This week’s question comes from Paul, a business owner. I have an ex-employee who qualifies for payroll tax forgiveness under the HIRE Act. We haven’t been able to get the signed Form W-11 yet. What is the deadline for obtaining Form W-11? Under the HIRE Act, for otherwise qualifying employees, employers are not required to pay the matching portion of OASDI or social security tax. Qualified employees must sign Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, to allow employers to claim the payroll tax forgiveness. Employers must obtain the signed Form W-11 before claiming any payroll tax forgiveness. Therefore, to claim the exemption for the second quarter of 2010, employers must obtain the signed Form W-11 before August 3, 2010 in order to file by the deadline of August 2, 2010. Employers that made timely deposits in full payment of their taxes for a quarter have ten more days after the due date to file Form 941, Employer’s QUARTERLY Federal Tax Return. Employers that do not receive signed Form W-11 until after they’ve filed Form 941 may not claim the payroll tax forgiveness on Form 941, but must file Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund, to claim the exemption. Contact Vision Payroll if you have further questions on the deadline for obtaining Form W-11.
The Internal Revenue Service (IRS) recently released a revised Form 941, Employer’s QUARTERLY Federal Tax Return, to be used by employers to claim payroll tax forgiveness under the HIRE Act for qualifying new hires. Newly added lines on Form 941 include the following:
- Line 6a – Number of qualified employees first paid exempt wages/tips this quarter
- Line 6b – Number of qualified employees paid exempt wages/tips this quarter
- Line 6c – Exempt wages/tips paid to qualified employees this quarter
- Line 6d – Payroll tax forgiveness this quarter
- Line 12c – Number of qualified employees paid exempt wages/tips March 19–31
- Line 12d – Exempt wages/tips paid to qualified employees March 19–31
- Line 12e – Payroll tax forgiveness March 19-31
Lines 12c, 12d, and 12e will be on the Form 941 for the third and fourth quarters, but are applicable only for the second quarter. Contact Vision Payroll if you have any questions on the revised Form 941.
This week’s question comes from Lisa, an office manager. We may need to layoff a few employees. Some of them may elect COBRA continuation coverage. I know there was a subsidy for employees laid off through March 31, but I just heard that the subsidy period was extended. When does the COBRA subsidy period end? As noted by the Internal Revenue Service (IRS) in IR-2010-052, under The Continuing Extension Act of 2010, workers who are involuntarily terminated during April and May might be eligible for the sixty-five percent subsidy on COBRA continuation coverage. Eligible employees pay a reduced premium to their employer who then pays the difference. The employer may claim a credit on Form 941 for the amount paid. Contact Vision Payroll for further information on the COBRA subsidy period extension.
The Internal Revenue Service (IRS) recently released a draft Form 941, Employer’s QUARTERLY Federal Tax Return, to be used by employers to claim payroll tax forgiveness under the HIRE Act for qualifying new hires. Newly added lines on Form 941 include the following:
- Number of qualified employees first paid exempt wages/tips this quarter
- Number of qualified employees paid exempt wages/tips this quarter
- Exempt wages/tips paid to qualified employees this quarter
- Number of qualified employees paid exempt wages/tips March 19–31
- Exempt wages/tips paid to qualified employees March 19–31
A final version of Form 941 is expected to be released next month. Contact Vision Payroll if you have any questions on the draft Form 941.
This week’s question comes from Aaron, a business owner. I just found out about the payroll tax forgiveness under the HIRE Act. We’ve hired several qualifying employees and already deposited the payroll taxes that should’ve been forgiven. Can we go back and claim payroll tax forgiveness under the HIRE Act? Answer: Under the HIRE Act, for otherwise qualifying employees, the OASDI tax, “Shall not apply to wages paid…with respect to employment during the period beginning [March 19, 2010]…and ending on December 31, 2010.” Employers may claim the credit for taxes paid related to these wages even if the taxes that are being forgiven have already been deposited. Simply reduce other payroll tax deposits in the current quarter or claim a refund with the filing of Form 941. Contact Vision Payroll if you have any further questions concerning payroll tax forgiveness under the HIRE Act.
