Tax Reporting by gabyion

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									Tax Reporting

  Fundamental Payroll Certification
           Chapter 5
              2009

                                      1
2009 Tax Reporting
– TEST UPDATE
   Test will be using 2009 forms that are PRE ARRA
      American Recovery and Relief Act 2009

   Enacted February 13, 2009
   Form 941 Change due to COBRA Credit
      COBRA Premium Assistance

          EE Pays 35% of COBRA Premium

          ER Pays 65% COBRA Premium for EE and gets Credit on

           941 Return
      Subsidized for reduction in hours and involuntary

       terminations between September 1, 2008 and December 31,
       2009
      Subsidy extended to March 31, 2010


                                                             2
 Depositing Federal Taxes
    The size and frequency of payroll tax
     liability determines the compliance
     dates for deposits
    Penalties assessed for noncompliance
    What are Total Federal Taxes?
Employee Federal Taxes    Employer Federal Taxes
 Federal Income Tax       No Federal Income Tax

 FICA 6.2% to Limit       FICA 6.2% to Limit

 Medicare 1.45% No Limit  Medicare 1.45% No Limit
                                                    3
Depositing Federal Taxes
   IRS tracks deposits and filings by EIN
   EIN- Employer Identification Number
   Form SS-4 request for EIN to IRS
   EIN utilized on all:
       Tax Deposits
       Tax Return filings
       Responding to IRS notices

                                             4
Depositing Federal Taxes
   Total Federal taxes reconciled on Form 941
       Employer Quarterly Tax Return


   Tax deposit requirements based on the
    lookback period
   4 Quarters
   For 2009:
       3rd and 4th quarters of 2007 (July – December)
       1st and second quarter of 2008 (January – June)

                                                          5
Depositing Federal Taxes
   Deposit schedule – ER Responsible for Correct Timing
       Based on Lookback period
   If Deposit Status Changes IRS Notifies You in
    November
   See and know chart on 5-2
      Annual         < $1,000 for the Year
      Quarterly      < $2,500 for the Quarter
      Monthly        $50,000 or Less
      Semiweekly     >$50,00 and < $100,000
      One-day Deposit $100,000 or more

                                                       6
Clarification –Annual $1,000
   If aggregate annual is <$2500 / annual
    tax history shows <$1000– may file by
    1-31 with the Form 944 Employers
    Annual Tax Return
   If liability exceeds—deposit is due the
    next day and the company becomes a
    semi-weekly depositor

                                              7
Clarification– Quarterly $2500
   If less than $2500 liability per quarter
    deposit with the quarterly filing (941)
   If probability of exceeding the deposit
    liability then prudent to make deposits
    on semiweekly basis
      This will avoid the interest on late
                     deposits

                                               8
$100,000 One day rule
   Regardless of current deposit
    frequency- Once liability hits $100,000
    that deposit must be made within one
    business day.
   Monthly depositors then become semi-
    weekly for all future deposits in current
    and following year

                                                9
Depositing Federal Taxes
   Monthly depositor status change
   Fixed deposit liability
   Holiday deposit rules
   Quarter ends
   Manual checks



                                      10
Quarter end liability
   When a semiweekly deposit period
    overlaps quarters – multiple deposits
    may be required to accommodate the
    appropriate payment in the correct
    quarter.




                                            11
Manual Checks
   In the eyes of the IRS– Manual checks
    are viewed as regular payroll checks
   liability and deposit rules apply based
    on the check date and constructive
    receipt



                                              12
Depositing Federal Taxes
   Safe Harbor rule (98% rule)
   Must deposit timely at minimum 98% of
    liability—cannot exceed 2% or $100
    whichever is larger
   Make up deposits –
       Monthly– by due date of Form 941
       Semiweekly- on the first Wednesday or Friday
        after the 15th of the month – no later than the
        Form 941 due date

