revised federal forms 940, 941 and w-9 and interactions ...media.straffordpub.com › products ›...

Revised Federal Forms 940, 941 and W-9 and Interactions With SUTA Forms Unemployment and Employment Tax Update and Compliance Lessons

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

For this program, attendees must listen to the audio over the telephone. Please refer to the instructions emailed to the registrant for the dial-in information. Attendees can still view the presentation slides online. If you have any questions, please contact Customer Service at1-800-926-7926 ext. 10.

THURSDAY, MAY 31, 2012

Presenting a live 110-minute teleconference with interactive Q&A

Steven J. Weil, PhD, EA, President, RMS Accounting, Fort Lauderdale, Fla.

Jay Grokowsky, Manager, Bauman Associates, Eau Claire, Wis.

Conference Materials

If you have not printed the conference materials for this program, please complete the following steps:

• Click on the + sign next to “Conference Materials” in the middle of the left-hand column on your screen.

• Click on the tab labeled “Handouts” that appears, and there you will see a PDF of the slides for today's program.

• Double click on the PDF and a separate page will open.

• Print the slides by clicking on the printer icon.

Continuing Education Credits

Attendees must listen to the audio over the telephone. Attendees can still view the presentation slides online but there is no online audio for this program.

Attendees must stay on the line for at least 100 minutes in order to qualify for a full 2 credits of CPE. Attendance is monitored as required by NASBA.

Please refer to the instructions emailed to the registrant for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

FOR LIVE EVENT ONLY

Tips for Optimal Quality

Sound Quality

For this program, you must listen via the telephone by dialing 1-866-873-1442 and entering your PIN when prompted. There will be no sound over the web connection.

If you dialed in and have any difficulties during the call, press *0 for assistance. You may also send us a chat or e-mail [email protected] immediately so we can address the problem.

Viewing Quality To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again.

Revised Federal Forms 940, 941 and W-9 and Interactions With SUTA Forms Seminar

Steven J. Weil, PhD, EA, RMS Accounting [email protected]

May 31, 2012

Jay Grokowsky, Bauman Associates [email protected]

mailto:[email protected]�

Today’s Program

Federal Form 940 Issues [Jay Grokowsky]

SUTA Issues [Jay Grokowsky]

Federal Form 941 Issues [Steven Weil]

W-9 And I-9 Issues [Steven Weil]

Slide 7 – Slide 22




FEDERAL FORM 940 ISSUES

Jay Grokowsky, Bauman Associates

8 © Bauman Associates, Ltd. 2012

A little history Early days (1938) More recent (1984) Current form

Federal Form 940


General issues and comments News: www.irs.gov/form940 2012 legislation/proposals

Temporary surtax went away in mid-2011. 2013 budget proposal – bring it back/make

permanent? Suspend interest payments and credit reduction

2012/13 Higher wage base/reduced tax (2015)

$15,000, inflation index Reduce net tax to 0.37%

Federal Form 940: General

http://www.irs.gov/form940�


Who is subject to FUTA? - Pub 15, page 28 General (non-farm/household worker): $1,500 wages or

employees for 20 weeks (current/prior year) Household ($1,000 any calendar quarter – current/prior

year) Farm workers ($20,000 wages; 10 or more workers

during 20 weeks current/prior year) States: May be different (lower thresholds)

What is subject to FUTA? Pubs 15 and 15A are your friends. Charts starting on page 30 (Pub 15)

Federal Form 940: General (Cont.)


Software setup: New FUTA/SUTA rates

Software in general ALWAYS review the output Assume the software is the preparer, and you are the

reviewer

Federal Form 940: General (Cont.)


Part 1 Line 1a/Line 1b Line 2: Credit reduction (Schedule A)

Form 940: Form Highlights


Part 2: FUTA tax (net) Line 3: Total compensation

Very broad - Includes Fringes Non-cash compensation Wages you paid Wages you didn’t pay (predecessor wages)

Not the same as total wages on Form 941 (Box 1, W-2 wages)

Form 940: Form Highlights (Cont.)



Line 4: Exclusions Specific boxes “Other” (Pub 15 charts)

Lines 7b & 7d: (2011) pre-7/1, 0.8%; post-6/30, 0.6%

Actually, these are “credit reduced amounts.” True rates were 6.2% and 6%, respectively.



