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!

Tick, Tick, Tick...Those 1099's are Due by the End of the Month!

Yes, its time for one of year-ends most annoying tasks.... generating 1099's. They are due to the recipient by January 31st, but Uncle Sam give you until February to get his copy, along with the 1096, out to him.

There are an alphabet soup of various 1099 forms covering everything from the 1099A ( acquisition of abandoned property) to the 1099S (proceeds from real estate transactions.) But the most common 1099 a small business runs into is the 1099MISC. This is the form used to report to the IRS expenses paid throughout the year to independent contractors, service providers, attorneys, and other non-employee compensation.

The typical rule of thumb is that you must issue a 1099MISC to any service provider who is not incorporated, and to whom you've paid more than $600 in the last calendar year. Except for attorneys, who you must issue a 1099 to regardless of how much you spent. Click here for a link to the IRS informational guide for more details.

A couple of tips to make 1099 processing a little easier:

1. During the year, as you use independent contractors-- that's your IT guy, your cleaning company, and the woman who developed your marketing campaign,--make it a habit to have them complete a W-9 Request for Taxpayer ID and Certification and keep it on file. This will insure you have full name, address and TIN# come 1099 time.


2. Better yet, take that info from the W-9 and put it right into your accounting software. Most programs have a section in the vendor set-up screen asking if they are eligible for a 1099 and requesting their taxpayer id number.


3. Taking this one step further, if you go into the options of your accounting software (in QuickBooks you want to go into Edit, then Preferences, and select 1099) you can select the accounts and threshold which are eligible. Now you can easily generate 1099 reporting directly from your software!

Happy Filing!!