                                                          13
Depositing Federal Taxes
   EFTPS—Electronic Federal Tax Payment System

   Two designated Treasury Financial Agents (TSA)
      Chase (Bank One) and

      Bank of America



   ACH network
      ACH Debit – direct to TSA

      ACH Credit -- Financial Institution initiates




                                                       14
Depositing Federal Taxes
ACH Credit
 Issuance of PIN to verify completed
  transactions
 Payments due on holiday- must be

  initiated day prior for availability the
  day after the holiday


                                             15
Depositing Federal Taxes
ACH Debit
 Issuance of a PIN to make payments
  via PC or phone– 24 hours –seven days
  a week
 Must be made by 8:00 pm EST to be
  effective the next business day
 PIN allows for payments and
  confirmations

                                      16
Depositing Federal Taxes
ETA– Electronic Tax Application
 Allows for same day deposit to Federal
  Reserve System-via Fedwire transfer
 Must be completed by 2:00 pm their

  time



                                           17
Depositing Federal Taxes
Non- EFTPS
 Immediate credit item – cash-money
  order- check from Federal Reserve city
 Accompanied with Form 8109 --

  Federal Tax Deposit Coupon
     Name, address, EIN
     Legible as they are scanned

                                           18
Quarterly Tax Return 941
Form 941 used for reconciliation of Federal Tax
  Payments
 Due end of month following end of quarter

     Wages, tips and other comp (including nontaxable
      income)
     Fed income tax from wages and tips
     Total wages & tips subject to SS/ MED
     Total deposits for the quarter& any balance due
     Advanced earned income credit pd to ees

                                                     19
Quarterly Tax Return 941
Filing timely– acceptable mediums
   USPS- return receipt requested-postmarked
    date due
   PDS-Private delivery services
       DHL- same day or overnight by 10:30
       FedEx- Priority or Std Overnight-2day –
        International Priority or First
       UPS-Next day or 2 day Air A.M.- worldwide or
        worldwide Express


                                                       20
Quarterly Tax Return 941
   Ensure efficient processing-
       No dollar signs or commas
          1000.00

       Negative numbers in parentheses
          (1000.00)


   Utilize the pre-printed labels!


                                          21
Quarterly Tax Return 941



   Look at Form 941



                           22
 Quarterly Tax Return 941
Header Section
 EIN – Employer Identification Number

 Employer Name and Address Information

 Report for this Quarter of 2009 – check
  box



                                        23
Quarterly Tax Return 941
Part 1
 Line 1- Number of employees

 Line 2 Total wages & tips subject to
  withholding + other compensation
 Line 3- Total income tax withheld from
  wages, tips & sick pay
 Line 4- check box if no wages subject to

  Social security and Medicare
                                        24
Quarterly Tax Return 941
Line 5 – Taxable Soc Sec & Medicare Info
 Line 5a-
       Column 1 Taxable Social Security Wages
       Column 2 Social Security Tax
   Line 5b
       Column 1 Taxable Social Security Tips
       Column 2 Social Security on Tips
   Line 5c-
       Column 1- Taxable Medicare Wages & Tips
       Column 2 Medicare Tax
                                                  25
Quarterly Tax Return 941
   Line   6- Total taxes before adjustments
   Line   7- Tax adjustments (7a+7b+7c = 7d)
   Line   8 – Total Taxes after Adjustments
   Line   9 – Advanced EIC Payments Made to employees
   Line   10 – Total Taxes After Adjustments
   Line   11 – Total Deposits for this Quarter
   Line   12a & 12b COBRA Adjustments
   Line   13 Total Adjusted Deposits
   Line   14 Balance Due
   Line   15 Over Payment – check box on how to handle
                                                      26
Quarterly Tax Return 941
 Line 15 Over Payment – check box on how to handle
Part 2
 Line 16 State or MU

 Line 17 – Decide which box to check

    If first box, go directly to Part 3

    If 2
          nd box, fill in Monthly Deposit Amounts

    If 3
          rd box, Complete Schedule B; file with this form

Part 3
 Line 18 – complete if business closed

 Line 19 – complete if a seasonal employee

                                                        27
Quarterly Tax Return 941
Part 4 – Authorization for Third Party Designee
  Associate authorized to work with IRS
Part 5 - Sign here
 Must be owner, president, VP, corp. officer, etc. . .

