Year-End Payroll Tasks & Deadlines

By Dec. 1, 2011
·        Remind employees that if there has been a change in their filing status due to marriage, divorce or dependents (birth, adoption, child turning 21), they may want to file a new W-4 for 2012.

·        Make sure employee paycheck names/SSNs match their SS cards and W-4 data.

·        An employer may elect to use the Special Accounting Rule; that is, treat taxable noncash fringes used any time in Nov./Dec. 2011 (e.g., personal use of company car) as paid in 2012. 

Before Dec. 31, 2011

·         Paychecks dated 2012 are 2012 wages, even if earned in 2011.

·        Check all SS withheld. If any employee exceeded the 2011 limit of $4,485.60, make an adjustment or refund before making your final tax-year 2011 deposit. Leave enough time to make adjustments and make refunds.

·        Ask your payroll service (if you use one) for a W-2 adjustment run before closing out 2011 to verify and correct:

- relocation expense reimbursements;
- manual or voided paychecks not in your system;
- personal use of company vehicles;
- company-paid educational assistance; and
- other taxable items paid outside of the payroll system.

·       Report on 2011 W-2s pay received in 2011, provided that the employee had access to the wages without substantial limitation or restriction. In other words, even if a paycheck is dated 2012, if the pay is for 2011 and the employee had access to it in 2011, include the amount on the 2011 W-2.

By Jan. 1, 2012

·        Process W-4s submitted for 2012 before the first 2012 wage payment. 

By Jan. 17, 2012

·        Review 2011 paychecks outstanding more than two pay periods so you have time to void and reissue in time for 2011 W-2s.

·        Verify that total taxes withheld and SS-taxable and Medicare-taxable wages reported on 2011 quarterly 941s (or the annual 944) equal the totals of 2011 W-2s to be distributed. 

·         Third-parties that distribute sick pay are required to send to you by today each payee’s annual statements of wages paid and taxes withheld for tax year 2011.

1099-MISC Deadline Just Around the Corner!

Yes, that's right, just around the corner!   I know that its not even Thanksgiving and the actual IRS deadline to mail form 1099-MISC to the recipient for the tax year ended 2011 is January 31, 2012.  (The deadline to file Form 1096 to the IRS is February 29, 2012)  Months away, true, but in my experience it is the one deadline that sneaks up and suprises me every year.  There is a lot going on between now and January 31st...reconciling the g/l accounts, tax planning, budgeting and  switching files over.  Of course, there are the holidays, which mean short weeks & office parties...and, of course, the cookies!  Plenty of distraction making it easy to put off thoughts of  1099's until after the first of the year.  But a little preparation will make sure your not scrambling to meet that deadline come January 31st.

• Order your forms now - There is no time like the present!  The beauty of ordering now is that you still have time to order and receive forms directly from the IRS saving yourself the time and cost of buying them from the office supply store.
• Brush up on the rules - Generally, you are required to issue Form 1099 MISC to individuals and partnerships to whom you paid rent or services totalling $600 in the calendar year.   The most common receipients are listed below, but you can find a complete list and dollar limits on the IRS website here.
• Attorney, fees and gross proceeds
• Commissions, nonemployee
• Compensation, nonemployee
• Directors' fees
• Mileage, nonemployee
• Nonemployee compensation
• Rental Expense
• Royalties

• Make sure you have all your W-9's on file - Go though your supplier list and make sure that you have a Form W-9 on file for each vendor. Cross check the company name, address and FID with your accounting records. Mail out W-9's to any new suppliers as soon as possible so you have all the information you need on file.

  Take these steps to begin preparing now and make sure you enjoy those delicious holiday cookies!

Business Trips that Mix Business & Pleasure

Although the 21st century has provided us with a multitude of lightning fast communication options the “face to face” meeting continues to remain a favored method to conduct business. The internet, cell phones, teleconferencing and the like are certainly important and useful in their own right, they have not replaced the business trip. In addition, many taxpayers are beginning to plan trips that combine elements of both business and pleasure. Business trips, conventions, and continuing education seminars in exotic locations can provide an interesting and enjoyable vacation style opportunity and at the same time generate legitimate deductions. Although the basic rules are relatively simple, there are a few rules that you should keep in mind when planning any business trip.


Business Travel - The Rules
Taxpayers who travel away from their tax home on business are permitted to deduct travel expenses, including fares, meals, lodging, and incidental expenses, if they are not otherwise lavish or extravagant. A business trip is "away from home" if it takes enough time that the taxpayer may be reasonably expected to need sleep or rest. A taxpayer's tax home is his regular or principal place of business, or his regular abode if he has no regular or principal place of business. You are not prohibited from enjoying non-business or personal activities while on a business trip, but the primary reason for the trip must be related to your trade or business.


Foreign Travel
Foreign travel expenses are subject to some limitations that do not apply if the business trip is within the United States. Some of an individual's foreign travel expenses may not be deductible if he or she takes part in substantial non-business activity during the trip. Taxpayers who travel outside the U.S. for longer than one week or spend less than 75 percent of their time on business are subject to allocation rules, which operate to partially disallow their expenses, unless they had no control over the trip arrangements or the vacation portion was not a major consideration of making the trip. The general rule is to allocate expenses, including meals and lodging, between business and non-business on a day-to-day basis. Each day is either entirely for business, or it is considered to be a non-business day. A day counts as entirely for business if the taxpayer's principal activity on such day was the pursuit of a trade or business. In addition, a day is counted as a business day if any of the following factors are present:
¨ The individual was traveling to or from an overseas destination in pursuit of a trade or business.
¨ The individual's presence outside the U.S. on that day was required at a particular place for a specific and bona fide business purpose.
¨ The individual was prevented on that day from engaging in the conduct of his or her principal business activity due to circumstances beyond his control.
¨ The day was a Saturday, Sunday, legal holiday or other reasonably necessary stand-by day, which intervened during the course of the taxpayer's trade or business.


Staying Over
Due to airline pricing policies, it is sometimes economical for a business traveler to stay over Saturday night although business concluded on Friday. The additional lodging expense may be more than offset by the lower airfare as a result of the Friday and/or Saturday night stay-over. In such situations, the additional meals and lodging expenses for the Friday/Saturday mini-vacation may be written off entirely as part of the deductible as ordinary and necessary expenses of the trip.
If, on a business trip during the week, a certain day is devoted primarily to pleasure, that day's expenses are not deductible. Although this may be a nondeductible expense that the business traveler is willing to pay, take care not to devote over half of the time you spend away from home on pleasure. In such a case, none of the transportation expenses involved in getting to and from the location are deductible. On the other hand, if more than half of the trip is devoted to business, all of the transportation expenses may be written off as a business expense.