Part 3: Adjustments (“tax increases”) Line 9: If all FUTA wages excluded from SUTA

5.4% tax increase Line 10: Some FUTA wages excluded in a state or some/all

SUTA taxes paid late Example: Officer’s wages excluded for state purposes Worksheet time (calculate “tax increase”)!


Line 10: Worksheet – page 8 instructions On time: What it means

On time vs. late vs. not at all SUTA wages vs. FUTA (e.g., officer exclusion)

Wisconsin: Benefit if you have 2 other employees State rate vs. 5.4% credit rate



Line 11: Multi-state/credit reduction states Schedule A

Multiple states and/or credit reduction state Check box for a state, even if 0% Credit reduction states: FUTA taxable wages, not

total wages in state OR wages subject to SUTA tax New list of credit reduction states for 2012 – DOL

Rates assume each state has a loan balance (loan from federal unemployment account) as of 11/10/2012. 2013 likely, too?



Sidebar: What is this? Loans from federal unemployment fund Higher FUTA tax

Credit Reduction


Confusion: Poor definition

Tax reduction? Credit reduction = Tax increase

Form 940: Poor design (1938 form better?) Start with gross tax Deduct credits

Form 940: Credit Reduction Confusion


Part 4: Deposits/what’s left to pay Line 13 tax deposits

Payment of taxes due to “credit reduction” Not due until 4th Q payment is due

November deadline – final determination of “credit reduction”

Pay with 940 (<$500)/deposit in January (>$500)

Form 940: Deposits


Part 5 Line 16 liability by quarter – only if > $500

“Credit reduction” is a 4th Q liability

Completed 940 and Schedule A



Successor employer Reporting Line 5: Include payments the predecessor made in

calculating the $7000 limits Example:

Predecessor paid $4,000. Successor paid $5,000.

Total $9,000 – put on line 3 $2,000 paid in excess of wage base $2,000 excess + $4,000 paid by predecessor =

$6,000 Line 5 Net to be taxed to successor = $3,000 ($9,000 – 6,000)

Form 940: Special Items

SUTA ISSUES

Jay Grokowsky, Bauman Associates


Wages subject to SUTA Higher wage base than FUTA Many states: Same definition of wages (FUTA credit)

Wisconsin: Federal definition of wages for UI tax purposes, with two exceptions: Agricultural entity coverage; only cash wages are

considered. Once covered, the employer must include all

cash and non-cash payments for agricultural labor as wages.

The value of employee achievement awards (compensation for services) is included as wages.

State Unemployment Taxes (SUTA) Issues


Coverage rules may be different Example: Wisconsin – not-for-profit with more than 4

employees in 20 or more weeks

Check your state(s) Web site listings for SUTA agencies at back of Form 940

instructions (page 13) Check your software!

State Unemployment Taxes (SUTA) Issues (Cont.)


E-filing state reports Some states require online/e-file (MN) Wisconsin

Relatively painless; can amend prior returns online Once hit 25 employees or file 1 report online, stuck

with online filing $20 fine for paper

E-pay (Wisconsin wants $$ by end of month, not mailed by end of month)



Business sale/purchase New owner can take over remaining account balance.

Generally asset purchases Also applies to a merger Application: Find out if an unemployment account

balance is positive

Officer’s exclusion: Wisconsin and other states? Effect on FUTA



Wisconsin: Deferral of Q1 tax payment 1st Q liability of $1000 or more Defer payment of up to 60% into future quarters, interest-

free

State SUTA: Look for state-specific seminars



Special assessment for interest Due to federal unemployment loans

NOT a tax Interest owed to the federal government as of Sept. 30

Example: Wisconsin: Sends out notices in July/August to

each employer Based on 2011 taxable payroll and a rate the state

calculates (0.18% for 2012 payment) Taxable wages need to exceed $25,000 for 2011.



