee Master file” when printing. And likewise if you selected “Archived data” during calculation, then select “Archived Year” in W-2 printing.

Restart?: A restart option is available if you encounter printer problems. Select “yes” in this field and the program will prompt the user to enter the Employee number to start with. Select “no” if you do not wish to restart the printing. Select “single” if you wish to print for a single employee.

State ID Code: If you calculated using the W-2 Calculation option you have the option of entering F1 to select all State/Local codes for these fields or specifically entering the code you want to print W-2’s for. Each W-2 form can accommodate up to two (2) State taxes codes and/or two (2) Local taxes codes, if an employee has more that two (2) of either code type a 2nd W-2 will be printed for that employee with the overflow data. Laser W-2 Forms: If you selected the W-2 Laser Printing option you need to enter the form you are using. If you are unsure of the correct option for the forms you purchased please see Attachment 1 of this document. 1 - If you have the Laser forms with Four (4) W-2’s per page.

2 - If you have the Laser forms with two (2) W-2’s per page. 3 - If you have the Laser forms with Four (4) E-file W-2’s per page.

4 - If you have the Laser forms with Four (4) W-2’s per page from Moore (Form 275/276)

Do You Wish to Print a Test Pattern?: It is recommended that you print a test pattern to verify that form lines up properly. If the printing needs alignment, enter “V” and the following prompts will be displayed:

Lower All Print Lines: Enter “Y” to lower the print lines on the entire form by ½ line. Enter “N” if you do not wish to lower all lines.

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Dec. 2009 Add-On for Windows Software – W2 & PR Year-End Procedure Notes 8of 15 4. Archive Year-end Totals: If you printed W-2’s from “Current” data, you should create an Archive of your 2009 W-2 payroll data once you have completed W-2 processing. The archive menu option is #6 on the PRW menu, "Archive Year-end Totals" and should be run for the year 2009. The archive program saves the 2009 Payroll data on your system so it can be utilized to reprint W-2's if needed.

Magnetic Media: If you want to review the Magnetic Media Reporting and Electronic Filing options and requirements refer to SSA Publication No. 42-007. W-2’s must be submitted online in the EFW2 file format using SSA Software called BSO (Business Services Online). In order to access the BSO software you will need to obtain a PIN/Password. All of the information needed to submit using BSO can be found in the above publication or at the following website.

http://www.ssa.gov/employer

5. Magnetic Media W-2 Processing: This program compiles the data that will create both the W-2 Calculation file for printing and the Magnetic file. If you make any changes to the data after this option has been run you will need to rerun for the system to recognize the changes made. This option should only be used if you ARE submitting Magnetic Media. If you are NOT submitting Magnetic Media, see steps 1 thru 4 above. When using the List or Range option the Creating Company must be the lowest company number entered in the List or Range company selection field.

Process Current or Archived Data?: NOTE: This prompt will only be displayed if you have archived data, if you have not archived PR data then the system will proceed directly to the “Quarter number” field. Enter “C” to calculate the W-2’s on your Current data or “A” to calculate W-2’s on your Archived data and verify the correct Archived year is entered. **See information on archiving data**

Quarter number: Enter 4 in this field.

Submitter Company No: SSA requires that a Submitter record precede any Employer data on the EFW2 file. The Submitter must be an existing Add-On Company but need not be a Payroll Company. Enter the 3 digit company number you wish to use. Once the submitter company is entered, the following screen will be displayed. Complete the information on the screen for the “Submitter” company and answer Yes to save.

Re-submission: Enter “Y” if you are creating a re-submission file otherwise Enter “N” in this field.

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Dec. 2009 Add-On for Windows Software – W2 & PR Year-End Procedure Notes 9of 15 Preparer Code: Enter the appropriate preparer code.

Company No: Select the Company(s) you are submitting for by entering the Company number for a Single company, F1 to select a range/list of companies. Once F1 is selected enter “R” to enter a range (i.e.; 10 thru 15) or “L” to enter a List of specific companies. Once the Company(s) has been selected, you will be prompted to verify the Employer Parameters for each company selected, make the necessary changes if the data

displayed is incomplete or incorrect.

