October 1, 2020Year-End Payroll Planning
A Year-End COVID Watch List
While this list is far from comprehensive, hopefully it will highlight some of the different considerations COVID legislation has brought to year-end as well as some sound suggestions. Wise payroll professionals are working with clients to save them money, help them claim back money in the form of FFCRA and CARES credits, remain compliant on limits, and perform the reconciliation necessary to maintain accurate accounting.
Refer to Your Year-End COVID Watch List this 4th Quarter
1. If you haven’t already, identify and assemble your year-end task force. These should be the team members from payroll, accounts payable, benefits and human resources who could be pulled into the process or asked to provide critical information.
2. Become familiar with new W-2 requirements – our Wise Tax Compliance Manager, Lynn Lauricella, CPP, says “this year the new requirements surround the COVID-19 legislation. They have released detailed guidance on exactly how and what needs to be displayed on the 2020 W-2.” When in doubt, visit the IRS website https://www.irs.gov/
3. Employer tax deferral of Social Security needs to be reconciled. As Lynn points out, “the IRS will be sending bills as to how much you need to pay back and you need to know that those bills are accurate.”
4. Reconcile any payments; family leave, sick leave, CARES-eligible amounts paid to employees – some of this information is even required on the 2020 W-2. All COVID-related credits claimed have to be checked against the limits and reconciled – if you have applied for credits, you’ll need to know that you are receiving the correct amount or the IRS may come knocking.
5. Validate your W-2’s – make sure the information matches your reports and that everything which should be displayed on the W-2 is there. Extra care is required this year because of the need to include COVID details as outlined by the IRS.
6. Several states have created COVID leave policies that give larger companies (500+ employees) options similar to those in the smaller-companies-only FFCRA Act.
7. There is an outstanding question about how to display the payroll tax deferral ‘holiday’ on the W-2’s. In this instance, companies affected will have to wait for guidance from the IRS.
Wise Consultants Can Help You Cut Through the Complexity
Though all the typical year-end tasks still apply in 2020, the COVID legislation adds a layer of complexity that can’t be ignored. Accuracy and compliance are essential to avoiding penalties. If you could use a hand with any year-end work, please reach out to our certified payroll professionals. Reach out to start a conversation at HCMHelp@wiseconsulting.com, or call 800-654-4550.
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