Examples (Cont.) Florida

Payment due by 6/30 .092% rate, taxable wages of at least $7,000 for FYE

6/30/2011 Arizona

0.5% of $7,000 of taxable wages Paid with quarterly report

Connecticut 1.7% per $1,000 of payroll; separate letter sent to

employer


FORM 941 ISSUES Steven J. Weil, PhD, EA, RMS Accounting

32

What's New For 2012 On Form 941 Minor form changes

Social Security wage max $110,100

Employee rate 4.2%* Employer rate 6.2%*

Medicare has no wage max*

Employee rate 1.45%* Employer rate 1.45%*

* Unchanged from 2011

© Steven J Weil PhD, EA, LCAM, RMS Accounting 5/21/2012 @ 4:55 PM

33 © Steven J Weil PhD, EA, LCAM, RMS Accounting 5/21/2012 @ 4:55 PM

34

941X refunds are now noted to be included here, meaning you no longer have to guess.


36

Old Line 16 was removed from 2011, and lines were renumbered.

Hint: If you handle more than one company, use the same PIN for all.


37

Important Things To Remember About Form 941

Paid preparers must complete the paid preparer’s block and sign Form 941.

Federal tax deposits must be made by electronic funds EFTPS or same-day wire.

Balance due returns may be filed with EFW (electronic funds withdrawal). Required tax deposits may NOT be made by EFW.

Returns must be filed for all quarters except for seasonal employers that check the box on Line 18.


38

Important Things To Remember About Form 941 (Cont.)

Address changes should be reported to the IRS by filing Form 8822-B, NOT by just changing your address on Form 941.

Taxable fringe benefits need to be included in taxable wages. Personal use of auto Gift cards Auto allowance Excess life insurance Non-accountable plan expenditures Health insurance 2% S - Corporate shareholders


39

Closing Or Ending Payroll When a business closes or permanently stops paying wages to

employees, it must file a final return notifying the IRS. This is done by marking the box on Line 17 and entering the date final wages were paid. You must also attach a statement showing the name of the person keeping the payroll records and the address where they will be kept.

Final 941 filing may trigger a required early W2 filing requirement.


40

http://www.irs.gov/pub/irs-pdf/p3909.pdf © Steven J Weil PhD, EA, LCAM,

RMS Accounting 5/21/2012 @ 4:55 PM

http://www.irs.gov/pub/irs-pdf/p3909.pdf�

41

E-Filing Points Filer type

Batch filer: Filing multiple companies Company: Individual registration PIN

Issues Transmitting last minute, system down Filing too soon (941X to fix errors) Lost ID or password


42

Year-End Notes Verify employee information: Names, SS#s and addresses

Verify that taxable fringe benefits are properly included

Verify that tax-favored benefits are properly classified

Reconcile 941s, SUTA & FUTA with W2s & W3 totals


43

Reconcile 941s, W2s, W3, SUTA And FUTA CLIENT #: XXXXXXXCLIENT NAME SMALL BUSINESS SUTA RATE 0.0103

W-2 RECONCILIATION REPORT - 2011TOTAL WAGES FED W/H SS WAGES SS TAX MED WAGES MED TAX

QUARTER 1 129,133.02 27,834.16 143,039.57 14,876.12 143,039.57 4,148.15QUARTER 2 130,394.09 29,046.02 120,437.68 12,525.52 144,477.68 4,189.85QUARTER 3 122,200.72 25,745.24 79,921.35 8,311.82 135,741.35 3,936.50QUARTER 4 201,962.27 73,193.17 124,383.67 12,935.90 193,295.70 5,605.58TOTALS 583,690.10 155,818.59 467,782.27 48,649.36 616,554.30 17,880.08W-2 TOTALS 583,690.10 155,818.59 467,782.27 19,646.86 616,554.30 8,940.04DIFFERENCE 0.00 0.00 0.00 29,002.50 0.00 8,940.04

SUTA/940 RECONCILIATION940/SUTA WAGES 940 TAX SUTA TAX

QUARTER 1 64,257.50 514.06 661.85 646,547.70QUARTER 2 5,957.50 47.66 61.36 Less Caf (7,419.00) QUARTER 3 4,372.50 26.24 45.04 Less 401K (55,438.60) QUARTER 4 9,960.01 59.76 102.59Taxable Wages 583,690.10TOTALS 84,547.51 647.72 870.84 Difference 0.00

NOTES & ADJUSTMENT

S

ACTUAL 940

DEPOSITS616,554.30 Med Wages 514.06 (55,438.60) Less 401K 47.66 22,574.40 Plus 2% Health 26.23

583,690.10 FIT Wages 587.95 payments to date647.72 total due

583,690.10 FIT Wages 59.77 amount to remit- DIFFERENCE

ROSS PAY PER CSA REPOR


44

W-2


45

W-3


W-9 AND I-9 ISSUES

Steven J. Weil, PhD, EA, RMS Accounting

47

DANGER

DO NOT FILL THIS FORM OUT FOR YOUR EMPLOYEES

REFER THEM TO THEIR TAX ADVISIOR

DANGER


48

Not To Be Overlooked Handling those mismatch name & SS#s before year-end.

