Year End and What's up for 2020! - Brought to you by: Becky Harshberger & Helen Hinton

 
Year End and What's up for 2020! - Brought to you by: Becky Harshberger & Helen Hinton
Year End and What’s up for 2020!
Brought to you by:
Becky Harshberger
bharshberger@ep.com
&
Helen Hinton
helen.hinton@aecom.com
Year End and What's up for 2020! - Brought to you by: Becky Harshberger & Helen Hinton
2020 Draft Form W-4

• During the October 3 IRS payroll industry telephone conference call,
  it was announced that the final version of the 2020 Form W-4
  (Employee's Withholding Certificate) will be issued by the end of
  November.
• The final version of the corresponding new Publication 15-T (Federal
  Income Tax Withholding Methods) is expected to be issued in
  December.
• To help employers and taxpayers understand the new Form W-4 and
  Publication 15-T, there was an IRS webinar on October 22 – it is
  available for listening on the IRS Website.
                                                                         2
Year End and What's up for 2020! - Brought to you by: Becky Harshberger & Helen Hinton
2020 Draft Form W-4

                      3
Year End and What's up for 2020! - Brought to you by: Becky Harshberger & Helen Hinton
2020 Draft Form W-4

Notable changes
   • Step-by-step process
     o Step 1: Personal information
     o Step 2: Account for multiple jobs
     o Step 3: Claim dependents
     o Step 4: Other adjustments (optional)
     o Step 5: Sign and date

                                              4
Year End and What's up for 2020! - Brought to you by: Becky Harshberger & Helen Hinton
2020 Draft Form W-4

Redesigned form
   • 5-Step process
   • No withholding allowances
   • New filing status
   • Claiming exempt
   • Privacy concerns
   • Withholding Estimator

                                        5
Year End and What's up for 2020! - Brought to you by: Becky Harshberger & Helen Hinton
Publication 15-T
o   Employer’s Withholding Worksheet
o   One calculation for both Legacy and New Form W-4

                                                       6
Year End and What's up for 2020! - Brought to you by: Becky Harshberger & Helen Hinton
Scenario #1
Fred uses 2019 Legacy Form W-4
  • Paid weekly $1,750
  • Claims married with 5 allowances
  • Line 6 blank

                                            7
Year End and What's up for 2020! - Brought to you by: Becky Harshberger & Helen Hinton
Scenario #1
Fred uses 2019 Legacy Form W-4
  • Employer’s Withholding Worksheet

                 Line                  Result
                  1a                       $ 1,750.00
                  1b                               52
                  1c                       $ 91,000.00

                                                         8
Scenario #1
Fred uses 2019 Legacy Form W-4
  • Employer’s Withholding Worksheet

                 Line                  Result
                  1j                                5
                  1k                        $21,000.00
                  1l                        $70,000.00

                                                         9
Scenario #1
Fred uses 2019 Legacy Form W-4
  • Employer’s Withholding Worksheet

                 Line                  Result
                  2a                        $70,000.00
                  2b                        $31,200.00
                  2c                         $1,940.00
                  2d                              12%

                                                         10
Scenario #1
Fred uses 2019 Legacy Form W-4
  • Percentage Method Tables
                                             See Page 5-42

                                                             11
Scenario #1
Fred uses 2019 Legacy Form W-4
  • Employer’s Withholding Worksheet

                   Line                Result
                    2e                     $38,800.00
                    2f                       $4,656.00
                  2g                        $6,596.00
                 2h/4b                        $126.85

                                                         12
Scenario #2
Fred uses 2020 Form W-4
  • Claiming Married filing jointly
  • Step 2 not marked
  • Nothing entered in Steps 3 or 4

                                             13
Scenario #2
Fred uses 2020 Form W-4 (no steps 2-4)
  • Employer’s Withholding Worksheet

                   Line                Result
                    1a                    $ 1,750.00
                    1b                            52
                  1c/1e                   $ 91,000.00

                                                        14
Scenario #2
Fred uses 2020 Form W-4 (no steps 2-4)
  • Employer’s Withholding Worksheet

                  Line                 Result
                   1f                               0
                 1g/1h                     $12,600.00
                  1i/2a                    $78,400.00
                   2b                      $31,200.00