Paid Preparer’s Use Only – unless already listed with
  IRS as filing agent with Form 8655




                                                      28
Alternative forms
   Form 943 - Employers annual Federal tax
    return for agricultural employees
   Form 945 - Annual Return of withheld
    Federal Income tax- non payroll
   Form 941-X – Adjusted Quarterly Federal
    Tax Return or Claim for Regund
   Form 944 - Employers Federal Tax
    return<$1000



                                              29
State Unemployment
•   All states must have a plan
•   Utilized to pay the unemployed
•   Employer tax
•   3 states allowing ee taxation
    •   Pennsylvania, Alaska, New Jersey (PAN)




                                                 30
State Unemployment
   Calculations vary per state
   More than half need to be by mag media
   Commonalities
       Total wages paid
       Taxable wages paid
       Nontaxable wages paid
       Number of ees each month
       Gross wages for each ee
       Breakdown of taxable & nontaxable wages per ee
       Number of weeks worked by each employee

                                                     31
FUTA-
Federal Unemployment Tax Act
   Assistance via loans to subsidize federally mandated
    state UI programs
   Rate 6.2% of initial $7,000
   Credit of 5.4% -- Not Automatic!
      Timely state deposits

      Not be in arrears in borrowed FUTA funds

   Effective rate is .8% with the Credit
   Some states don’t qualify for the full credit
         Example: In 2005, NY FUTA Tax Rate 1.4%

         6.2% - 3.7% = Paid 1.4% instead of .8%

                                                           32
FUTA-
Federal Unemployment Tax Act



   Look at Form 940



                          33
    FUTA-
    Federal Unemployment Tax Act
   Calculating Federal UI Tax each Quarter
   Up to Wage Base $7,000
   Deposit Using EFTPS by Deposit Due Date
   With full credit max withheld per ee is $56.0
      $7,000 x .8% = $56.00

   If liability for quarter is under $500 it can be carried
    forward
   Due dates for Deposits:
          Q1- April 30                 Q3- October 31
          Q2- July 31                  Q4- January 31
                                                               34
FUTA-
Federal Unemployment Tax Act
   Annual filing – Form 940 – Federal
    Unemployment Tax Return
   Due by January 31 unless all deposits
    were made by the due dates—extension
    to February 10
   Penalties are the same as other Federal
    taxes

                                         35
     FUTA- 940 Annual Return
   Must file if Wages of $1500 pd in any qtr of 08 or 09, or
   At least one employee employed for any part of a day in
    any of 20 different weeks in 08 or 09
   Business Owner changes
      Taxes re-start with each employer meeting either test;

      Must file separately

   Non profit organizations do not pay FUTA
      Section 501 (c)(3) of IRC

   (Go to Page 5-55 in your book to view Form 940)

                                                            36
FUTA- 940 Annual Return
   Line by Line- Section by Section
   Type of return
       A. Amended
       B. Successor employer
       C. No payments to ees in 2009
       D. Final Business Return



                                        37
FUTA- 940 Annual Return
Part 1 Tell about return
 Line 1a- State unemployment postal
  code
 Line 1b- SUI to multiple states-check

  and complete schedule A
 Line 2- check if credit reduction state




                                            38
FUTA- 940 Annual Return
Part 2 Determine FUTA tax before adj
 Line 3-Total payments for all employees

 Line 4-Payments exempt from FUTA tax
     4a- Fringe Benefits
     4b- GTLC-
     4c- Retirement Pension
     4d- Dependent care
     4e- Other amounts

                                        39
FUTA- 940 Annual Return
   Line 5-Payments made to each ee in
    excess of $7,000
   Line 6- Subtotal
   Line 7- Total taxable FUTA wages
   Line 8- FUTA tax before adjustments



                                          40
FUTA- 940 Annual Return
Part 3- Determine your adjustments
     Line 9- FUTA wages exempt from SUI(all)
     Line 10- Some FUTA wages exempt from
      SUI
     Use the Tax x 5.4%
     Line 11- Credit reduction- copy line 3 amt