Make sure you have the correct legal name for every employee.

A good friend once told me, no one is born Bubba …

You have to earn it!


50

Retaining Form I-9

http://www.uscis.gov/portal/site/uscis


http://www.uscis.gov/portal/site/uscis�

51

http://www.msba.org/departments/commpubl/publications/bar_bult/2009/august/obamaadmin.asp


http://www.msba.org/departments/commpubl/publications/bar_bult/2009/august/obamaadmin.asp�

52

ICE Audits

ICE audits are so prevalent among certain targeted U.S. industries that in January, ICE Director John Morton announced the establishment of a wholly dedicated auditing unit to support ICE's work site enforcement strategy by helping the ICE field offices expedite the audits they perform. The Employment Compliance Inspection Center (ECIC), established in Crystal City, Va., flanks ICE headquarters and investigates businesses to ensure compliance with employment verification procedures and U.S. immigration laws.


53

IRS Revises Form 941-X And Instructions The IRS has posted an April 2012 version of Form 941-X (adjusted employer’s quarterly federal tax return or claim for refund) and the Form 941-X instructions, on its Web site. Form 941-X is filed to correct an error on a previously filed Form 941. Form 941-X is a stand-alone tax return. It does not get attached to Form 941. The form and instructions were last revised in January 2011. The new version of the form takes into account the extension of the “payroll tax cut” through Dec. 31, 2012. The “payroll tax cut” temporarily lowers the Social Security withholding tax rate on wages earned by employees from 6.2% to 4.2%, from Jan. 1, 2011 to Dec. 31, 2012. Employers report corrections to taxable Social Security wages and tips on Form 941-X, Part 3, lines 8-9. The IRS notes in an asterisk below these lines that if employers are correcting either a 2011 or 2012 Form 941, they should be using a 10.4% tax rate (i.e., 4.2% employee tax rate plus 6.2% employer tax rate) in the tax calculation, rather than 12.4% (i.e., 6.2% employee tax rate plus 6.2% employer tax rate). An asterisk below Form 941-X, Part 3, Line 10 advises employers correcting taxable Medicare wages to use a 1.45% tax rate, rather than 2.9%, if they are only correcting the employer portion of Medicare wages and tips.

54

IRS Not Processing Some Credit Reduction Unemployment Tax Returns Correctly

On the May 3 IRS payroll industry conference call, two payroll processing companies said that the IRS is making a few calculation errors in the processing of 2011 Form 940 (employer's annual federal unemployment (FUTA) tax return), for clients who have payroll in “credit reduction states.”

Background: Under Title XII of the Social Security Act, states with financial difficulties can borrow funds from the federal government to pay unemployment benefits. If a state defaults on its repayment of the loan, the amount of state unemployment tax credits that employers in the state may claim on Form 940 is reduced (i.e., the state is a “credit reduction” state). Employers in credit reduction states pay federal unemployment tax (FUTA) at a rate 0.3 percentage points higher than other employers, beginning with the second consecutive Jan. 1 in which the loan isn’t repaid. They report the credit reduction on Form 940, Schedule A (multi-state employer and credit reduction information).

The calculation errors: One of the callers said that the error was limited to employers with payroll in Minnesota. The returns had been filed on paper. Affected clients were receiving credit notices from the IRS.

The other caller said that calculation errors were also being made on returns filed by employers with payroll in other states than Minnesota. However, unlike the first caller, her clients were receiving balance due notices from the IRS. The IRS was doubling the amount of the credit reduction. The affected returns had apparently been filed electronically.

The IRS is looking into the matter.

55

Employee Vs. Independent Contractor

revised federal forms 940, 941 and w-9 and interactions ...media.straffordpub.com › products ›...

Documents