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The Payroll Company Year-End Resources – 2020

Payroll processing is a complex system of accurately recording compensation, taxes, and deductions. A successful year-end requires a variety of tasks, in addition to running your regular payrolls. Use the following checklist to remind yourself of the tasks that need to be completed and the dates that tasks are due.

To download these bullet points in an easy-to-use checklist format – click HERE

Don’t forget that our customer care representatives are available to help you Monday through Friday from 8:00 a.m. – 5:00 p.m. Central. We are also available via email at Call or email us any time!

Important Dates:

  • Dec. 25, 2020 – Christmas Day. TPC is closed. No bank activity.
  • Dec. 28, 2020 – Last day to submit 4th quarter adjustments without possible late penalty/interest charges from the IRS or expedited fees from TPC. Adjustments can still be submitted past this date; however, there may be penalties and interest assessed by the IRS if there are late tax deposits associated with the addition/change.
  • Jan. 1, 2021 – New Year’s Day. TPC is closed. No bank activity.
  • Jan. 15, 2021 – Deadline for ACA form approval.
  • Jan. 18, 2021 – MLK Jr. Day. TPC is open. No bank activity.
  • Jan. 20, 2021 – Target shipping date for W-2, 1099 and 1095 forms.
  • Jan. 31, 2021 – Deadline to postmark employee copies of form W-2, 1099 and 1095.

Links to the calculators and publications can found at the bottom of the page.

Make Sure Your Employee Totals Are Correct – Year End W-2 Adjustments 

Before the last scheduled payroll of fourth quarter, make sure to update any totals for your employees that you want included in quarter balances. The following items should be considered:

  • Manual Checks
  • Voided Checks
  • Third-Party Sick Payments
  • Group Term Life
  • Personal Use of Auto
  • Dependent Care Benefits
  • Non-qualified Moving Expenses
  • 401k, Other Retirement and Cafeteria Plans
  • Paid Time Off
  • Taxable Fringe Benefits
  • Bonuses or Other Incentive Pay
  • Non-cash Payments
  • Value of Company Paid Health Insurance for 2% or greater Sub-Chapter S Corporation

HELPFUL GUIDE! Download our Understanding Your W2 handout for employees.

Note: In the fourth quarter, you must update missing totals for your employees and run any bonus payrolls by Dec. 28, 2020. Government agencies may charge you with penalties and interest based on deposit and filing frequencies if you have to run a special payroll to process manual and/or voided checks or third-party sick payments after the last day of the quarter.

Note: Some payroll checks cut throughout the year may not have been cashed. These checks should not be voided in the payroll system, but should be considered ”unclaimed property” and reported to the appropriate state agency. If payroll checks are drawn off of your account, we do not know what checks have been cashed. If checks are drawn off of TPC’s account, clients may request a list of uncashed checks. It is your responsibility to track these employee down and/or file this information with the appropriate agency in your state. TPC does NOT do this for you.

Bonus Payrolls: Bonus payrolls should be processed as special payrolls and separately from your regular payrolls. This eliminates the potential for negative impacts to your employees’ taxes and voluntary deductions. It also allows you to turn off direct deposit and issue live checks as well, selecting which voluntary deductions to include in the payroll. Closely review each employee’s bonus check on the payroll pre-process report for accuracy prior to submitting your payroll. Before processing your bonus payroll, be prepared to answer the following questions:

  1. Will the bonus payroll be issued via direct deposit or live checks?
  2. Should voluntary deductions such as 401k loans or state income tax be taken out of the bonus payroll?
  3. Are changes needed to the tax amounts such as federal and/or state income tax withheld from the checks?

Bonus payrolls with a 2020 check date will be included in 2020 wages and reflected in all fourth quarter tax reports and W-2s. If you need to report a 2020 bonus after Jan. 1, 2021, with a 2020 check date you may incur penalties and interest. If your Federal tax liability is over $100,000, your tax deposit must be made by the next business day after the check date. You should report these payrolls at least 48 hours before the check date to allow enough time to process and deposit the tax payment.

Entering Fringe Benefits in Payroll

Below are a list of earnings codes that are used to enter fringe benefits via the time entry grid or individual time entry grid. Please contact support if you need any of these codes created for your company.

Group Term Life – Use to report the taxable amount of group term life. Taxable for FICA/Med. Enter on a live check to allow for FICA/Med withholding. Gross up for FICA/Med and enter on a manual check for employees with no more payments this year or who are terminated. Access the GTL taxable amount calculator and import tool.

If you are unsure how to gross up a manual check, please contact the support team and we are happy to walk you through adding this to the system.

Sub S Corp Ins – Use to report the value of company paid health insurance for 2% or greater owners of sub-chapter S corporations. Taxable for income tax only. If entered on a live check, income tax will be withheld. To avoid withholding, enter on a manual check.

Non-Cash Fringe – Use for personal use of company vehicle, cash bonuses, gift card bonuses. Fully taxable, withholds FICA/Med and income taxes. Enter the gross amount of the benefit on a live payment and the taxes will automatically calculate. Enter the gross amount on a manual check and the taxes will calculate on the next live check (including the current payroll). If you do not have any more payments for the year, enter as a manual check and gross up the payment for FICA/Med. Please let us know if you need assistance entering a manual check.

