CHAPTER 7.2: 945 DOCUMENTATION

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CHAPTER

 

7.2:

 

945

 

DOCUMENTATION

 

What is a 945 account?       

Just as a 941 account is set up to handle payroll, a 945 account is set up to handle all tax withholding for non‐payroll  items such as:  

 

 Pensions, annuities and IRA’s 

 Deferred compensation plan distributions (401‐K, 403‐B ….) 

 Gambling winnings  *Advantage does not handle gambling winnings. (See ETC section of documentation)   Backup withholding 

 

In order to process non‐payroll information a separate client number is established for the 945 account.   (The client  must be “full” or “non” tax filing, have an active payroll account established, and be in good credit standing.)   The  employer type field on Client Demo Header Screen 1 is coded with an “X” to indicate 945 account status.  

 

Employees who receive distributions from a retirement plan or a pension payout (lump sum or recurring payments)  receive Form 1099‐R at year‐end instead of a W2.   

   

What service options does Advantage offer? 

Advantage can make the 945 tax deposits, report the non‐payroll information to the IRS or State, and produce the 1099‐ R.  The client can opt for Advantage to handle all, or a portion of this.  

 

As part of the set‐up process the client should complete the 945 Account Service Options Checklist.  Depending on the  level of service the client selects Tax, Payroll, or both departments may handle the 945 account.  

 

945 Account Charges 

945 Accounts that are run through payroll are not billed a separate fee.  They are subject to the same base charges and  per check charge as the payroll. 

 

A fee of $50.00 per quarter will be charged to 945 clients that are handled by the Tax Department.   Fees will not be  waived for “no activity”. 

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945 Accounts 

Just as a 941 account is set up to handle payroll, a 945 account is set up to handle all tax withholding for non‐payroll  items such as:  

 

Pensions, annuities and IRA’s 

Deferred compensation plan distributions (401‐K, 403‐B ….) 

Gambling winnings *Advantage does not handle gambling winnings. (See ETC option)  Backup withholding 

 

In order to process non‐payroll information a separate client number is established for the 945 account.   (The client  must be “full” or “non” tax filing, have an active payroll account established, and be in good credit standing.)   

 

Employees who receive distributions from a retirement plan or a pension payout (lump sum or recurring payments)  receive Form 1099‐R at year‐end instead of a W‐2.   

   

What service options does Advantage offer?  Advantage offers: 

945 tax deposits 

Preparation and filing of Form 945  Preparation and filing of Form 1099‐R   

The client may opt for Advantage to handle all 945 services or just one of the service options.     

As part of the set‐up process the client should complete the 945 Account Service Options Check List.  Depending on who  will provide the 1099‐R at the end of the year determines which department will service the account. 

1099’s Prepared by Advantage 1099’s Prepared by Client

Employee records will be set up by the payroll department and payroll runs processed All Form 1099-R’s will default to distribution code ‘7” (Normal Distribution) unless a different distribution code is required. This information must be given to CSR at time of set up

The 1099-R recipient is set up similar to an employee but with the following tax flags: Fica Flag = E 

Fit Flag = M or S **Except rollovers Sit Flag = M or S **Except rollovers Futa Flag = E

SUI / SDI Flag = E WC Flag = E W-2 Code = R

Pension = Y (if applicable)

1099 Dist Code (see Dist code section)

No employee records are needed; Special Services Department will handle the account. The client will report 945 tax liabilities either paid by client or request payment by Advantage using the 945 Information Reporting Form. Form and instructions can be found in Section Three.

After the Special Services Department processes the 945 information, an automatic CCD debit is sent to the client’s bank account directly. This will allow the Special Services to collect the tax funds prior to the tax payment

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Processing Fees 

945 accounts that are processed through payroll are not billed a separate fee.   They are subject to the same base  charges and per check charge as the payroll. 

 

A $50.001 per quarter fee is charged to 945 accounts that are handled by the Special Services Department.  Fees will not  be waived for inactivity. 

945 Tax deposits only 

945 tax deposits can also be made through our ETC (Electronic Tax Compliance) product.  This option can be selected  instead of a standard 945 account when the client elects to have Advantage only transmit the tax payment to the IRS.   

Even though Advantage does not handle gambling winnings because they are reported on a W‐2‐G form instead of a  1099‐R, Advantage is able to make the 945 tax payment by setting up an ETC account, and the client can prepare the W‐ 2‐G for the employee themselves. 

 

ETC accounts do not need a separate client number; however a separate contract must be completed.  Clients with 945  payments paid through ETC will be charged $75.00/year.   Fees for inactivity are not waived.   Contact the TaxPay  Department in Henrietta, NY to set up an ETC account. 

