2022 End of Year News 

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

Important: Deadline for Employers Filing Forms W-2 and 1099

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.

 
Standard Deadlines
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 AdjustmentsAdditional 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 nlopas@jfsconsutingco.com or fax to 970-530-4453. State Deposit and EFT Requirement Notices State Deposit Frequency Notice or State Notification of EFT Requirements. If you receive a notice, it is your responsibility to send us a copy for our records. We do not automatically receive this information from the State.
Please email to nlopas@jfsconsutingco.com or fax to 970-530-4453.

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.

Forms W-2
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.

Qualifying Employees:

  • 18 or older
  • Employed for at least 180 days, earning taxable wages in Colorado
  • Not currently enrolled in a qualified employer-provided retirement plan

Qualifying Employers:

  • Has at least five employees
  • Does not already offer a qualified retirement program
  • Has been in business for at least 2 years
Starts: 2023 Enrollment**The new program will not require employers to provide their own plans.

The Money:

  • 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

The Money:
                    9 or few employees    .9% employee contributions
               10 or more employees    .9% employee contributions
                                           .9% employer 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.

Employee Agreement
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.

  1. Amount of money or the value of property
  1. The date when the property was provided to the employee
  1. The replacement value of the property
  1. The date the employer expected the property to be returned

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.

 

Please note JFS will be sending out new engagement letters to all clients that have not been updated for the following calendar year.

 
Happy Stress-Free Year End From JFS!

Colorado Paid Family and Medical Leave Insurance Program

What is FAMLI?

The FAMLI program will ensure all Colorado workers have access to paid leave in order to take care of themselves or their family during life circumstances that pull them away from their jobs — like growing their family or taking care of a loved one with a serious health condition. Eligible employees will receive up to twelve weeks of leave. FAMLI will start providing benefits to employees beginning January 1, 2024.

What are Your Employer Responsibilities?

  • Employers and their employees are both responsible for funding the program and may split the cost 50/50. The premiums are set to 0.9% of the employee’s wage, with .45% paid by the employer and .45% paid by the employee.
  • Employers with nine or fewer employees do not have to contribute to the program, but do need to remit their employees’ share (.45%) of premium payments each quarter.
  • Employers may also elect to pay the full amount if they choose to offer this as an added perk for their employees.
  • Employers with nine or fewer employees do not have to contribute to the program, but do need to remit their employees’ share (.45%) of premium payments on behalf each quarter. This can be done through a simple payroll deduction.
  • Employers who offer their own paid leave program may apply for an exemption.
  •  Reach out to your HR Specialist – Beginning in Fall 2022, you will want to begin incorporating language into employee manuals regarding premium deductions. Beginning in Fall 2023, you will want to adopt clear guidance and communications to employees around FAMLI benefits.

IRS Backlog Continues




National Taxpayer Advocate has released the statutorily mandated midyear report to Congress. The report expresses concern about continuing delays in the processing of paper-filed tax returns and the consequent impact on taxpayer refunds. At the end of May, the agency had a backlog of 21.3 million unprocessed paper tax returns, an increase of 1.3 million over the same time last year. 

Backlog of Unprocessed Paper Tax Returns
More than 90% of individual income taxpayers e-file their returns, yet last year, about 17 million taxpayers filed their returns on paper. Some choose to file on paper. Some have no choice because they encounter e-filing barriers, such as when they are required to file a tax form or schedule the IRS cannot accept electronically. Before the pandemic, the IRS typically delivered refunds to paper-filers within four to six weeks. Over the past year, refund delays on paper-filed returns have generally exceeded six months, with delays of 10 months or more common for many taxpayers.

The report says the IRS has failed to make progress in eliminating its paper backlog because “its pace of processing paper tax returns has not kept up with new receipts.” During the month of May, the IRS processed an average of about 205,000 individual income tax returns (Forms 1040) per week. Its Form 1040 backlog at the end of May stood at 8.2 million, with millions more paper tax returns not yet classified or expected to arrive before the extended filing deadline of October 15.

