Monday, September 28, 2009

Employer Wage Reporting

Employers have a responsibility to complete specific tasks related to wages paid to employees. Different types of businesses may require additional forms. It is always best to confirm your particular requirements with the IRS.

In January employers will be wrapping up the previous year’s reporting issues. Employers will file, with the IRS, the previous year’s 4th quarter 941 form. Determine if the tax withholding (federal, Social Security and/or Medicare) rates have changed from the previous year. If rates have changed you will need to make the necessary changes accordingly. The deadline for issuing W2 forms to employees also comes at the end of the month.

With the second month of the year come a few more tasks. This is the time to file W2 forms A and W3 with the SSA. Take the time to match form 941b totals W3 information.

April starts the second quarter of the tax year. File 1st quarter 941 form by the last day of April. The 2nd quarter 941 form is due the last day of July this includes payroll from April 1st through June 30th. In October third quarter 941 form is due including payroll periods July through September.

In November request Publication 393, MMREF instructions from SSA or IRS, if you have not received it. If employers plan on electronically filing W2 information they should update their password at SSA’s Business Services Online. Before the end of the year have your employees update their W-4 and W-5 forms for the next year. Whether electronic filing or paper filing submitters should test their form processes for the next year.

The beginning of the new tax year may be an excellent time to consider investing in payroll software. A complete payroll program can save users time and money at the same time avoiding costly calculation errors on payroll forms. For a free trial of Payroll Mate follow this link: payroll software download

To read this article in Spanish please follow this link:

Reporte De Salarios Para
Los Empleadores Con Software De Nomina

Thursday, September 10, 2009

Avoiding W2 and W3 Errors

The fourth quarter of the tax year brings around the time to start preparing for end of the year wage reporting. Being organized and primed for this time of the year alleviates unnecessary last minute stress and mistakes. The IRS and SSA host a Small Business Seminar for both paper filers and/or electronic filers. Business owners may want to attend the seminar for valuable information on reporting wages and taxes and to receive the latest electronic filing instructions. If this is your first time generating W2 forms for your employees these seminars may be helpful. For information regarding the seminars contact the IRS (1-800-829-1040) or the Employer Service Liaison Officer (ESLO).

SSA asks employers to abide by a few guidelines when generating W2 and W3 forms. Keep your entries inside the boxes, use dark ink, do not erase or use white out on the form they also do not require dollar signs to be printed in the boxes.
W2 Box a – Employee’s nine digit Social Security number
W2 Box b – Employer’s nine digit identification number
W2 Box e – Employee’s name as shown on Social Security card and address
W2 Box 1 – Regular wages, tips and compensation
W2 Box 3 – Social Security wages, do not exceed maximum wages for the year
W2 Box 5 – Medicare wages, there is no limit on Medicare wages
W2 Box 7 – Tips paid

W3 Box b – This box must always be completed
W3 Box c – Show the total number of W2 forms included with this W3 form
W3 Boxes e, f, g – Position the label provided by the IRS in Publication No. 393 or enter EIN,employer’s name and employer’s address
W3 Box h – Show any other EIN number used during the tax year

This is a list of commonly used or required boxes on the W2 and W3 forms. Employers may be required to fill in additional boxes depending on their circumstances. Remember both the IRS and SSA websites can be very informative.

In October you can order W2 and W3 forms. You can order paper forms or W2 form printing software. By November the IRS will mail tax forms and IRS Publication No. 393 with a label identifying you as an employer. The label includes employer’s name, address and EIN, affix the label over Boxes e, f, g on the W3 form. For employers that file electronically you will receive the Magnetic Media Reporting and Electronic Filing booklet (MMREF-1). Before December your employees should update their W-4 and W-5 (Earned Income Credit Advance Payment Certificate) forms.

Before you actually file your wage reports you should balance your 941 form to your W3 form for the tax year. Annual amounts from payroll records should match the total amounts reported on all 941 forms for the year; the total amounts reported on all 941 forms for the tax year should match the sum of the same data fields shown in the W3 totals. To help you with balancing your records the SSA has prepared two worksheets. The first is a worksheet for the W3 form, the second is a worksheet for the fourth quarter 941 form. If you would like to use the worksheets to help you match your total amounts you can request a paper copy of the Employer’s Guide from SSA.

Strictly adhering to IRS and SSA guidelines and filing dates is the number one way to avoid errors and fines. Payroll software that automatically calculates Federal, Medicare, Social Security taxes and populates W2/3 and 941 forms lessens the tendency to make manual calculation errors.

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