                                                        15
Scenario #2
Fred Smith uses 2020 Form W-4 (no steps 2-4)
  • Employer’s Withholding Worksheet – Percentage Method

                 Line               Result
                  2c                         $1,940.00
                  2d                              12%
                  2e                       $47,200.00

                                                           16
Scenario #2
                                                           See Page 5-42
Fred Smith uses 2020 Form W-4 (no steps 2-4)
  • Employer’s Withholding Worksheet – Percentage Method

                                                                           17
Scenario #2
Fred Smith uses 2020 Form W-4 (no steps 2-4)
  • Employer’s Withholding Worksheet – Percentage Method

                   Line               Result
                    2f                     $5,664.00
                    2g                     $7,604.00
                  2h/4b                        $146.23

                                                           18
Scenario #3
Fred uses 2020 Form W-4
  •   Claiming married filing jointly
  •   Step 2 box checked R
  •   Step 3 = $6,500
  •   Step 4a = $26,000
  •   Step 4b = $2,600
  •   Step 4c = $100

                                                19
Scenario #3
Fred uses 2020 Form W-4 (steps 2-4)
  • Employer’s Withholding Worksheet

                 Line                  Result
                  1a                       $ 1,750.00
                  1b                               52
                  1c                       $ 91,000.00

                                                         20
Scenario #3
Fred uses 2020 Form W-4 (steps 2-4)
  • Employer’s Withholding Worksheet

                 Line                  Result
                  1d                        $26,000.00
                  1e                       $117,000.00
                   1f                        $2,600.00
                   1g                            $0.00

                                                         21
Scenario #3
Fred uses 2020 Form W-4 (steps 2-4)
  • Employer’s Withholding Worksheet

                  Line                 Result
                   1h                        $2,600.00
                  1i/2a                   $114,400.00

                                                         22
Scenario #3
Fred uses 2020 Form W-4 (steps 2-4)
  • Employer’s Withholding Worksheet

                 Line                  Result
                  2b                        $96,400.00
                  2c                        $14,382.50
                  2d                              24%

                                                         23
Scenario #3
Fred uses 2020 Form W-4 (steps 2-4)                        See Page 5-42
  • Employer’s Withholding Worksheet – Percentage Method

                                                                           24
Scenario #3
Fred uses 2020 Form W-4 (steps 2-4)
  • Employer’s Withholding Worksheet

                  Line                 Result
                   2e                       $18,000.00
                   2f                         $4,320.00
                   2g                       $18,702.50
                   2h                          $359.66

                                                          25
Scenario #3
Fred uses 2020 Form W-4 (steps 2-4)
  • Employer’s Withholding Worksheet

                 Line                  Result
                  3a                            $6,500.00
                  3b                              $125.00
                   3c                            $234.66

                                                            26
Scenario #3
Fred uses 2020 Form W-4 (steps 2-4)
  • Employer’s Withholding Worksheet

                 Line                  Result
                  3c                            $234.66
                  4a                            $100.00
                  4b                            $334.66

                                                          27
2020 State W-4s

•   States that have been using the Federal W-4 may be looking at issuing
    their own forms
•   Currently CO, DE, NE, NM, ND, SC, and UT use the federal W-4 only
•   ID, MT, OR, & VT created a new state W-4 form in 2019
•   NE is planning to issue a 2020 state W-4
•   NM will continue to use the Federal W-4 for 2020
•   SC may issue a 2020 state W-4 (per their website)
•   UT will likely continue to use the Federal W-4 as the UT calculation only
    uses marital status from the Federal W-4 (does not make adjustment for
    any exemptions/allowances)

                                                                                28
Thresholds for 2020 already announced

Social Security Wage Base
    • The 2020 social security wage base will be $137,700.
    • As in 2019, wages paid in excess of $200,000 in 2020 will be subject
       to an extra 0.9% Medicare tax that will be withheld only from
       employees’ wages. Employers will not match the extra tax.
    • The maximum social security tax employees and employers will each
       pay in 2020 is $8,537.40, up from $8,239.80 in 2019.