Company HSA – If your company made contributions directly to employees’ HSA accounts without reporting through payroll, contact customer support for details on how to report.

Time Off Balances: If TPC tracks vacation, sick, PTO or other time off balances in the payroll system, there are multiple options. Please contact us to discuss if you need changes made to your accrual plans.

Health Insurance Premiums reported on form W-2: For 2020, reporting of health insurance premiums is mandatory for employers who had 250 or more W-2s issued in 2019. We will contact you if you meet this criterion to ensure that this obligation is met.

Third-Party Sick: Please notify us if you expect to report additional third-party sick pay after Dec. 31 so that we can delay your W-2 processing. Please forward sick pay reports to support prior to the last payroll of the year to have any sick pay not previously reported included in the employee W-2s. Do not wait until the end of the year to report all of your sick pay for the entire year. If you have additional third-party sick pay after your last payroll of the year, we have until Dec. 31, 2020, to deposit the taxes without risk of penalty. As year-end approaches, review the following information about third-party sick pay:

  • Federal legislation requires the reporting of both taxable and non-taxable sick payments made to employees from a third party. Taxes withheld on those payments must also be reported. Sick pay should be included on either the employee’s W-2 or on a separate form provided by a third party. If third party sick pay is not reported by the third party, it must be included on your employee W-2s.
  • It is important that you obtain this information from the appropriate third-party provider as soon as possible. These entries must be processed on or before your last 2020 payroll to ensure that your 941 and W-2 reports are accurate.
  • If any of your employees have received temporary disability payments in 2020 from a third-party carrier, such as an insurance company or state agency, the amount of these payments must be submitted to TPC as soon as they are reported to you. Any adjustments submitted after your W-2s are processed could result in extra processing and amendment fees.
  • Most carriers provide monthly third party-sick pay statements throughout the year – and a recap each January. This reporting method allows employers to review and submit third-party sick payments throughout the year rather than all at year end.
  • For clients with third-party sick pay, the payee of applicable employer FICA taxes MUST also submit and file the corresponding W-2 forms. Please verify your FICA payment structure with your insurance vendor to ensure proper payment and filing occurs at year end.

2021 Company Schedule: Please review your payroll schedule for year end and next year. This can be accessed under Client Management > Client Maintenance > Payroll Run Schedule. Please contact us immediately if you need to change any of your scheduled check dates. Jan. 1, 2021 is a Friday. If your normal check date is the first of the month, your check date may have automatically moved to Thursday, Dec. 31, 2020 because of the holiday. Please email support if you need to change the check date.

Unemployment Rate Notices: Please be sure to forward all notices of 2021 state unemployment tax rates to support via email, fax or a Customer Community case. TPC will complete voluntary contribution calculations and let you know if a contribution is recommended. Please include all pages of the notice. Voluntary contributions have submission deadlines.

Filing Frequency Changes: TPC does NOT always receive filing frequency change notices directly from agencies. Anytime that you receive a notice that one of your filing frequencies has changed, we need you to forward it to support so we can ensure we are filing appropriately. Failure to forward these notices may result in penalties and interest which would be your responsibility.

Verify Employee and Contractor Information: After you process the last payroll of the year, make sure to check the following for errors:

  • Employee Name & Address
  • Social Security Number
  • PTO information
  • Filing Status & Exemptions
  • YTD Wages & Taxes
  • Pre-Tax YTD amounts such as 401(k) and Medical 125

Social Security Number Verification: In iSolved, go to Reports > Reports on Demand. There are reports called “Employee W2 Verification” and “Employee W2 Preview” available to assist with verification. These reports are also available in the Report Archive on the last scheduled payroll of the year. We suggest that you ask each employee to review a recent pay stub for name and address accuracy. This can be done through messaging in iSolved – ask us how!

W-2 Delivery: Your W-2s will be delivered to your primary business address on file unless we have previously arranged mailing them directly to your employees. If you would like to confirm or change delivery method please send us an email by Dec. 31, 2020. Employer and employee copies are available to you at any time of the year for no additional fee under Reports > Year End Reports on Demand in iSolved.

1099 Delivery: Unless otherwise requested, all 1099s will be mailed directly to recipients no later than Jan. 31, 2021. Copies are available in iSolved by going to Reports > Year End Reports on Demand.

W-2 Errors and Changes: W-2 forms are required to have a name and social security number that match. If you discover an error, please notify us immediately. We are unable to correct W-2s for address changes after Dec. 31, 2020. As an employer, you are required to send the employee W-2 to the last known address. If the W-2 is returned for an incorrect address and the employee contacts you to provide you with a correct address, the IRS instructs you to issue the W-2 with the incorrect address to the employee in an envelope showing the correct address or otherwise deliver it to the employee.

W-2 Reprints: You can reprint a W-2 to paper or .pdf using iSolved by going to Reports > Year End Reports on Demand. If you would like us to reprint and mail a W-2 for a fee of $15.00, please contact support.

ACA Reporting: We will be sending out separate communications with instructions to those of you that have signed up to have TPC do your ACA 1094/1095 reporting. ACA form delivery is the same as what you have elected for W-2 delivery.

Don’t forget that our customer care representatives are available to help you Monday through Friday from 8:00 a.m. – 5:00 p.m. Central. We are also available via email at Call or email us any time!