2022 End of Year News
The end of 2022 is approaching quickly. While this time of year can be stressful, we hope this year-end guide will be a useful tool in readying you for the remainder of 2022 and the upcoming 1099 and W-2 filing season. In this guide, you will find information on important deadlines, tax and payroll updates.
Let’s start with the important items first!
please ask yourself these questions.
- Do we have an updated list of employees addresses and social security numbers to file W2’s?
- Do you need any special year end payrolls run such as bonus checks?
- Have you consulted with an HR specialist for 2023 HR updates?
- Did you send us your next year’s (2023) payroll and unemployment tax rates?
- Does JFS need to file 1099’s on your behalf?
- Do you have W-9’s for all vendors that qualify for 1099’s? If JFS does your bookkeeping, please provide our bookkeeping team with that information.
2022 Year End Newsletter
The Consolidated Appropriations Act of 2016 includes provisions requiring the accelerated Form W-2 and Form 1099 filing due dates. Due to increased incidents of tax fraud and identity theft, the IRS has moved forward with a provision to require employers to report Form W-2 and Form 1099 data to the Social Security Administration and IRS by January 31st.
With this deadline, it is essential for businesses to be prepared as soon as possible in the months leading up to the due date. This means organizations will have to participate in advanced planning to ensure all documentation is submitted accurately and on time. We encourage human resources and payroll teams to begin planning now and submit changes and year-end adjustments early. Please pay close attention to timelines and important cut-off dates in this year-end guide as well as correspondence via email from your JFS Team throughout the remainder of 2022.
If you would like JFS to print and file Forms 1099, please contact our office.
Payrolls must be submitted at least three banking days in advance of the check date to allow sufficient time for payroll funding and employee direct deposits to be received and posted by the check date. Due to strict banking rules, we will not make exceptions to the three-banking day rule.
Consent for Electronic Delivery of Forms W-2, 1095 and 1099.
Our payroll system offers the ability to deliver electronic year-end tax forms to your employees through the Employee Self Service portal. If you would like to have your tax forms delivered to your employees electronically, please contact our office.
Holiday Processing Schedule
Year-End Payrolls and Adjustment Deadlines
A few important points to remember. Please notify us by December 2, 2022, to schedule the following adjustments:
Bonuses and Extra Payrolls – Bonus Payroll Request If you are paying bonuses or have any extra payrolls that need to be included on your 2022 Forms W-2, you must let us know. Things to keep in mind when running bonus payrolls:
- Blocking direct deposit
- Blocking deductions
- Supplemental Tax Rates
- Gross up or Net checks
- Separate payroll runs
Payroll Adjustments – Make sure payroll adjustments (e.g., voided checks, third party sick, etc.) are completed before your last payroll with a 2022 check date is processed. If any manual checks are written after your final payroll of 2022 has been processed, an additional payroll will be required to be processed to commit this data for 2022 tax reporting.
Additional processing fees will apply.
Fringe Benefit Adjustments – Identify and schedule special payroll adjustments such as group-term life, auto allowances and other fringe benefits. Because some of these fringe benefits require tax withholdings, they must be entered at the same time as a “regular” payroll run before the end of the year. Please contact our team as soon as possible with any adjustments that need to be included in 2022 tax year reporting.
Third-Party Sick Pay – Determine if you have third-party sick pay information that must be reported for 2022.
2% Shareholder Health Insurance – Health insurance premiums paid by an S-Corporation for employees who are more than 2% shareholders must be treated as compensation and must be included on the employee Form W-2. Premiums are taxable and subject to withholding taxes but are excluded from the definition of wages for Social Security and Medicare tax purposes.
Please contact us as soon as possible with the total premium amount(s) paid for health insurance for more than 2% shareholders of an S-Corporation for the 2022 tax year. This must be processed with a payroll dated in 2022 to be included on the 2022 Forms W-2. Information received after 12/30/2022 will require Year End Adjustments. Additional fees will apply for year-end adjustment processing.
Employer Portion of Health Insurance – The Affordable Care Act provides that employers must report the cost of the employer-provided health care coverage on Form W-2. Reporting is mandatory for employers who filed 250 or more Forms W-2 in the preceding reporting year. The amount reported should include both the portion paid by the employer and the portion paid by the employee. Please contact us to discuss the setup of your health insurance deductions and the entry of the employer portion of the health insurance premium. It is your responsibility to preview your Forms W-2 and verify the amounts in Box 12 Code DD prior to processing your final payroll of 2022. Please contact us for changes that you may need. Amended Forms W-2 and Quarterly returns will be required if you fail to report changes prior to December 31, 2022.