                                                   41
FUTA- 940 Annual Return
Part 4- Determine FUTA tax for 2009
 Line 12- Total FUTA after adjustment
  (8+9+10+11 = Line 12)
 Line 13- FUTA tax deposited

 Line 14- Balance due

 Line 15- Overpayment




                                         42
FUTA- 940 Annual Return
Part 5- Report FUTA Liability by Quarter
  only if Line 12 is < $500. If not, skip
  and go to Part 6
 Line 16- FUTA liability per quarter on

  lines 16a-16d
 Line 17- Total liability for the year

     (16a+16b+16c+16d = Line 17)

                                            43
FUTA- 940 Annual Return
Part Six – Authorization for Third Party
  Designee
 Associate authorized to work with IRS

Part Seven - Sign here
 Must be owner, president, VP, corp. officer,
  etc. . .
Paid Preparer’s Use Only – unless already
  listed with IRS as filing agent with
  Form 8655

                                                 44
FUTA- 940 Annual Return
Schedule A– state unemployment paid
  to multiple states
 Part one- Check state boxes that are
  applicable
 Part 2-Information for states with credit
  reductions
 See information pg. 5-63– not
  applicable for this year (good to know)

                                          45
FUTA- 940 Annual Return
   The lines for credit reduction states will be
    listed and if FUTA wages were paid to these
    states the amount needs to be listed and the
    additional percentage, known as the credit
    reduction needs to be calculated.
   This is done for each applicable state
   Total amount is calculated and entered on
    line 11 of the 940

                                                46
Wage and Tax Statement-
Form W-2



   Look at Form W2



                          47
Wage and Tax Statement-
Form W-2
   (Go to Page 5-33 in your book)
   Employee documentation for filing Form 1040
      IRS track tax obligations, and

      Social Security Administration SSA to provide
       Social Security benefits
   Form W-2 – Wage & Tax Statement
   Form W-2c - Corrected Wage & Tax Statement
   Form W3 – Transmittal of Wage & Tax Statements
   Form W3c – Corrected Transmittal of Wage & Tax
    Statements

                                                       48
Wage and Tax Statement-
Form W-2
Filing Deadlines
   Copy A – SSA– last day of February or if electronic –
    March 31
   Copy 1- State/ Local- state regulations
   Copy B- Employees- January 31
   Copy C- Employees for personal file- January 31
   Copy 2- Employees filed with state- January 31
   Copy D- Employers for files – none
   Former ees – w/company unless requested in
    writing-then 30 days from request
   Business ceasing operation – by final 941 filing
   Extension of 30 days if filing form 8809
                                                        49
Wage and Tax Statement-
Form W-2
   Ensure efficient processing
   No erasures, strikeouts or whiteouts
   Do not use dollar signs
   Use black ink only
   Legibility a must



                                           50
    Wage and Tax Statement-
    Form W-2
   Box A– Employee SS # -- if none use all 0’s
   Void- check box if error in processing & do
    not include in the Form W3
   Box B- EIN
   Box C- Employer name, address and zip
    code
   Box D- Control number


                                              51
Wage and Tax Statement-
Form W-2
   Box E- Employees name
       Use full first name, middle initial and full
        last name, and suffix if appears on SS card
       Do not use titles or degrees
       Compound- hyphenated no -
   Box F- Employees address and zip code


                                                   52
Wage and Tax Statement-
Form W-2
   Box 1- Wages, tips & other
    compensation
   Box 2- Federal Income tax Withheld
   Box 3- Social Security wages
   Box 4- Social Security tax withheld
   Box 5- Medicare wages & tips
   Box 6- Medicare tax withheld
                                          53
Wage and Tax Statement-
Form W-2
   Box 7- Social security tips
   Box 8- Allocated tips
   Box 9- AEIC
   Box 10- Dependent care benefits
   Box 11-Nonqualified plans



                                      54
Wage and Tax Statement-
Form W-2
Box 12- multiple codes
 A= Uncollected ss tax on tips
 B =Uncollected Medicare on tips