                                                                             29
More thresholds for 2020!

Pension Plan Limits
    • Elective deferrals to 401(k), 403(b), most 457 plans – increased to
      $19,500 (from $19,000)
    • Catch up contributions – INCREASED to $6,500 (from $6,000)
    • Max annual benefit under defined benefit plan - $230,000 (up from
      $225,000)
    • Annual contributions to an IRA – remains at $6,000; catch up
      remains at $1,000

                                                                            30
More thresholds for 2020!

HSA Annual Contribution Limit
    • The 2020 maximum annual HSA contribution for an eligible
      individual with self-only coverage is $3,550 ($3,500 in 2019)
    • For family coverage, the 2020 maximum annual HSA contribution is
      $7,100 ($7,000 in 2019)

Maximum Out-of-Pocket Spending on HSA-Compatible HDHPs
    • Self-only coverage maximum is $6,900 ($6,750 in 2019)
    • Family coverage maximum is twice that, $13,800 ($13,500 in 2019)

Minimum Deductible Amounts for HSA-Compatible HDHPs
    • The minimum deductible is $1,400 ($1,350 in 2019) for self-only
      coverage and $2,800 ($2,700 in 2019) for family coverage           31
More thresholds for 2020!

FSA Contributions
    • Health FSA limit (under cafeteria s.125 plan) is increased to $2,750
      (from $2,700)
    • Dependent care limit remains at $5,000 (MFJ/Single) or $2,500
      (MFS) - not inflation adjusted

Qualified Transportation and Qualified Parking (Rev Proc 2019-44)
    • Monthly exclusion limit increased to $270 (from $265)

                                                                             32
More thresholds for 2020!

Adoption Assistance Programs
    • Exclusion increased to $14,300 per year (from $14,080)
    • Phase out begins for modified AGI in excess of $214,520
    • Completely phased out for modified AGI of $254,520 or more

Foreign Earned Income Exclusion
    • Increased to $107,600 (from $105,900)
    • Must meet Sec 911 criteria and have Form 2555 on file for 2019

Federal Tax Levy Exempt Amount
    • Increased to $4,300 (from $4,200 in 2019)
    • New as a result of tax reform, for use when the personal exemption
      amount is zero                                                       33
More thresholds for 2020!

Standard Deduction
    • Increased to $24,800 (from $24,400) MFJ
    • Increased to $12,400 (from $12,200) for Single and MFS
    • Increased to $18,650 (from $18,350) for HoH

Reporting Penalties
   • Returns required to be filed in 2021
   • For failure to timely file accurate information return / failure to timely
      furnish accurate employee statement
   • Per return penalties – $50 if filed/corrected within 30 days, $110 if
      before Aug 1 (up from $100) and $280 after Aug 1 (up from $270)
   • Maximum penalties – $565,000, $1,696,000 and $3,392,000
      respectively
                                                                                  34
More thresholds for 2020!

Employer Owned Vehicles
   • Can only use cents-per-mile to value personal use of employer owned
      vehicles if the FMV is below a specified amount
   • IRS made a big change to this number in mid-2019
   • For 2019, the amount was adjusted to $50,400 for cars, trucks &
      vans (under previous rules it was $15,700 for cars and $17,600 for
      trucks & vans)
   • The 2020 amount is still to be announced
   • It means you can now use cents-per-mile for higher-value vehicles

                                                                       35
More thresholds for 2020!

                            36
California 2020 Tax Updates

• CA UI rate schedule in effect for 2020 will continue to be Schedule
  F+, which provides for contribution rates from 1.5% to 6.2% (the
  Schedule in use is based on overall fund balance)
• New employer UI rate is to remain at 3.4%
• ETT rate will remain at 0.1% (for positive-rated and new employers)
• UI and ETT taxable wage base will remain at $7,000
• 2020 CA SDI wage base up to $122,909 (from $118,371 for 2019)
  – tax rate remains at 1%
• Max SDI withholding for employees will be $1,229.09 – a rise of
  $45.38 from $1,183.71 in 2019

                                                                        37
FUTA / SUTA Updates

• For 2019, US Virgin Islands is the only state with a FUTA credit
  reduction – 2.7% (2.4% in 2018)

• Most states have released 2020 wage bases:
  https://www.americanpayroll.org/compliance/compliance-
  overview/state-unemployment-wage-bases