Employer’s Responsibilities for Forms W-4 – IRS regulations say that employers should remind their employees by December 1st to submit revised Forms W-4 if their marital status should their Form W-4 need to be updated. When an employee provides their employer with a Form W-4 claiming an exemption from withholding, the form is valid for the remainder of that year and until February 15th of the next year. If the employee does not provide a new Form W-4 before it expires on February 15, the employer will withhold tax as if he or she is single with no other adjustments. However, if you have an earlier Form W-4 (not claiming exempt status) for this employee that is valid, withhold as you did before.
Year-End Adjustment Cut-off Date – Payroll adjustments must be processed by 12:00 pm MST on December 30, 2022. Any adjustments made after December 30, 2022, will result in Forms W-2C for employees and amended Quarterly 6 return fees will apply. Adjustments requiring Forms W-2C and Amended Quarterly returns processed after December 30, 2022, will begin to be processed by JFS in February 2022. We encourage you to process adjustments well in advance of December 30, 2022.
Reminder: Process year-end adjustments early. Do not wait until January. There will be additional fees for adjustments processed after December 30, 2022.
Important: Payrolls processed in 2022 which have a pay date in 2022 will show as wages on the 2022 Form W-2. These wages will not be part of your 2022 YTD totals. Please check your schedule and verify all dates PRIOR to submitting payroll. If you need to adjust your check date back to 2022 you MUST notify us in advance and prior to processing the payroll.
Direct Deposit / Pay Cards / Positive Pay Service
For clients using our Direct Deposit, the earliest day that funds (including Christmas bonuses) can be available to your employees is the third business day (48 Banking Hours) after your payroll is submitted.
If your policy is to pay the prior day when a check date is on a holiday, then you will need to process a day earlier. Please review your current payroll processing schedule and check dates for accuracy and call our office immediately if any changes need to be made.
If you need to change your payroll, check dates, you must let us know BEFORE we process your payroll.
IRS Federal Deposit Frequency Notices
In November, the IRS will mail a deposit frequency notice to employers stating what their deposit frequency will be for the upcoming year. If you receive a notice, it is your responsibility and it is important that you send us a copy for our records and so that appropriate updates can be made to your account settings. We do not automatically receive this information from the IRS. Please email to email@example.com
Please email to firstname.lastname@example.org
State Unemployment Rate
You will receive notification of your state unemployment insurance (SUI) tax rate for the upcoming year. We need this rate to calculate your state unemployment insurance tax and SUI expense correctly. When a notice is received, it is your responsibility to send us a copy for our records. If we do not receive a copy of your rate change notice by December 10th, you will be charged a $25 fee per state for us to request the information from your State Department of Labor.
It is important that you provide us with updated information. JFS is not responsible for incorrect tax filing frequency and/or incorrect rates. You may be subject to tax filing penalties and interest.
JFS will electronically file your employer Federal Forms W-2 information with the Social Security Administration and State and Local Governments, regardless of the number of Forms W-2. JFS will also electronically file the required transmittal form.
Social Security Administrative Notice
The Social Security Administration (SSA) has cautioned payroll service providers to be more mindful of duplicate Form W-2 reporting. SSA research found this occasionally occurs when clients transfer from one payroll service provider to another mid-year. To assist in this situation, JFS would like to remind our clients that we will be preparing and filing your Form W-2 reporting for the tax year 2022, unless we receive a request stating otherwise. The Social Security Administration and State agencies do not allow punctuation in employee names (e.g., periods and dashes, etc.).
Important: An employee’s name should match exactly what is shown on the employee’s Social Security card (first name, middle initial, last name). It is especially important to report the exact last name of the employee. Please remove any punctuation in active and terminated employees prior to year-end.
Reminder: The IRS charges a penalty of $50, and most states charge $25 for each return of Form W-2 that has a missing or incorrect Social Security number or federal identification number. We cannot file your federal Forms W-2 electronically if Social Security numbers are invalid or missing. If you are missing Social Security numbers when we process your file electronically, we will bill you $25 per missing address and/or Social Security number.