HR 2847, An Act making appropriations for the Departments of Commerce and Justice, and Science, and Related Agencies for the fiscal year ending September 30, 2010, and for other purposes, was passed by Congress and sent to President Barack Obama who indicated he will sign it March 18, 2010. The law, also called the Hiring Incentives to Restore Employment Act or HIRE Act, allows employers who hire employees after February 3, 2010 (and before January 1, 2011) who were unemployed for sixty days in the period from February 3, 2010 to December 31, 2010 to not pay the employer portion of the social security tax (6.2% of taxable earnings). Employers must still collect and pay the employee portion of the social security tax. Additionally, the employer and employee portion of the Medicare tax must still be collected and paid for all employees. The Internal Revenue Service (IRS) is not planning to change the Form 941 for the first quarter 2010 (the three months ended March 31, 2010). Credits for taxes paid in this quarter will be available on the Form 941 filed for the second quarter 2010. The credit amount would be treated as an additional payment for the second quarter 2010. Employers who employ such qualifying individuals for a fifty-two week period would also be eligible for a $1,000 credit against income taxes. Contact Vision Payroll if you have any questions on the new law.
This week’s question comes from James, a company controller. We have employees who are eligible for the COBRA subsidy credit. We receive a credit on Form 941 for the subsidy we provide employees. What do we need to provide Vision Payroll to get the COBRA subsidy credit? Answer: The COBRA subsidy credit has been extended to include employees terminated through March 31, 2010. The credit is generally 65% of the total premium, but Notice 2009-27 provided further details on the calculation of the premium reduction. Simply provide Vision Payroll the amount of the employer subsidy eligible for the credit and Vision Payroll will reduce the federal tax deposit due on Form 941.
This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review general information regarding Form W-2.
Forms W-2 should be typed or machine-printed in black ink, using 12-point Courier font. Dollar signs and commas must be omitted, but decimal points and cents, even if zero, must be included. Forms W-2 must be prepared on a calendar year basis using pay dates, not work dates. Wages for work performed in 2008 and paid in 2009 are included and wages for work performed in 2009 and paid in 2010 are excluded.
Report the employee’s social security number (SSN) in box a. Employees who have applied for, but not received, an SSN should be reported with all zeroes and corrected on a Form W-2c. Enter in box b the employer’s employer identification number, not the owner’s SSN. Box c must contain the employer’s address as shown on Forms 941, 943, 944, CT-1 or Schedule H of Form 1040. Box d is an optional box for employer use to identify individual forms. Box e should report the employee’s name exactly as shown on the social security card. Suffixes such as Sr. or Jr. should only be included if on the social security card. Do not include professional and academic titles and degrees such as CPA or Ph.D. as part of the employee’s names. Names should not be changed on Form W-2 unless the employee has received a revised card from the Social Security Administration. The Address in box f should be the address where the employee receives mail. Foreign country names are not to be abbreviated.
The next topic in this continuing series will be Box 1, wages, tips, other compensation. Contact Vision Payroll with any questions on 2009 Form W-2.
This week’s question comes from Rick, a restaurant owner. I started my business in June of this year. Since I didn’t have a big payroll in June, the Internal Revenue Service (IRS) recently informed me that I should file Form 944. Since my payroll will be much higher in 2010, I should file Form 941. How do I opt out of filing Form 944? Answer: In Rev. Proc. 2009-51, the IRS explained the procedure to opt out of filing Form 944. Employers who have previously filed Form 941 or Form 944 should call or write the IRS stating that they want to opt out of filing Form 944 before April 2, 2010. New businesses should call or write the IRS before the second day “of the month that the first required Form 941 for the current tax year is due.” In 2010, those days are April 2, 2010, July 2, 2010, October 2, 2010, and January 4, 2011 (due to automatic extensions for holiday and weekend days). Telephone numbers and mailing addresses are provided in Rev. Proc. 2009-51. Contact Vision Payroll if you have any questions on opting out of Form 944.
This week’s question comes from Elizabeth, a small business owner. I need to give copies of my quarterly tax returns to my CPA so I can finish my income tax return. I can’t find my copies anywhere. How can I get copies of my quarterlies? Answer: Vision Payroll offers a CPA Reporting Service that will deliver electronic or paper copies of your quarterlies to your CPA. Your CPA will appreciate always having your file up-to-date and you’ll appreciate the timesavings for both of you at year-end. And there’s no charge for this valuable service. Send us the name and address of your CPA and we’ll get you the paperwork to enroll. Contact Vision Payroll today to get started.