• Should be starting to receive 2020 rate notices (GA, NH, OK, TN, VT)
  – opportunities to audit rate notices / benefit charges, and review
  voluntary contributions / joint account elections to reduce rates

                                                                         38
W-2 Related Updates – Truncated SSNs

Truncated SSNs on Form W-2
   • Employers have the option to truncate SSNs on the employee copy
     of the Form W-2 & W-2c starting with the 2020 Form W-2
     (furnished in 2021) – i.e. not this year!
   • The truncated SSN would appear as XXX-XX-1234 (similar to
     allowance for Form 1099 series)
   • The full SSN must appear on the W-2/W-2c copy filed with the SSA

                                                                        39
W-2 Related Updates – SSA ‘No-Match’ Notices

SSA sending out Form W-2 name/SSN “no-match” notices
    •   Official name is Educational Correspondence (EDCOR) notices or
        Employer Correction Request Notices
    •   Started mailing in March 2019
        •   Sample correction request notice at
            https://www.ssa.gov/employer/notices/EmployerCorrectionRequest.pdf

    •   Employers are advised to take action to correct the SSN mis-match
        within 60 days

                                                                                 40
W-2 Related Updates – Form W-2 Verification Code, Discontinued

• In October 2019, the IRS announced it will discontinue the Form W-2
  Verification Code pilot program for the 2019 tax year. The IRS said that
  because federal law now requires employers to submit Forms W-2 by
  January 31 each year, it can combat fraud and identity theft without the
  need for the verification code.
Background
In 2016, the IRS worked with four payroll service providers (PSPs) – ADP, Ceridian, Intuit, and
Paychex – that placed a 16-character verification code on Forms W-2 issued to the employees of
certain clients. Between 2016 and 2018, additional PSPs participated in the program and the number
of W-2s on which the verification code appeared increased from approximately two million to more
than 60 million.
The Form W-2 verification code pilot program “marked an unprecedented cooperative effort between
payroll service providers, employers, tax software providers, tax professionals, the Social Security
Administration, and the IRS to identify new avenues to ensure the accuracy of information reported
on tax returns and to identify fraudulent tax returns,” the IRS said.
In its announcement that it would discontinue the program, the IRS “expresses its appreciation to the
many stakeholders, especially the payroll service providers and industry software developers, who     41
joined in the verification code project.”
FLSA Overtime Rule
Increase to Exempt Salary Threshold
  • In Sep 2019, the US DOL announced a final rule to make 1.3m US workers
    newly eligible for overtime pay
  • The final rule:
     • Raises the salary-level threshold for white-collar exemptions from $455 per
        week to $684 per week (equivalent to $35,568 per year for a full-time
        worker), effective Jan 1, 2020
     • Raises the highly compensated employees requirement to $107,432 per
        year (from $100,000)
     • Allows employers to use nondiscretionary bonuses and incentive payments
        (incl commissions) paid at least annually to satisfy up to 10% of the salary
        level
  • Remember the employee’s job duties must also meet the duties test to qualify
    as an exempt employee
  • Employers need to review their exempt employee population to make sure they
    qualify under the new rules – if not, they may need to be paid overtime  42
Affordable Care Act: Additional State Requirements

2019 ACA Reporting
  • 2019 Forms 1094-C and 1095-C due by Mar 31, 2020 (electronic)
  • Effective January 1, 2019 the amount of the individual responsibility
    payment was reduced to zero for those who do not maintain health
    insurance

State Healthcare Reporting
   • DC and NJ have individual mandates, effective Jan 1, 2019
   • NJ requires copies of 2019 ACA forms for NJ residents, to be
     transmitted by Mar 31, 2020
   • DC requires copies of 2019 ACA forms for DC residents by Jun 30, 2020
     (in subsequent years, the filing deadline will be 30 days after the IRS
     deadline)
   • CA, RI and VT have enacted individual mandate laws effective Jan 1,
     2020
Not new, but do you know about Form 8919?

• Use Form 8919 to figure and report your share of the uncollected social
  security and Medicare taxes due on your compensation if you were an
  employee but were treated as an independent contractor by your
  employer.
• By filing this form, your social security earnings will be credited to your
  social security record. See https://www.irs.gov/businesses/small-
  businesses-self-employed/independent-contractor-selfemployed-or-
  employee for more information.

