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Reminders About Filing W2s

Posted on December 31, 2012 by Leasa Magnuson in Business Tax

As the new year begins I thought it might be helpful to keep the following procedures in mind when preparing your W2s and W3.

  • Form W-3 is the total of all Forms W-2.
  • The sum of line 2 for the four quarters on Form 941 should balance to the amount appearing in Box 1 of Form W-3.
  • The sum of line 5a for the four quarters on Form 941 should balance to the amount appearing in Box 3 of Form W-3.
  • The sum of line 5c for the four quarters on Form 941 should balance to the amount appearing in Box 5 of Form W-3.
  • Test reasonableness of Social Security wages and withholdings (multiply Box 3 from Form W-3 less excess wages by 4.2%).
  • Test reasonableness of Medicare wages and withholdings (multiply Box 5 from Form W-3 by 1.45%).

Additional year end payroll considerations.

  • Verify all taxable benefits are included in Forms W-2.
  • Compare individual employee amounts from the payroll register totals to Forms W-2.
  • Box 14 of Form W-2 may be used to report contributions to Section 125 (Cafeteria) Plan for childcare and medical care.
  • Check for excess contributions to qualified plans (401(k), SIMPLE, etc.).
  • Calculate value of any personal use of company vehicles and add to wages only in Box 1 of Form W-2 and in line 2 of Form 941.
  • For S-Corporations, health insurance paid by the corporation for a 2% or more shareholders is included only in Box 1 and 16 of Form W-2.

The employee name on all payroll reports should match what appears on the employee’s Social Security card.  If you are unsure of a number or want to verify that you have correct numbers you can go to http://www.ssa.gov/bso/bsowelcome.htm and register with SSNVS.

Before running your 1st payroll in 2013

Prepare a final 2012 backup of your software and put in a safe place.

  • Remind employees they need to file a new W-4 by handing out new W-4s with final payroll of 2012.
  • Verify that employee requests for fringe benefit deduction changes for the new year have been applied.
  • Change withholding tables and social security limitations in your software either manually or through the update provided by your software company.
  • Verify your 2013 state unemployment rate and make necessary changes.  For 2013 in the state of Colorado, the subject wages is increased to $11,000.00.
Payroll Taxes, W2

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Testimonials

Leasa Magnuson was there when we needed her.

An unexpected audit on our returns was triggered by an unfortunate investment loss. All of the horror stories we had heard about came to the top of our minds and the adrenaline started pumping. We had never been through an IRS audit and didn’t know what to expect. We gathered all of the information requested. Leasa reviewed what we had, suggested a few more items and then we dropped off the requested supporting documents to the IRS several days prior to the audit. Promptly at 9:00 a.m. on audit day Leasa was there to support me and answer the grueling questions I was sure would come from the investigator.

Before we had a chance to take the hot seats in the investigator’s office, we were told that they had reviewed our documentation and we were given a "no change" verdict – which means everything checked out. We were free to leave.

I am confident Leasa’s council, review, and organization of our documentation and giving the IRS advanced time to review the information led to the positive outcome.

We are very lucky to have her on our team and will continue to use Leasa in the future.

Anita & Mike Kelly

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