Any and all adjustments to your 2021 payroll must be completed by your final payroll of the year. This allows us to process your Forms W-2 following your final payroll. If we receive an adjustment after your final payroll, but prior to December 31, 2021, you may be assessed additional fees
. If we receive changes to 2021 AFTER December 31, 2021, you may be assessed fees, and additionally will be required to sign a liability agreement, stating that you understand the implications and the potential tax penalties you could receive.
**IF YOU ANTICIPATE NEEDING TO MAKE ADJUSTMENTS AFTER DECEMBER 31, PLEASE COMPLETE OUR 2021 PAYROLL ADJUSTMENT FORM AND SEND TO US IMMEDIATELY!**
Generally, wages include all non-cash payments, fringe benefits, tips and other compensation (whether or not withholding was deducted at the time of payment). Below you will find a list of common payments that must be included in W-2 wages:
- Manual checks: If you paid employees net pay outside a normal payroll run that has not been forwarded to our office for inclusion with a regular payroll, be sure to forward the information to our office before your final payroll for 2021.
- Non-cash payments: Employers that provide taxable non-cash fringe benefits to their employees must include the cash value of such benefits as wages. One of the most common fringes is personal use of a company vehicle. It is fully taxable. Please report this to FlexChecks no later than your last payroll of the year. Contact your accountant for the calculation, or click HERE to view the IRS’s Employer’s Tax Guide to Fringe Benefits.
- Group-term life insurance in excess of $50,000.
- Non-qualified moving expense reimbursement.
- Third-party sick pay: If you have not reported ANY 3rd party Sick Pay benefits to FlexChecks for 2021, you should contact your provider to confirm they will be handling all filings including processing of W-2 and any federal and state returns. If you have processed 3rd Party Sick Pay benefits with FlexChecks for 2021, any portion still to be included as income must be submitted no later than your last payroll of the year. We suggest you allow FlexChecks to include the information on W-2’s and to notify your provider that it will be handled in that manner. If you choose for your provider to complete the W-2 reporting, you will be responsible for all necessary filings.
- Health Savings Account (HSA) contributions: All amounts contributed to an HSA need to be reported. This includes amounts deducted from the employee as well as employer contributions. If you made contributions for employees and have not included them as a benefit through payroll, please contact us so we can add the amounts paid.
- Non-accountable business expenses, reimbursements, or allowances: Payments made under reimbursement arrangements that use per diem or mileage allowances do not have to be reported on Form W-2 UNLESS they compensate more than the IRS specified rates. The excess amount paid is fully taxable and must be reported to FlexChecks by your final payroll of 2021. If you have any questions relating to business expenses, please contact FlexChecks directly.
- Deferred Compensation Plans: In general, amounts deferred to Section 457 plans and non-qualified deferred compensation plans with a substantial risk of forfeiture become taxable for FICA and FUTA when the employee becomes vested (the employee’s substantial risk of forfeiture lapses). This is not necessarily in the same year that the wages were earned. When an employee becomes vested, please provide your Client CARE Team Leader with the following information:
- The date the employee became vested.
- The amount of employee and employer current year’s contributions before the vested date.
- The total amount of employee’s and employer’s current year contributions for prior years.
- The amount of employee FICA you collected on the employee and employer contributions.
- When a vested employee receives a distribution, please report the following to your Client CARE Team Leader:
- The distribution amount.
- Whether this is a partial or full distribution.
- The amount of federal tax withheld on the distribution.
- If the distribution is attributed to employee or employer contributions.
- S-Corp Health Insurance: Health and accident insurance premiums paid on behalf of a greater than 2% S Corporation shareholder must be reported on Form W-2, and are subject to federal, state, and local income taxes. They are not subject to FICA or FUTA taxes. The shareholder is eligible for a deduction for premiums paid on their individual income tax return if certain requirements are met.
If you have payments that are not covered above (adoption benefits, stock options, deferred compensation, education assistance, achievement awards, etc.) and need more information on how these payments should be reported, please contact our office directly. Any and all of these adjustments must be included in your final payroll of 2021.