In this issue:
Staying current with your W-4 forms, finalizing year end payroll adjustments, W-2 forms and holiday bonuses, and information on new tax rates for 2009.
ARE ALL OF YOUR EMPLOYEES CURRENT WITH THEIR FORM W-4?
Employees Exempt from Withholding:
An employee who certified to his employer on Form W-4, Employee’s Withholding Allowance Certificate, that he had no income tax liability for 2007 and anticipated no income tax liability for 2008 was entitled to an exemption from withholding for 2008. If the employee expects to incur income tax liability in 2008, a new Form W-4 must be given to the employer by February 15, 2009.
Change in Exemptions:
If an employee loses an exemption at the beginning of the New Year for any reason, they should also file a new Form W-4 for 2009. An employee who wishes to make changes to their current withholding should also fi le a new Form W-4.
EMPLOYERS – HAVE YOU TOLD YOUR EMPLOYEES ABOUT THE EARNED INCOME CREDIT (EIC)?
For 2008, you are encouraged to notify the following employees that they may be able to claim the EIC on their 2008 returns:
- Employees with one qualifying child and wages less than $33,995
The employee’s copy of Form W-2 that is prepared by Tricom Funding has the required statement about the EIC on the back of the form.
California Employers:
California enacted a law effective 1/1/2008 which states that the information you provide on the back of W-2’s is not sufficient notification of earned income credit. Please refer to memo and hand out that will be provided by the Accounting Department for more details.
REMINDER: FORM W-5 EXPIRES ON DECEMBER 31ST
If you received a Form W-5 (Earned Income Credit Advance Payment Certificate) from an employee, it needs to be renewed for 2009. The form must be renewed annually by January 1st. An employee is eligible to receive advanced EIC if they:
- Complete Form W-5 and submit it to their employer
- Have at least one qualifi ed child (as explained on Form W-5)
- Expect that their 2009 earned income and adjusted gross income will be less than $35,463
- Expect to claim EIC on their 2009 tax return
If an employee is currently receiving advance EIC payments, or is eligible to receive advance EIC payments, you should furnish them with a Form W-5. When an employee files for advance EIC, you will need to indicate this information on the start-up form. Tricom Funding will provide an area on the form for you to check off: (0) if the employee is not fi ling EIC, (1) if the employee is filing EIC and their spouse is not receiving advance EIC from another employer, and (2) if the employee and their spouse are both receiving advance EIC.
TRICOM HAS FRAUD PROTECTION
For those clients that process payroll using Tricom’s payroll account, you have very strong payroll fraud protection. Not only do Tricom’s checks have several levels of security, but Tricom is on a positive pay system. Each check that is presented for payment is verified with actual check registers to ensure the check was actually processed by Tricom. Each day, exceptions are checked and verified. Any fraud checks are rejected as fraud. Once this occurs, the client is notified. Even though these checks will never be honored, it is important to report this fraud to your local law enforcement agency. Typically, the employer will receive a collection call from the vendor where the check was cashed looking for payment. Tricom will provide you with an affidavit of forgery. This affidavit, along with a copy of the police report will generally satisfy the victim of the fraud. If you have any questions about this process, please contact Mary Jo Heim at 262-509-6214.
If you are currently not processing your full service payroll with Tricom’s fraud protected accounts, please contact Rick Gehrke at 262-509-6303.
TRICOM CAN MAIL YOUR W-2’S FOR YOU
Tired of running to the post office to buy books of stamps? Tired of licking and sticking all those stamps on every employee’s W-2? Tricom Funding will mail all W-2’s from our office upon request. We will either mail ALL W-2’s, including internal, or we will ship them all to you. If you would like us to mail them, please contact someone in Tricom’s Accounting Department to arrange this. You will be charged for the dollar amount of the postage on your Weekly Activity Payment Report after the W-2’s have been mailed.
