2023 Year End Preparation Memo

We will close out your payroll records for the year after your last regular payroll of the fourth quarter. The law requires W-2's to be delivered to the employees no later than January 31, 2023.

Therefore, we will begin to close out the year and start printing W-2's on January 1st. In order to do so, we must hear back from you before December 16, 2022 . 

Please use the form below to respond regarding your year-end processing. Responses received after the close has begun will require your company to be reopened, incurring an additional charge.

If you fail to respond by December 16, 2022, we will automatically close your company after your last regular payroll of 2022.  

  Please remember that we must process adjustment/bonus runs in time to meet your tax filing deadlines and make your tax deposits timely. Any adjustment processed after January 1, 2023 will be dated December 31, 2022 and therefore federal taxes will be due as follows:

• Semi-Weekly Depositors: Due January 5, 2023
• Monthly Depositors: Due January 17, 2023

If you are requesting this adjustment less than 2 days prior to the applicable due date, your taxes will be considered late, and you may be subject to penalties and interest from the IRS.

Some adjustments have special tax implications. Please check with your accountant as to how they should be handled. 

  When you report fringe benefits that are taxable, they must be run with a payroll with regular earnings to be able to take the appropriate taxes. Be sure that each employee has enough earnings for the taxes to be calculated and withheld from that check.

 Please submit this form by December 16, 2022

COVID-19 Developments

The impact of the 2020 COVID-19 pandemic has been a large one.  We are heading into the end of 2022 and we are still feeling the effects.  Because of the large unemployment numbers during the pandemic, states had to borrow from the Federal government to meet their unemployment obligations.  Some states that have failed to repay the loans within the allowable time frame are going to be FUTA credit reduction states as a result. 

The United States Department of Labor has identified the following states as FUTA Credit Reduction States/territories for 2022:

• California (CA)
• Connecticut (CT)
• Illinois (IL)
• New York (NY)
• U.S. Virgin Islands

When there isn’t an issue of a state repaying its loan, the total cost per employee is typically $42 annually.  The FUTA tax rate is 6% with a credit reduction of 5.4% leaving a .6% rate on the first $7000 of wages per employee.  

Employers will pay another $21 per employee in 2022 where the FUTA credit reduction applies as their credit will be reduced by .3%.  The reduction will continue another .3% each year until caught up on their loans.  

For clients using our Evolution payroll platform, Complete Payroll will retroactively calculate the liability for each of our clients and collect the additional FUTA tax in January. Evolution clients will be notified in advance of the date taxes will be impounded.

For clients using our iSolved payroll platform, Complete Payroll will retroactively calculate the liability for each of our clients and collect the additional FUTA tax with a regularly scheduled payroll in December.  If you are not currently running a regular payroll, CP will run an adjustment payroll for this recalculation for you.  The adjustment in tax will be reflected in your payroll reports.  If you have any questions please feel free to contact me or your customer service representative.

Year End Processing Schedule

The end of the year is upon us and we are preparing to calculate your W-2's, 1095’S, year-end and fourth quarter reports. It is very important that you understand how the year-end process operates.  

Year End forms including the employer copy of the W-2’s will be delivered electronically with your quarterly reports.  Employee copies of the W-2’s and if applicable, 1095’s will be the only items printed and shipped.  

The Social Security Administration’s filing deadline for W-2’s this year is January 31st.  Any changes made after initial filing will require amendments and incur applicable charges.

Unless you notify us, we will begin processing your fourth quarter returns, annual reconciliation returns and W-2's as soon as your last scheduled payroll of the year is processed. We will begin sending W-2's to each company beginning January 9th, 2023 and should be completed by January 20th, 2023. Any changes received after January 6th will be updated after February 1st and will require amendments.

W-2 Preview Reports

These reports were sent out with payroll in the 4th Quarter. If you have not done so already, please review to ensure employee names, addresses, SSN's, etc. are accurate and complete and return to your CSR as soon as possible. If you have not received this report please contact your CSR for a copy.

Additional adjustments/changes may include:

Void/Manual checks

Year End bonus checks

NOTE: If you need to make any changes after your last payroll and you have not requested for us to hold your company open, please call your CSR IMMEDIATELY.

Otherwise, we will begin processing year-end within 48 hours of your last payroll of the current year. Submitting changes or additional information after this period will result in additional charges.

Other Year End Deadlines

  If you receive a Notice of Change of your deposit frequency from any agency, please fax the notice to us immediately.

  Watch for your Unemployment Rate Change Notices and fax them to us immediately.  

  Please send all coupon books, tax returns and Agency Correspondence from all states to us as soon as you receive them.

In compliance with the Patient Protection and Affordable Care Act (PPACA), Applicable Large employers (ALE), those employers with 50 or more full time and full time equivalent employees, are required to report health care information to the IRS and their full time employees for tax year . This reporting is done separately from the W-2 wage information. However, 1094-C and 1095-C reports will be processed for those companies using our HR & ACA product on a similar time schedule as W-2s. This year, 1095’s will be processed and shipped separately from the W-2’s. This year, 1095-C reports must be distributed to employees by February 28th, 2023. An ACA Authorization Form will be provided with your last payroll in December. When you return this to your CSR, we will process and ship your 1095s.