                                                                                44
45
Misc State Updates

California “ABC” Test for Independent Contractors
   • California A.B. 5 was passed in Sep 2019 to codify the CA Supreme
     Court decision in Dynamex
   • Applies a 3 part test (“ABC” Test) to determine if the individual is an
     employee or independent contractor for purposes of the UI code and
     wage orders
   • Some occupations are exempt from this standard, e.g. real estate
     agents, certain health care professionals
   • To be treated as an independent contractor:
      1. The worker is free from the employer’s direction and control;
      2. The worker performs work outside of the employer’s usual course
          of business; and
      3. The worker has an independent trade or business
                                                                               46
Misc State Updates

California Cannabis Industry Payroll Tax Reporting
  • California law requires the reporting and payment of payroll taxes to the EDD
    if an employee is hired to perform services.
  • The Employment Development Department (EDD) has announced assistance
    to business owners in the cannabis industry to comply with the state's payroll
    tax laws and avoid unforeseen tax liabilities.
  • Cannabis businesses may include, but are not limited to: distributors,
    transporters, and dispensaries, which would include employees, plant
    caretakers, budtenders, security guards, salespersons and deliverers.
  • The EDD offers several resources, including FAQs on the cannabis industry and
    payroll tax reporting.
  • One question notes that a cannabis industry employer must remit payroll taxes
    regardless if the business cannot establish a business checking account. The
    business must contact a local EDD Employment Tax Office to make appropriate
    arrangements with an EDD representative.                                     47
Misc State Updates

Colorado Wage & Hour Protections
   • Proposed CO Overtime & Minimum Pay Standards Order (COMPS) Order
     No. 36 would establish a new minimum salary threshold for overtime
     exemptions and all CO employees would be covered by wage & hour
     protections (current legislation include only 4 narrow job categories)
   • If adopted, it would be effective Mar 1, 2020 (for expansion of
     protections) and Jul 1, 2020 (for salary threshold increase)
   • Minimum salary requirement for exempt employees would be $42,500,
     effective Jul 1, 2020 (currently $23,088)
   • Additional increases are also scheduled for following years
   • As this is higher that the FLSA requirement, employers will need to
     review their exempt workforce in CO if this Order is adopted

                                                                          48
Misc State Updates

Connecticut Paid Sick Leave
  • Effective Jan 1, 2021, all CT employers will be required to withhold
    0.5% from employees (no employer contribution similar to CA)
  • The bill allows up to 12 weeks of paid leave to care for themselves or an
    extended family member (plus an additional 2 weeks for pregnancy)
  • Benefits will be available from Jan 1, 2022
  • Employers may opt out and provide a private plan
  • Guidance is expected in 2020

                                                                           49
Misc State Updates

Connecticut Exploring Employer Payroll Tax
  • The Connecticut Department of Revenue Services (DRS) has sent two
    email notices to certain employers requesting necessary data for
    evaluating the potential impact of a payroll tax
  • One of the notices contains a survey seeking from employers:
      1.   the total employees as of Dec. 31, 2018,
      2.   the total wages paid to employees who worked in Connecticut in 2018,
      3.   the employer type, and
      4.   if any employees are covered by a collective bargaining agreement.
   • Responses were due from employers by Oct. 1, 2019
   • Legislation in 2019 established a state payroll commission to evaluate
     the feasibility of imposing a payroll tax on employers.
   • The legislation notes either a 5% payroll tax, beginning on Jan. 1, 2021,
     or phasing-in the tax over a three year period at the following rates:
                                                                            50
     1.5%, 3% and 5%.
Misc State Updates

DC Penalty for Failure to Provide Commuter Benefits
  • Effective Jan 1, 2016, DC employers of 20 of more employees were
    required to offer commuter transportation benefits (either a pretax
    deduction or employer paid/provided benefit)
  • In Aug 2019, final regulations were adopted to provide for penalties for
    failure to comply:
     • First offence - $100
     • Second offence - $200
     • Third offence - $400
     • Fourth and subsequent offences - $800
  • Penalties apply per employee, per month

                                                                           51
Misc State Updates

Illinois Non Resident Withholding Threshold
    • Effective Jan 1, 2021, a 30-day threshold is established for taxation of
      non-residents working in IL
    • Under current rules, nonresidents are only taxed on compensation
      sourced to IL, i.e. all services are performed in IL or their “base of
      operations” is in IL – think similar to the test for SUI
    • The new rule will actually increase the number of nonresident workers
      subject to IL income taxes
    • (The state may be trying to preempt the Mobile Workforce Simplification
     Legislation which proposes a 30-day threshold and was re-introduced in
     the House on Oct 22, 2019.)

