As 2021 comes to an end, we recommend businesses start preparing for year-end payroll forms sooner rather than later. Below are a few suggestions on what to do to get ready for year-end payroll forms:
- Review employee’s addresses and social security numbers so they are accurate on W-2s.
- Review Health Savings Account (HSA) and retirement account amounts withheld to confirm limits were not exceeded.
- Include in payroll fringe benefits such as personal use of a company vehicle and insurance premiums paid by the company. The treatment of these items can change based on who they are for (employee or shareholder) and the entity type.
- Include in payroll Third Party Sick Pay and Disability Pay.
- Include in payroll any wages paid to employees unable to work due to certain COVID related circumstances.
Not all additional payroll items above are taxed the same and may only be subject to certain payroll taxes. They also may need to be reported differently on W-2s.
Now is also the time to prepare for holiday bonuses and gifts as they need to be reported through payroll before the end of the year. Bonuses are always taxable, as are gifts of cash, gift cards, gift certificates, and most other non-monetary gifts. Some small gifts, like a turkey for Thanksgiving, can be excluded from wages.
There are a lot of variables when dealing with year-end payroll so please reach out to us if you have any specific questions!