When the above data has been entered, a W-2 Calculation program is run for the selected companies, after which the data generated is used to create the magnetic media file. The file data path and name are displayed on the screen as displayed below.

This file (W2REPORT.XXX where XXX is the submitter company number) may be copied to diskette for State Submission or uploaded using SSA’s Business Services Online (BSO) for Federal Submission. A BSO Employer Handbook may be secured by calling SSA at 1-800-772-6270 Monday thru Friday, 7:00am to 7:00pm EST or downloaded from http://www.ssa.gov/employer/bsohbnew.htm

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Dec. 2009 Add-On for Windows Software – W2 & PR Year-End Procedure Notes 10of 15 6. Magnetic Media Audit Report – This option will give you a hard copy of the W2REPORT file that was

just created. Select “F” for Federal. The report will show taxable wages and tax withheld for FICA, Medicare, Federal, State and Local Tax Codes along with total deferred compensation. It also shows the number of employees and the number of records.

7. Magnetic Media Creation – This option copies the W2REPORT.XXX (where XXX is the submitter company number) file to diskette. Enter “F” to create the State Magnetic Media for W-2’s

(W2REPORT.XXX). Enter “S” to create Quarterly State Magnetic Media.

Insert a DOS formatted Diskette in the drive and press Enter. You will be prompted to select a device letter for the drive that you wish to copy to. After the device has been established it will be displayed automatically for any subsequent copies. If errors occur during the copy they will be displayed. Upon successful completion, the directory of the diskette is displayed so that you may be assured that the copy executed completely.

The script developed to copy to the diskette is displayed, it will contain the source and destination file names. In some states the destination file name will differ from W2REPORT. In all cases it will not contain the company number suffix seen on the source file name.

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Dec. 2009 Add-On for Windows Software – W2 & PR Year-End Procedure Notes 11of 15 Report Current Year or Archived Year?: When printing W-2’s you must select the same data source as you used for the W-2 calculation, which means if you selected “Current Data” when you ran the W-2 calculation program then you need to select “Current Employee Master file” when printing. And likewise if you selected “Archived data” during calculation, then select “Archived Year” in W-2 printing.

Restart?: A restart option is available if you encounter printer problems. Select “yes” in this field and the program will prompt the user to enter the Employee number to start with. Select “no” if you do not wish to restart the printing. Select “single” if you wish to print for a single employee.

State ID Code: If you calculated using the W-2 Calculation option you have the option of entering F1 to select all State/Local codes for these fields or specifically entering the code you want to print W-2’s for. Each W-2 form can accommodate up to two (2) State taxes codes and/or two (2) Local taxes codes, if an employee has more that two (2) of either code type a 2nd W-2 will be printed for that employee with the overflow data. Laser W-2 Forms: If you selected the W-2 Laser Printing option you need to enter the form you are using. If you are unsure of the correct option for the forms you purchased please see Attachment 1 of this document. 1 - If you have the Laser forms with Four (4) W-2’s per page.

2 - If you have the Laser forms with two (2) W-2’s per page. 3 - If you have the Laser forms with Four (4) E-file W-2’s per page.

4 - If you have the Laser forms with Four (4) W-2’s per page from Moore (Form 275/276)

Do You Wish to Print a Test Pattern?: It is recommended that you print a test pattern to verify that form lines up properly. If the printing needs alignment, enter “V” and the following prompts will be displayed:

Lower All Print Lines: Enter “Y” to lower the print lines on the entire form by ½ line. Enter “N” if you do not wish to lover all lines.

Lower Bottom Half: Enter “Y” in this field if you wish to lower just the bottom half of the form by ½ line. If “Y” is entered in the field above, the system will prompt if you want to lower bottom half an additional ½ line. Enter “Y” if you wish to do so, otherwise enter “N”.