                                                                            52
Misc State Updates

Maine Paid Sick Leave
  • Effective Jan 1, 2021, ME employers of 10 of more employees will be
    required to allow employees to accrue one hour of paid sick leave per 40
    hours worked, up to a max of 40 hours per year
  • Accrual begins at start of employment, but employer can require
    employee to be employed for 120 days during the year before using the
    accrued leave
  • The paid sick leave can be used for personal illness and for the illness of
    immediate family members
  • Legislation that would establish a PFML insurance program is currently
    pending (LD 1410)

                                                                             53
Misc State Updates

Massachusetts Paid Family and Medical Leave
  • Contributions effective Oct 1, 2019, i.e. you should already be withholding
    from employees!
  • First quarterly deposit and return due Jan 31, 2020 (for 4Q19)
  • Contributions should be reported in Box 14 of the Form W-2 using “MAPFML”
  • Benefits will be payable from Jan 1, 2021
  • 2019 rate is 0.62% for medical leave and 0.13% for family leave on covered
    wages up to the SS wage base
      • Less than 25 employees in 2018, employee pays all contributions
      • 25 or more employees in 2019, employee pays 100% of family leave
        contributions and up to 40% of the medical leave contributions, i.e. max
        0.248%
  • No guidance yet, but if the employer chooses to contribute any of the
    employee portion, that would be considered taxable income to the employee
    (company is paying employee’s personal tax liability)                        54
Misc State Updates

New York Enrollment for 2020 Voluntary Employer Tax
  •   The New York Department of Taxation and Finance is reminding employers to register
      for the Employer Compensation Expense Program (ECEP) for the 2020 tax year.
  •   The ECEP allows employers to elect to pay an optional tax for employees that earn
      over $40,000 annually in wages and compensation in New York.
  •   ECEP was established in response to increased federal income taxes due to the
      $10,000 limit on state and local income tax (SALT) deductions under the Tax Cuts and
      Jobs Act (TCJA).
  •   Enrollment for ECEP election for the 2020 tax year began on Oct 1, 2019 and ends
      on Dec 1, 2019.
  •   The rate of tax for 2020 will be 3% (1.5% in 2019).
  •   Employers should notify employees that they have made the election for the 2020 tax
      year.
  •   The optional Employer Compensation Expense Tax (ECET) is paid on the same dates
      as when an employer's withholding tax payments are due, however, ECET is filed and
      paid separately from withholding tax.                                              55
Misc State Updates

Oregon Paid Family and Medical Leave
  • Passed Aug 2019
  • Contributions effective 2022; benefits payable in 2023
  • Tax rate will not exceed 1%, split between employers and employees
  • Employers with more than 25 employees will contribute 40% of the
    overall contribution; employees will contribute 60%
  • Up to 12 weeks of paid leave to care for own illness or a sick family
    member, for baby bonding, or deal with issues related to domestic
    violence, sexual assault, stalking or harassment
  • Available for all OR workers who make at least $1,000 in a calendar year

                                                                          56
Misc State Updates

Puerto Rico Special Leave
  • Passed Aug 2019
  • Employees may take up to 15 days of unpaid leave each calendar year
    to address situations related to domestic or gender-based violence, child
    abuse, sexual harassment, in employment, sexual assault or stalking

                                                                           57
Misc State Updates

Rhode Island Deposit Frequency Changes
  • Effective Jan 1, 2020, employers that currently remit tax on a quarter-
    monthly and daily basis will be required instead to remit on a weekly
    basis, i.e. more time to make deposits!