 

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Sample 945

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945 Account Service Options Checklist

Associate / Client #: ___________________ Date: _________________ Client Name: _____________________________________________________ Authorized Signature: __________________________________________ Please circle the options that apply:

1. The following will be reported on Form 945: Federal Withholding

Back-up Withholding

*please list state State Withholding _____

*please list state State Backup Withholding _____ 2. Who will provide the 945 form at year-end? Client/Plan Administrator

Advantage Payroll Services

3. Who will provide Form 1099-R at year end? Client/Plan Administrator

Advantage Payroll Services

4. Who will be making deposits? Client/Plan Administrator

Advantage Payroll Services

5. Who will file Form 945 with the IRS? Client/Plan Administrator

Advantage Payroll Services

6. Who will file Form 1099-R to the IRS? Client/Plan Administrator

Advantage Payroll Services

7. Who will file Form 1099-R to State Agency? Client/Plan Administrator

Advantage Payroll Services

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945 Information Reporting Form

Back‐up and Pension Tax Withholding  Fax to: Advantage Payroll Services 

Fax #:  (207) 784‐3850 

ATTN: Pammi Hewins  x 20507 or Casey Gile   x 20418  Phone # (207) 784‐0178 or (800) 876‐0178 

 

TODAY’S DATE:_____________________________  CLIENT :_________________ 

CLIENT NAME:_____________________________________________________________  CONTACT PERSON FOR QUESTIONS:______________________________________  CONTACT PHONE #:___________________________________________________  REPORTING PERIOD:  MONTH______________DATE______________YEAR_______ 

RECORD OF CLIENT DEPOSITS: DATE OF DEPOSIT:______________

      Amount of FEDERAL Back‐Up Withholding:____________________________        Amount of State of _________ Back‐Up Withholding:____________________        Amount of FEDERAL Withholding (Pension/ IRA Distribution)______________        Amount of State of _________ Withholding (Pension/ IRA):_______________   

       TOTAL OF ALL DEPOSITS:______________________________ 

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REQUEST FOR ADVANTAGE TO DEPOSIT:

     Amount of FEDERAL Back‐Up Withholding:_______________________________       Amount of State of ________Back‐Up Withholding:________________________       Amount of FEDERAL Withholding (Pension/ IRA Distribution)_________________       Amount of State of ________Withholding (Pension /IRA)____________________   

TOTAL OF REQUESTED DEPOSITS:_______________________ 

SIGNATURE OF AUTHORIZATION:________________________________________  TITLE:_____________________________   DATE:__________________________

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How to use the 945 Information Reporting Form:

All 945 tax liability is provided to the Special Services Department by the client via the 945 Information Reporting Form. Please note that 945 accounts handled by Payroll do not utilize this form.

The form is divided into three sections: Client Information, Client payments, and Advantage payments. The liability date is crucial as it determines when the tax payment is due. As with all tax payments, penalties are assessed for late payment. All clients are required to complete the first

Section, which provides basic client information and the date to which the tax liability should be posted.

TODAY’S DATE:____________________________ CLIENT #:______________________________

CLIENT NAME:____________________________________________________________________

CONTACT PERSON FOR QUESTIONS:__________________________________________________

CONTACT PHONE #:_______________________________________________________________

REPORTING PERIOD: MONTH______________DATE______________YEAR_______

Some clients pay their own taxes and opt to have Advantage report only the tax information to the IRS or State agency. These clients will complete the second Section of the form, which lists the liability amounts to be reported and the date they were paid.

RECORD OF CLIENT DEPOSITS: DATE OF DEPOSIT:____________________

Amount of FEDERAL Back-Up Withholding:________________________________________

Amount of State of _____________ Back-Up Withholding:____________________________

Amount of FEDERAL Withholding (Pension/ IRA Distribution)___________________________

Amount of State of _____________ Withholding (Pension/ IRA):_______________________

TOTAL OF ALL DEPOSITS:______________________________

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If a client is requesting Advantage to debit their account and pay the taxes, Section three is completed. This section lists the liability amounts to be reported and requires an authorized signature for the tax debit.

REQUEST FOR ADVANTAGE TO DEPOSIT:

Amount of FEDERAL Back-Up Withholding:___________________________________________

Amount of State of ________________Back-Up Withholding:____________________________

Amount of FEDERAL Withholding (Pension/ IRA Distribution)_____________________________

Amount of State of ________________Withholding (Pension /IRA)________________________

TOTAL OF REQUESTED DEPOSITS:_______________________________________

SIGNATURE OF AUTHORIZATION:_____________________________________________________

TITLE:_____________________________ DATE:_______________________________________

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CHAPTER

 

7.7:

 

SAMPLE

 

FORMS

 

Sample Forms Index 

 Payroll & Tax Processing Agreement        (Index pages 1‐4)   8655       (Index pages 5‐6)   New York Power Of Attorney        (Index pages 7‐10)   New Jersey Power Of Attorney           (Index page 11)   New Client Profile      (Index pages 12‐14)   New Account Checklist       (Index page 15)   Proposal Page       (Index page 16)   2012 W‐4      (Index  pages  17‐21)   I‐9 (valid until 2012)      (Index pages 22‐23)   New York IIT‐2014      (Index pages 24‐30)   Direct Deposit Form      (Index page 31)   NY WTPA Forms       (Index pages 32‐37)   Client Reactivation Form      (Index page 37)   Signature Scan Form       (Index page 38)   Logo Scan Form       (Index page 39)   125 Client Enrollment Form      (Index page40)   Paid Time Off Form      (Index pages 41‐42)   Promptax‐ initial user      (Index pages 43‐48)   Promptax‐ existing user       (Index pages 49‐52)   Swipeclock Forms      (Index pages 53‐58)   New Account Missing Data Sheet        (Index page 59)   Welcome Letter       (Index pages 60‐64)   Welcome Package      (Index pages 65‐75)   New Client Cheat Sheet        (Index page 76)   

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