YEAR END PAYROLL ADJUSTMENTS & W-2 INFORMATION
Any adjustments to payroll records for 2008 must be in our office no later than Friday, December 26, 2008. If you know you are going to have adjustments but do not believe you will have them to us by this date, please contact Mary Jo Heim (extension 214) by December 26th. Adjustments turned in to Tricom Funding after this date may cause delays in processing your W-2’s and other year-end reports. Since the IRS requires W-2’s to be distributed by February 2nd, it is extremely important that we process adjustments early in order to meet this deadline.
The following information must be included on Form W-2:
- Group-term life insurance cost for coverage over $50,000
- Personal use of company auto
- Third-party sick pay
- Auto or expense account allowance not accounted for by employee
- Participation in a pension or deferred compensation plan
- Cost of fringe benefits (e.g. health insurance premiums) provided to a >2% shareholder of an S Corporation
If you or your employees are affected by any of the above items, please contact Mary Jo Heim by December 12th so we can properly account for them on the W-2s.
HOLIDAY BONUS RUNS:
All holiday internal payroll bonuses will be debited from your account. Please turn any holiday bonus requests into your payroll processor 24 hours prior to your regular payroll schedule. This will allow us extra time to accommodate any special calculations.
NEW TAX RATES FOR 2009
As in past years, there are several new tax rates going into affect on January 1, 2009. The following is a list of states that have made us aware of changes in their rates:
- California
- Minnesota
- Maryland
- New Mexico
- Michigan
California Disability has increased from .8% to 1.18% (first $90,669 of Wages)
New Jersey has added an additional employee tax to increase the cumulative employee taxes (excluding withholding) from .925% to 1.015%.
There are no federal tax rate changes for 2009. The federal tax rates will remain at 10%, 15%, 25%, 28%, 33%, 35%, but there are changes in personal exemption amounts.
The Social Security Administration has increased the taxable wage base to $106,800 for 2009. The Medicare taxable wage base was eliminated in 1994; therefore all earned income will be subject to Medicare tax. The tax rates for Social Security and Medicare remain unchanged at 6.2% and 1.45% respectively.
The effect of this change is illustrated as follows:
You may want to inform your employees when they receive their first paycheck for 2009 that the taxes withheld on their check may have changed due to changes in the federal and state tax tables.
NEW IRS FORM I-9
The IRS has released a revised From I-9, Employment Eligibility Verification. Among some of the changes made include the ability for employers to sign and retain Forms I-9 electronically, instructions changes which now indicate employees are not obligated to provide a SSN in section 1 unless the employer participates in E-verify, as well as several List A documents being added and removed. The revised I-9 is available for download through the US Citizenship and Immigration Services website at
www.uscis.gov.
NEW MINIMUM WAGE INCREASES FOR 2009
Voters in several states approved minimum wage increases.
| Arizona: |
$7.25 |
|
Montana: |
$6.90 |
| Colorado: |
$7.28 |
|
Oregon: |
$8.40 |
| Florida: |
$7.21 |
|
Washington: |
$8.55 |
| Missouri: |
$7.05 |
|
Vermont: |
$8.06 |
Any questions on these increases should be directed to the each state’s labor departments.
WHAT DO I NEED TO DO WITH MY YEAR END REPORTS?
During the month of January, Tricom Funding will send several reports and forms to your office that will need your attention. Most of you will receive these in a shipment separate from your normal overnight package, so please watch for it. Below we have listed the major reports and forms, and what to do with them when you receive them:
Employee’s Form W-2:
We will use the 4-to-a-page laser W-2 forms. Unless you notify us that you would like Tricom to mail your W-2’s directly from our office, we will stuff all employees W-2’s in non-sealed envelopes and ship them to you for stamping and mailing. If you do not want your W-2’s in envelopes, please call Mary Jo Heim (extension 214) as soon as possible. If we do not hear from you, you will receive your W-2’s in envelopes.