ACA 1095 Preview Reports

These reports were sent out to all ACA clients by your CSR in November. If you have not done so already, please review and update ACA fields as needed to ensure all employee ACA information is correct as soon as possible. Verification of ACA fields in Evolution which feed the 1095-C should be done using this report before the current year ends. If you have not received this report, please contact your CSR for a copy. If changes are required after 1094-C/1095-C reports have been processed, a re-processing fee will apply.

Employer-Sponsored Health Insurance Coverage

Employers with 250 or more W-2's must include the "aggregate cost" of employer-sponsored health insurance coverage on employee W-2s. Aggregate cost includes the total of all employee and employer contributions. Companies with 250 or more W-2s must contact your CSR to set up the necessary code to report this information if it has not been done already.

Disability Payments

In compliance with the Patient Protection and Affordable Care Act (PPACA), Applicable Large employers (ALE), those employers with 50 or more full time and full time equivalent employees, are required to report health care information to the IRS and their full time employees for tax year . This reporting is done separately from the W-2 wage information. However, 1094-C and 1095-C reports will be processed for those companies using our HR & ACA product on a similar time schedule as W-2s. This year, 1095’s will be processed and shipped separately from the W-2’s. This year, 1095-C reports must be distributed to employees by January 31st. An ACA Authorization Form will be provided with your last payroll in December. When you return this to your CSR, we will process and ship your 1095s.

  NOTE: Call your INSURANCE COMPANY to request this information as soon as possible. Make sure you request your company be held OPEN, if necessary. Also, we will be providing W-2's so make sure the insurance company does not provide your employees W-2's. The final deadline for inputting disability payments (third party sick pay) will be January 6th, 2023.

NYS Paid Family Leave

Insurance companies are required to provide employees receiving NYS Paid Family leave pay with the appropriate 1099 form. If your company is self-insured for NYS Paid Family Leave, please provide the necessary information to your CSR for Complete Payroll to produce the required 1099 forms.

The value of some non-cash fringe benefits must be considered income to employees.  These benefits must be reported on the 941 and employee W-2's. Examples of these benefits are:

• Car Allowances
• Personal Use of a Company Car (PUCC)
• Educational Assistance
• Moving Expenses
• S-Corp Insurance Premiums
• Etc.

These adjustments must be done on a regular payroll run so you must be sure each employee has enough earnings to cover the additional taxes that must be withheld from that check.

If you require more information, please refer to IRS Publication 15-B.

Group Term Life Insurance

You are required to include in wages the cost of group term life insurance that you provide to an employee for more than $50,000.00 of coverage, or for coverage that discriminated in favor of the employee. This amount is subject to Social Security, Medicare, and withholding taxes. Please refer to IRS Publication 15-B for detailed instructions. Group Term Life Insurance can be set up to calculate each payroll automatically. This would need to be set up with the first payroll of January, so if you are interested please contact your CSR.

Flexible Spending Accounts (FSA) - Medical & Dependent Care

Dependent care FSA must be separated from your medical FSA because dependent care FSA must be reported in W-2 Box 10.

W-2 Box 14 – Other 

Any employee who received FFCRA/ARPA wages will have the gross amount reported in Box 14 on the W-2.

For instance, the lease value of a vehicle provided to your employee and reported in box 1 must be reported here, or on a separate statement to your employee. You may also use this box for any other information that you want to give to your employee. NY Employers will see employee contributions to the Paid Family Leave Program reported here. Other examples include:

• State Disability Insurance Premiums & Taxes Withheld
• Union Dues
• Uniform Payments
• Health Insurance Premiums Deducted (after-tax)
• Nontaxable Income
• Etc.

You must notify your CSR to request your that information be reported in box 14.

  The IRS filing deadline for 1099’s is January 31, 2023.

Therefore, 1099 information should be provided to Complete Payroll as soon as possible in January for timely filing.

Form 1099-NEC will be used to report distributions for services performed by someone who is not your employee, including Attorney’s fees. Form 1099-MISC is still available for reporting other information previously reported on the Form 1099-MISC.

Form 1099-R is used to report distributions of annuities, retirement and profit sharing plans, and IRAs.

The accuracy of the information reported on 1099's is as important as the information on W-2s.
We can generate paper 1099's. We will also file 1099's on your behalf. We will be filing Form 1099 and Form 1096 (Transmittal Form for 1099's) with the appropriate agencies.

Contact your CSR if you would like us to generate your 1099's.

Form 945

Form 945 is an annual federal form for reconciling taxes withheld and deposited on non-payroll earnings (i.e., backup federal withholding and tax withheld on 1099-R and 1099-MISC income). We can produce Form 945 for you. You will just need to supply your CSR with the necessary information (i.e., amount withheld and deposited throughout the year).

Make life easier on yourself in 2023 by considering the following:

  Updates to employee deductions such as medical, dental, life insurance, 401K etc.

  Updates to time off balances, if applicable (for example: vacation and sick)

  Updates to company benefits and/or rates including Lowest Cost Benefit as needed for ACA clients

  December 31^st minimum wage increases. NOTE: Complete Payroll will not change pay rates unless instructed to do so

  With new laws in place, (i.e. NYS Hero Act) year end is a good time to revisit your employee handbook. 

• If you need help with this, we do offer an Employee Handbook Service!