2023 Year End Reminders
The end of the year is a busy time for everyone, but it's especially important for businesses to stay on top of their payroll. PayWorks has compiled this comprehensive checklist of payroll tasks that need to be completed by the beginning of the new year, as well as some helpful reminders.
Last 2023 Processing Date
The last day to run payroll or adjustments affecting 2023 employment tax returns and W-2 forms will be Wednesday, December 27, 2023 at 3:00 p.m. EST.
Update Employee Addresses
It is important to maintain accurate employee addresses for W-2 purposes. Incorrect addresses may cause W-2 forms to be delayed or returned, and charges can be incurred for reprints. If the payroll system recognizes any missing information you will receive a report attached to the payroll package. Also please remind your employees to update their addresses if necessary, including any apartment number if applicable. Your Account Representative can run a listing of all your active and terminated employees if you would like to verify the information that we have on file.
Bonus Checks
Bonus checks can be processed a number of ways based on your preferences.
With the regular payroll or through a separate payroll processing
Bonus checks can be run with a normal payroll check date or a special payroll processing that has a different check date. Either way, the amount can show as “Bonus” or a description of your choosing on the employee pay statements. If processed with a regularly scheduled payroll they can be added to the regular check or issued as a separate check. If using direct deposit you have the option of processing live checks on an exception basis.
For a specific net amount
If you’d like a specific net amount we can do a “gross-up” calculation for you. Should you wish to use this method, please submit the figures to us at least one day prior to the processing day. Bonuses for specific net amounts must be processed as a separate check.
Taxation method
The IRS considers bonus payments to be supplemental wages and defines two taxation options for federal income tax. They can be taxed using the normal W-4 calculations or at a flat 22%. Payments exceeding $1 million are taxed at a flat 37%. Each state defines their own methods for supplemental pay such as bonuses. Your Account Representative will review those options with you.
Deductions
Determine which, if any, deductions should be taken on the bonus payments. Items to consider would be retirement plan contributions, insurance deductions, loans, garnishments, etc.
Funding for High-Dollar Payments
If using direct deposit and the payroll run exceeds $500,000 and/or an individual entry exceeds $100,000 (net) the direct deposit must be funded by a wire transfer.
Form 1099-NEC
If PayWorks has paid your independent contractors during the course of the year we will ask you to confirm if you wish to observe the mandated filing threshold amounts or have us issue a 1099-NEC to all independent contractors. The forms will be billed at the same fee as W-2 forms. The due date for filing the 1099-NEC is January 31st. For those clients who have paid their independent contractors on their own, and would like PayWorks to create and file either 1099-NEC or 1099-MISC (rents, royalties, etc.), please contact your Account Representative regarding data submission and pricing.
Third Party Sick/Disability Pay
If any current or former employees collected disability payments from the state insurance fund or a private insurance carrier those payments need to be reported for employment tax purposes on your payroll account. The taxable portion of the payments must be included on the employer’s Form 941 calculations as well as state tax returns as applicable.
Disability payers will typically notify employers of the payee and payment amount for payments made during the course of the year. If you haven’t done so, please forward these notifications to PayWorks immediately. Each disability payer is also required to provide a recap to employers of all payments made in the 2023 calendar year by January 15, 2024.
If any of your employees collected disability in 2023, and you have not forwarded the periodic payments amounts to PayWorks, please notify us so we can hold the filing of the quarterly reports and printing of the W-2 forms. If we are not notified and the quarter has been closed, any additional entries will result in a minimum reprocessing fee of $300 plus the reprinting of all W-2 forms at $7.00 per form.
Non-Cash Taxable Fringe Benefits
If you provided non-cash taxable fringe benefits to employees during the year, the value of those benefits must be reported, and in most cases taxed, through the payroll. If you are unsure if non-cash benefits are reportable, please check with us and your accountant. Examples of these types of benefits include, but are not limited to:
Personal use of company vehicle
Group term life or other employer-provided insurance with W-2 reporting implications
S-Corp 2% shareholder health insurance premiums
Paid Time Off Accruals
Please review your paid time off policies regarding carry-over and/or pay out options. These options are normally defined by either state-mandated plan requirements or your company policy. If you requested accrual tracking as part of your payroll services you can refer to the Accrual Report in your latest payroll report package. Please contact your Account Rep to discuss your options.
W-2 Delivery
We anticipate that employee W-2 forms will be ready for shipping by mid-January. We offer three delivery options to choose from.
With your normal payroll delivery.
Via Priority Mail to your office as soon as they are printed and can be packaged.
Mailed directly to the recipients.
Please let your Account Representative know your choice so we can expedite delivery when the forms are ready.
Holiday Processing Schedules
PayWorks will be closed on Monday, December 25th and Monday, January 1, 2024, which are also bank holidays. Please keep in mind that if you are using our tax filing and/or direct deposit services we must run the payroll two business/banking days prior to check date in order to make the appropriate funds transfers on schedule. An exception can be made for direct deposit but there is a fee of $35.00 charged by the transfer agent for a 24-hour window.
Please keep in mind that the check date of the payroll determines in which year it is reported for payroll tax purposes. If you need a payroll to appear in the 2023 tax reports/W-2s it must process with a check date no later than December 29th. Please schedule it with your Account Representative accordingly.
Priority Mail Delivery
Due to the volume of mail handled during the holidays, as well as the possibility of inclement weather, your payroll reports may be delayed if you use this service. We cannot guarantee delivery day and time once the Post Office receives the package. Your Account Representative can forward your tracking number at any time if you like. Please consider either on-site printing (we supply the check stock and envelopes), or emailed pay statements as alternatives to hard copy delivery.
Contact your Account Representative today to schedule a call to discuss your end-of-year payroll checklist. The earlier you start, the smoother the transition will be.