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Payroll Year-End Procedures for Processing W-2’s Prior to Processing

2010 Payroll

Please read all instructions prior to processing a 2010 payroll

Payroll processed with a Pay Period End date of 12/2009 and a check date of 01/2010 is considered to be a 2010 Payroll. If your check date is 12/2009 then it is a 2009 payroll. Year End Procedures

1. Print the payroll reports that you will need to balance the year. Print the Earnings Status and the Tax Status Reports for all Codes and the Deduction Status Report for all Pre-tax deductions. See Attachment 2 for additional information on specific reports to print.

2. Balance your payroll reports for the year. To do this you will want to verify that your Total Gross Wages are correct for all Tax Codes and verify that the Total Gross Wages less any Pre-tax deductions match your Taxable Wages for each Tax Code. If you need to make corrections to the Employee Maintenance files select the “Payroll Conversion Entry” option located on the PRX menu and make the necessary changes to bring your reports into balance. See Attachment 3 for questions and answers regarding YE balancing.

*If you are in balance, but do not have time to print W-2’s and create magnetic Media skip step #3, follow steps 4 thru 10 then Print your W-2’s when you have time using the 2009 W-2 Processing

Instructions.

3. Process the W-2’s and create the Magnetic Media diskettes/Electronic EFW2 file using the 2009 W-2 Processing Instructions.

4. Close period 12 using the Payroll Month End Update option located on the Payroll Periodic Processing Menu (PRR). All 12 periods must be closed before you can run the Year End Update.

5. Archive the 2009 Payroll data using the Archive Year End Totals option located on the W-2 Processing Menu (MMS/PRW)

6. Back-up your Payroll system or do a complete Back-up and save it in case you need it later if something were to happen to the Archive file.

7. Run the Year End Update option located on the Payroll Quarterly and Year End Menu. In Enhanced Payroll this option is located on the PRY Menu and in Regular Payroll this option is located on the PRR Menu. Verify you are Closing the year 2009.

8. Select Tax Code Maintenance and Contribution Code Maintenance located on the Payroll Maintenance Menu (PRM) and update your FICA Tax Code and FICA Contribution Code to reflect the continued limit of

$106,800.00

9. Select Tax Table Maintenance located on your Payroll Maintenance Menu (PRM) and Enter the updated 2010 Federal Tax and Earned Income Tax Tables. If you need help with your State Tax Tables please contact Add-On Health Systems Support.

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Payroll Year-end Procedures for Processing W-2’s After Processing a

2010 Payroll

Please read all instructions prior to processing a 2010 payroll.

Payroll processed with a Pay Period End date of 12/2009 and a check date of 01/2010 is considered to be a 2010 Payroll. If your check date is 12/2009 then it is a 2009 payroll.

Year End Procedures

1. Print the payroll reports that you will need to balance the year. Print the Earnings Status and the Tax Status Reports for all Codes and the Deduction Status Report for all Pre-tax deductions. See Attachment 2 for additional information on specific reports to print.

2. Balance your payroll reports for the year. To do this you will want to verify that your Total Gross Wages are correct for all Tax Codes and verify that the Total Gross Wages less any Pre-tax deductions match your Taxable Wages for each Tax Code. If you need to make corrections to the Employee Maintenance files select the “Payroll Conversion Entry” option located on the PRX menu and make the necessary changes to bring your reports into balance. See Attachment 3 for questions and answers regarding Year-End

balancing.

3. Close period 12 using the Payroll Month End Update option located on the Payroll Periodic Processing Menu (PRR). All 12 periods must be closed before you can run the Year End Update.

4. Archive the 2009 Payroll data using the Archive Year End Totals option located on the W-2 Processing Menu (MMS/PRW)

5. Back-up your Payroll system or do a complete Back-up and save it in case you need it later if something were to happen to the Archive file.

6. Run the Year End Update option located on the Payroll Quarterly and Year End Menu. In Enhanced Payroll this option is located on the PRY Menu and in Regular Payroll this option is located on the PRR Menu. Verify you are closing the year 2009.