Employer Copy D Form W-2:
You will receive a disk with employer copies of W-2’s. These will not qualify as duplicate W-2’s for your employees. They are just meant as a record for you to see total W-2 wages for your employees. Also, if you are ever audited or receive a tax notice you may need this copy.
Payroll History Reports:
To reduce the amount of unneeded paper in your office, we will not be sending year-end history reports unless you specifically request them. You can refer to your W-2 copies for yearly wages. Our Help Desk is also available to run individual employee histories when needed. To request a year-end history report for all employees, please contact a member of Tricom’s Accounting Department.
Tax reports:
We will forward you copies of all tax reports that are fi led with the federal, state and local governments. These are your copies and should be retained by you. You may need these in the future for audits or evidence of filing.
W-2 reproductions:
If an employee has a request for a reproduction of a W-2 form, please fax the attached form to our office and we will mail the reproduction out within 5 business days. If you have any questions regarding W-2 reproductions, please contact the Help Desk. Please note that you will be charged .42 cents per W-2 that we mail for you. No W-2 reprints will be available prior to January 23, 2008.
VALID SOCIAL SECURITY NUMBERS
The IRS has announced that it will begin to impose upon employers a $50 penalty for each Form W-2 where the employees name and social security number do not match the Social Security Administration database. Employers can call SSA’s nationwide toll-free number for employers (800-772-6270), weekdays from 7:00am to 7:00pm ET, to verify up to five employee names and social security numbers. The SSA also has a website where you can verify up to 10 SSNs at one time. The website is
www.ssa.gov/employer/ssnv.htm. If you need assistance with this process, please contact Mike Auchter (ext. 213) or Erica LeTourneau (ext. 239). However, the IRS has stated that as long as the employer has a completed W-4 with the invalid social security number, signed by the employee, they will abate this penalty. Also keep in mind that our Pay Card vendor will be unable to set up pay cards for employees with invalid Social Security numbers.
2009 UNEMPLOYMENT RATES
Please fax a copy of your 2009 unemployment rates to Mary Jo Heim as soon as you receive them. You should receive rates from the states of all employees except New Jersey and Tennessee (these rates changed 7/1/08). We need to enter your 2009 rates into our system before January 1st in order to withhold proper unemployment amounts.
HOW MUCH POSTAGE WILL I NEED?
To help you prepare your office with the appropriate amount of postage for mailing, feel free to contact the Accounting Department after January 21st for the total number of W-2 Forms being shipped to your office. However, Tricom can mail ALL W-2’s for you from our office. Please see the middle of page 2 of this bulletin for details. W-2 shipments will begin January 21-25th.
DECEMBER FINANCIAL STATEMENTS
Due to the volume of W-2’s and government forms that need to be filed by February 2, 2009, we will be unable to complete December financial statements for everyone during January. We encourage you to send your information as early as possible. Your accountant at Tricom Funding will then contact you to work out an approximate schedule as to when you will receive your statements.
Please note that your corporate tax returns (for most of you) will be due on March 16, 2009. This means your tax accountant will probably be requesting your year-end Financial Statement by the beginning of February. Therefore, the sooner we receive your information, the better we will be able to schedule completion of your statements.
VENDOR RELATIONSHIPS
Tricom has partnered with ten different vendors to assist in our clients’ business needs. We have developed vendor partnerships in the following areas:
- Employee Benefit Plans
- Drug Testing
- Pay Cards
- Employee, Customer Tracking Software
- Flexible Benefit Plans
- 401K Plans
- Background Checks
- Unemployment Claim Monitoring
- Worker’s Compensation Insurance
Please contact Mary Jo Heim (ext.214) with any questions or for contract information on any of these vendors.
Questions?
Your year-end payroll tax specialists are:
- Mary Jo Heim, CPA
- Kelly Fitzsimmons
- Nate Allerheiligen
- Erica LeTourneau
- Michael Auchter
Please feel free to call them with questions at:
1-888-4-TRICOM (487-4266)
Fax: 866-782-0706