                                                                              58
Misc Local Updates

Dallas, TX Paid Sick Leave
  • Supposed to be effective Aug 1, 2019 but is being challenged in court
     due to violations of the Texas Minimum Wage Act
  • Currently, Dallas has announced the law will not be enforced until Apr 1,
     2020 for employers with 6 or more employees (Aug 1, 2021 for
     employers with 5 or fewer employees)

Pittsburgh, PA Paid Sick Leave
   • In 2015, law requiring most employers within the City to provide paid
      sick leave was signed by the Mayor, but was challenged in court
   • In July 2019, the court ruled in favor of Pittsburgh, however, no
      announcement has yet been made as to the effective date of this
      ordinance
                                                                             59
Misc Local Updates

San Francisco, CA Employer Health Care Spending Rates
  • Beginning in 2020, the health care expenditure rate for San Francisco
     employers with 100 or more employees will be $3.08 per hour
     (currently, $2.93 per hour), and $2.05 per hour for medium-sized
     businesses with 20-99 employees and nonprofits with 50-99 workers
     (currently, $1.95 per hour)
  • Managerial, supervisory, and confidential employees who earn more
     than $104,761 annually (or $50.37 per hour) are exempt in 2020
     (currently, $100,796 annually and $48.46 per hour)

                                                                            60
2019 YEAR END – REMINDERS

Prior to 12/31
• Communicate year end plan and deadlines to stakeholders, e.g. last
  payroll, etc.

• Reconcile, reconcile, reconcile!
   • Avoid 941/W-2 mismatch notices
   • YTD 941 vs W-3/W-2s
   • File amended returns if needed
   • Taxable wage recon

• State and local account numbers
   • Are you using “Applied for” for any filings?
   • Work with third party provider to identify any filing failures
     throughout the year and correct                                   61
2019 YEAR END – REMINDERS

Prior to 12/31
• Review new earnings and deductions codes
   • Is everything being taxed/reported correctly?

• Preview W-2s / error reporting
   • Negative wages
   • Verify SSNs
   • Review high level execs
   • Box 12 codes, Box 10, Box 11, Box 13, etc.
   • Correct limits?

• Specific state and local corrections to taxable income, e.g. moving
  expenses, bicycle reimbursements, etc.
                                                                        62
2019 YEAR END – REMINDERS

Prior to 12/31
• Gather imputed income items for processing before year end
   • Taxable expense reimbursements
   • Non cash fringe benefits
   • Gifts, prizes and awards
   • Relocation
   • Third party sick pay
   • Consider making year end estimated tax deposits

• Ensure ACA reporting plan is in place

• Confirm that all relevant compliance / legislative changes are
  implemented for current and following tax year
                                                                   63
2019 YEAR END – REMINDERS

Prior to 12/31 - communications and employee reporting
   • Review employees with FICA and other exemptions
   • Collect wage repayments before year end if possible
   • Review any work state allocations and update if necessary
   • Communicate new FICA wage base, 401(k) limits, etc.
   • Ask employees to review their paychecks for state withholding,
     etc.
   • Remind employees to use the IRS tax calculator and update their
     W-4 if necessary (for 2018 and 2019)
   • Communicate when W-2s will be available and how they will be
     provided
       • Have employees confirm home address
       • Give option to sign up for electronic W-2 if available
   • Helpdesk support – training / FAQs, etc.                          64
2019 YEAR END – REMINDERS

After 1/1
• Benefits audits, e.g. pre-tax limits, etc.
• Review and correct errors that may cause W-2 file to fail
• Final W-2 review (and issue W-2s by Jan 31)
• Notify EEs claiming exempt on Form W-4 – exemption for 2018
  expires Feb 18, 2020 (Tuesday as Feb 17 is a holiday)
• Work with A/P to issue any 1099s required for deceased employees
  by Jan 31
• Earned income credit notices – CA, IL, LA, MD, NJ, TX and VA
• SUI rate updates (ongoing)

                                                                     65
2019 YEAR END – REMINDERS

After 1/31
• Monitor tax filings to ensure all required returns are filed timely
• Reconcile, reconcile, reconcile!
   • Review 941 for reasonableness when available
   • Annual 941 vs final W-3

• Work with employee helpdesk to review common employee
  questions, provide training, etc.
• Year end debrief

                                                                        66
Happy Holidays from the APA LA Chapter!
      Thank you for your support!

                                          67
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