7. Select Tax Code Maintenance and Contribution Code Maintenance located on the Payroll Maintenance Menu (PRM) and update your FICA Tax Code and FICA Contribution Code to reflect the continued limit of

$106,800.00

8. Select Tax Table Maintenance located on your Payroll Maintenance Menu (PRM) and Enter the updated 2010 Federal Tax and Earned Income Tax Tables. If you need help with your State Tax Tables please contact Add-On Health Systems Support.

9. Process your 1st

2010 Payroll.

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Attachment 1

Year-End processing reports

From the Periodic Processing Menu (PRR) print the following reports for the 4th quarter:

Earnings status report: This report will give you quarter-to-date as well as year-to-date totals for earnings. You may print this for each individual pay code or all pay codes.

Deduction status report: This report will give you quarter-to-date as well as year-to-date totals for deductions. You may print this for each individual deduction code or all deduction codes.

Tax status report: This report will give you quarter-to-date as well as year-to-date totals for taxes. You may print this for each individual tax code or all tax codes.

Contribution status report: This report will give you quarter-to-date as well as year-to-date totals for contributions. You may print this for each individual contribution code or all contribution codes.

The above-mentioned reports are designed to be used as tools to balance your quarter and your year. If you need additional auditing tools to find specific discrepancies you may also use the following reports from the same menu:

Workman’s compensation report: This report will give you quarter-to-date as well as year-to-date totals for Workman’s Compensation contribution codes. You may print this for each individual code or all codes.

Earnings History Report: This report may be pulled for just the Quarter or for the entire Year. This report will reflect ALL earnings by pay type for the defined period.

Earnings History DETAIL report: This report will give you all earnings DETAIL information for a defined period, it will detail it either by CHECK or by SUMMARY.

This is the most detailed report you will get for the year.

In addition to the above mentioned reports from the Quarterly and Year-end menu, you will need to print and balance the following 4th quarter reports,

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Attachment 2

Payroll Year-End Balancing

Frequently Asked Questions &Answers

Q: I have printed my reports and my Federal Gross Wages and my Federal Taxable Wages are not balancing, how can I find out which employee is wrong?

A: The Federal Taxable wage, and the Federal gross wage, should only be different by the amount of pre-tax deductions (i.e.401k, 403b, 125 flex, etc.) Take your Federal Tax Status Report and Identify which employee’s Gross and taxable YTD columns are different amounts. After you have identified those employees, get your Deduction status reports for all pre-tax deduction codes. You should be able to subtract the amount of all pretax deductions for an employee from the gross wages, and have it equal the taxable amount.

Gross Wages -less-Pretax Deductions=Taxable Wages

Problem employees should be obvious. Once you have identified all potential problems, you then need to take a closer look at each employees earnings history detail report for the year and identify what happened and in which quarter.

Q: I have printed my reports and my FICA Gross Wages and my FICA Taxable Wages are not balancing, how can I find out which employee is wrong?

A: The FICA Taxable wage, and the FICA gross wage, should only be different by the amount of pre-tax 125 flex deductions. Take your FICA Tax Status Report and Identify which employee’s Gross and taxable YTD columns are different amounts. After you have identified those employees, get your Deduction status reports for all pre-tax 125 flex deduction codes. You should be able to subtract the amount of all pretax 125 flex deductions for an employee from the FICA gross wages, and have it equal the taxable amount.

FICA Gross Wages -less-Pretax 125 flex Deductions= FICA Taxable Wages

Problem employees should be obvious. Once you have identified all potential problems, you then need to take a closer look at each employees earnings history detail report for the year, to identify what happened and in what quarter.

Q: My FICA gross wages, and my Federal Gross wages are not the same. How can I identify which employee(s) is wrong?

A: Federal and FICA gross wages should always be the same. Take both the Federal Tax status report and FICA tax status report, and go through each employee to identify who is wrong. Once the employee(s) who have discrepancies are identified, print the Earning History Detail report for the entire year on those employees. Look for a check where either FICA or Federal taxes were not paid.

Q: I cannot get a specific Tax to print on my W2’s. What do I do?