 C= Cost of GTL over $50,000
 D= 401k Contributions

 E=403B Contributions
 F= 408k6 Contributions

 G= 457 b Contributions

 H= 501c18D Contributions



                                    55
Wage and Tax Statement-
Form W-2
   J= Sick pay not included in income
   K=Tax on golden parachute
   L= Nontaxable part of employer business
    expense reimbursements
   M= Uncollected SS tax on GTL
   N= Uncollected Medicare on GTL
   P= Excludable Moving expense
    reimbursements
   Q= Nontaxable combat pay
                                              56
Wage and Tax Statement-
Form W-2
   R=Archer Medical Savings Account
    Contributions
   S= Simple retirement account
    contributions
   T= Adoption benefits
   V=Income from exercise of
    nonstatutory stock options
   W= Health savings accounts
                                       57
Wage and Tax Statement-
Form W-2
   Y= Nonqualified Deferred Comp
    Deferrals
   Z= Income from 409A-Nonqualified
    Deferred Comp Plans
   AA= Roth 401(k) deferrals
   BB=Roth 403(b) deferrals


                                       58
Wage and Tax Statement-
Form W-2
   Statutory Employee – check if
    earnings are subject to soc sec and
    medicare but NOT subject to FIT
   Retirement plan box – check if in
    plan even part of year
   Third Party sick pay box- check if
    vendor providing separate payments or
    noting employer paid
                                        59
Wage and Tax Statement-
Form W-2
   Box 14- Other usually for lease value
    method of company vehicle- state
    clearly
   Box 15- Employers state tax ID
    number
   Boxes 16-20– state and local tax
    information

                                            60
Wage and Tax Statement-
Form W-2
   Reconcile the 941’s to the W2’s
   The W3 is a summarization and must
    accompany the W2s to SSA
   All companies with 250 or more W2s must file
    electronically
   If electronic poses hardship – file at least 45
    days prior to due date form 8508- Request
    for Waiver from Filing Information Returns on
    Magnetic Media

                                                 61
Wage and Tax Statement-
Form W-2
   USPS- - Certified mail–
   PDS– street address necessary
   Due dates are the dates postmark or
    delivery commitment of PDS
   Memorize the chart for penalties on
    page 5-50.


                                          62
1099 Misc., Trade or
Backup Withholding



Look at Form 1099 Misc.



                          63
1099 Misc., Trade or
Backup Withholding
 (Go to Page 5-65 in book)
1099 Misc.
    Filed to IRS by 2-28 or if electronic by 3-31

    At least $10 in royalties, broker payments,
     or tax exempt interest
    At least $600 in income, health care
     payments, rents, prizes
    At least $600 in gross proceeds pd to an
     attorney
    Any fishing boat proceeds
                                                 64
1099 Misc., Trade or
Backup Withholding
   Non profit organizations, trusts , farmers
    cooperatives
   Exceptions:
       Box 6- medical & healthcare payment
       Box 7- Services provided by attorney
       Box 7-payments by a federal executive agency
       Box 8- Substitute payments in lieu of dividends
       Box 14- gross procedures to attorney for legal
         services

                                                          65
1099 Misc., Trade or
Backup Withholding
 Box2- Payment for merchandise
 Box 3- Payment of rent for real estate
  agents
 Box 4- Wages paid to employees

 Box 5- Business travel allowances pd to
  employees
Must report if >= $5000

                                        66
1099 Misc., Trade or
Backup Withholding
   Company must withhold 28% federal
    withholding on recipients of 1099 Misc
    that do not provide a TIN.
   Payments made as previously stated
   Lookback period is the 2nd preceding
    calendar year.


                                             67
Tax Reporting
Study!
 Collecting & Depositing Federal Taxes

 Quarterly Tax Return Form 941

 Federal Unemployment & Form 940

 Wage & Tax Statements Form W2s

 Form 1099 Misc




                                          68
Tax Reporting



 Thanks For Attending!



                         69

								
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