Forms 1099-MISC & Forms 1099-NEC
Please call our office if you would like JFS to file Forms 1099 on your behalf prior to December 2, 2022. A signed engagement letter must be completed and returned to our office for JFS to file Forms 1099 on behalf of your company. You will need to submit amounts paid to subcontractors for 2022 before December 30th, 2022.
We will prepare 1099 forms for the IRS.
Note: Please review how you use this type of payment; we commonly process non-employee compensation (payments to independent contractors) which must be reported on Form 1099-NEC in box 1. If you need Forms 1099 for other payment types (e.g., rents, royalties), please let us know. Please do not report other types of non-taxed payments as Form 1099 amounts. We have a new request form to process Forms 1099, please call our office and we can send you the form. Please note our system is a payroll system that handles Forms 1099, not a standalone Form 1099 system. If you need Forms 1099 processed after your final payroll of 2022 has been completed, there will be additional fees to reopen your 2022 payroll records in order to produce Forms 1099.
Changes of Legal Entity
There are many payroll reporting requirements to consider if you change your business entity (i.e., sole proprietorship to a corporation, partnership, etc.) during the calendar year; including, but not limited to, accurate payment of your federal and state taxes and filing of your tax returns.
It is important to notify your payroll specialist of your intent to change business entity before you need to process a payroll under a new entity. We must have sufficient time to ensure that we can make the transition a smooth one and to handle the transfer of any associated services. We can handle the transition for a nominal fee and assist with the special agency requirements. Please contact your payroll specialist immediately if you intend to change your business entity at the beginning of January.
List of Employees & Forms W-2
Please confirm that all Social Security numbers and addresses are correct. It is important that we have complete and correct information in the system by December 30, 2022. Employee names must match the name on individual’s Social Security card. We will assess $25 per missing Social Security number and/or address that is corrected after January 3rd, 2022.
2023 Human Resource Updates
Colorado Required Retirement Program
HB 18-1298, Colorado Secure Savings Plan requires all employees to participate in a state-administered Roth IRA for retirement unless they enrolled in the qualified employer-provided plan.
|Starts: 2023 Enrollment||**The new program will not require employers to provide their own plans.|
- Minimum 5% employee contribution
- Roth IRA, which means that contributions are made with after-tax dollars. Employees do not pay taxes when using the funds after retirement (like you are paying yourself).
- Optional, additional deferral rates may vary depending on age, income, and marital status.
- 2022 Roth IRA maximum contribution is $6,000 if you are under age 50 or $7,000 if you’re age 50+.
- Plans will “travel with” people even if they change jobs or leave the state.
Paid Family Medical Leave Insurance (FAMLI)
HB 18-1001 requires every employer in Colorado, regardless of size, to allow its employees to take up to 12 weeks of paid medical leave similar, but not identical, to leave under the FMLA.
Reasons for Leave:
Starts: Contributions begin on January 2023
Employee use begins January 2024
9 or few employees .9% employee contributions
10 or more employees .9% employee contributions
Employees will receive between 37% and 90% of their wages, capped at $1,100 per week.
Employees will receive between 37% and 90% of their wages, capped at $1,100 per week.
Premium and Benefits Calculator
Self-employed, local government employees or an employer with a private plan may be exempt from participation.
Employee Termination Reporting
SB 22-234 Code of CO Regulations requires employers to provide a notice to employees upon separation that informs them of eligibility for unemployment insurance.
SB 22-161 is the Wage Theft Bill, regulating deductions from terminated employees’ final wages for company assets not returned.
If an employer has a signed agreement with employees to deduct unreturned company property from a final paycheck, then they must also provide certain information to the terminated employee, giving the opportunity for the property to be returned and the withheld wages to be paid.
Void Non-Compete Agreements
HB 22-1216, the Uniform Restrictive Employment Agreement Act regulates noncompete and nondisclosure agreements between employees and employers.
As of March 1st, 2022, this bill nullifies preexisting Non-Complete and Non-Disclosure agreements as a term of employment and knowing using non-completes that violate Colorado law creates criminal liability. Consult legal counsel for direction.
Daylight Savings Time Year-Round Pending Federal Approval
HB 22-1297 makes daylight savings time the year-round standard in Colorado, but only if federally approved.
The Senate passed The Sunshine Protection Act of 2022 will allowing Colorado and several other states to remain on Daylight Savings/Standard Time as of November of 2023, and “fall back” an hour. This bill still needs congressional approval.