14 Dec Year End Payroll Reminders
The end of 2015 is quickly approaching! We encourage all of our clients to begin the year end process now by reviewing employee data and gathering voided and/or manual checks. Timely planning is essential in the year end process. The following items will give you helpful reminders on what should be reviewed, as well as important general information. It is important that all corrections, updates and adjustments to your payroll records are processed prior to December 31, 2015.
- W2 Processing / Hold Request: Most payroll providers will start processing W2’s immediately following December 31st. If you would like to put a hold on processing W-2’s you will need to contact your payroll provider to make this request. All W-2’s should be post marked and distributed by January 31, 2016.
- Void or Manual Checks: Any 2015 checks that need to be voided, or manual checks that need to be posted, must be processed along with, or before, your final payroll in 2015.
- Review Employee Demographics: Encourage all current employees to review the demographic information on their latest checks, as this is exactly as it will appear on their W2 (and 1095-C). Substantial penalties could be assessed for filing W2 or 1095-C forms with missing SSN or addresses. Most payroll providers will not be responsible for these penalties so it’s extremely important to review your employee demographic information thoroughly.
- Employer-Sponsored Health Coverage (Report in W2 Box 12DD): If your company issued 250 or more W-2 forms in 2014, employers are required to report the cost of employer sponsored health premiums on the employee’s 2015 W-2 forms. If you filed less than 250 W-2’s last year this requirement is optional.
- Medicare Withholding Rates are Unchanged for 2016: Medicare tax withheld will continue at 1.45% on employee Medicare wages paid up to $200,000. Employee wages that exceed $200,000 will continue to be subject to the additional 0.9% withholding (total of 2.35%). The employer portion is not affected by these limits and will continue at 1.45% on all Medicare wages.
- Social Security Wage Base is Unchanged for 2016: The Social Security withholding tax rate continues at 6.20% for 2016. The social security wage limit also remains at $118,500 with no change from 2015.
- FUTA Credit Reduction States (CA, CT, OH, VI): The Department of Labor has released their final listing of 2015 FUTA “credit reduction” states. Employers paying wages in these states (CA, CT, OH, VI) will be subject to the additional FUTA taxes when the Form 940 is filed for 2015.
- Year End Adjustment Runs and Bonus Payrolls: For timely tax deposits by your payroll provider, please make sure any 2015 adjustment payrolls are processed by December 31, 2015. 2015 adjustment payrolls processed after December 31, 2015 could be subject to late tax deposits and penalties that your payroll provider will not be responsible for.
Dana Mork, Payroll Director at Resource Alliance
Dana shares her opinions, not legal advice, about increasing performance and limiting liability.