Forms 1040 are just one component of the paper tax returns processing backlog. Millions of business tax returns and amended tax returns (both individual and business) are also filed on paper. The overall backlog has increased by 7% over the past year. 
The report credits the IRS with taking recent steps to address the backlog but notes “missed opportunities” to have acted earlier. “The IRS’s paper processing delays were evident more than a year ago, and the IRS could have addressed them more aggressively at that time,” Collins wrote. “Had the IRS taken steps a year ago to reassign current employees to processing functions, it could have reduced the inventory backlog carried into this filing season and accelerated the payment of refunds to millions of taxpayers. Had the IRS implemented 2-D barcoding, optical character recognition or similar technology in time for the 2022 filing season, it could have reduced the need for employees to engage in the highly manual task of transcribing paper tax returns. Had the IRS quickly used some of the $1.5 billion of additional funds provided by the American Rescue Plan Act of 2021 (ARPA), which was enacted 15 months ago, to hire and train additional employees, it could have worked through the backlog, answered more taxpayer telephone calls and otherwise improved taxpayer service.

“At the end of May 2021, the IRS had an additional 15.8 million returns that had been suspended during processing and required manual review by IRS employees. The suspended returns consisted largely of e-filed returns on which taxpayers claimed Recovery Rebate Credit amounts that differed from the allowable amounts shown on IRS records. As of May 2022, the IRS had reduced the number of suspended returns to 5.4 million. The report credits the IRS with developing procedures to reduce delays among suspended returns, in part by automating the review process. However, e-filed returns suspended during processing did not generally result in extended refund delays. By contrast, unprocessed paper-filed tax returns have resulted in refund delays of six to 10 months or longer.

New Business Mileage Rate


New Business Mileage Rate effective July 1st, 2022
From 58.5 cents a mile to
62.5 cents a mile

On June 9, 2022, the Internal Revenue Service issued Announcement 2022-13, increasing the standard mileage rate for the final six months of 2022 from 58.5 cents per mile to 62.5 cents per mile.  The new rate will be effective for traveling beginning on July 1, 2022, through December 31, 2022.  The old rate of 58.5 cents per mile will remain in
effective through June 30, 2022.
In the IRS’ press release, IRS Commissioner Chuck Rettig noted: The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices. We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.
”The standard mileage rate is a national average rate, which takes into account a variety of factors including fuel costs, depreciation, insurance and other fixed and variable costs.
The business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.  Employers continue to have the option to use other methods that calculate the actual costs of using their vehicle rather than using the standard mileage rates.

New Colorado Retail Delivery Fee



New Colorado Delivery Fee Effective July 1, 2022, Colorado imposes a retail delivery fee on all deliveries including third party deliveries to a location in Colorado with at least one item of tangible personal property subject to state sales or use tax.

About the Retail Delivery Fee for the State of Colorado

The retailer or marketplace facilitator that collects the sales or use tax on the tangible personal property sold and delivered, including delivery by a third party, is liable to collect and remit the retail delivery fee. Deliveries include when any taxable goods are mailed, shipped, or otherwise delivered by motor vehicle to a purchaser in Colorado.
The retail delivery fee is due at the same time as your sales tax return. Returns are generally filed on a monthly basis and must be filed on or before the 20th day of the month following each reporting period. Retailers permitted to file state sales tax returns on a quarterly, annual, or other basis will file the retail delivery fee return on the same schedule. The retail delivery fee will be reported and paid on a new return, the DR 1786 form. The retail delivery fee is collected state-wide, does not need to be separated by jurisdiction, and is calculated per sale. The retail delivery fee is made up of six different fees for a total of .27 cents a sale. The rates are listed above.
Retailers with an active sales tax account, a retailer license, and any sales tax liability reported after January 1, 2021, will be automatically registered for a retail delivery fee account by July 1, 2022. This applies to both in-state and out-of-state retailers. There is no license required or registration fee due.

Holiday Hours

Happy Holidays!

The JFS Family whishes you and yours the happiest of holidays!

Our office will be closed Friday, December 24th and again on Friday, December 31st. 

If your have any questions in the meantime, feel free to leave us a message.