Vision Payroll

January 22, 2011

2010 Form W-2 Tips, Part 13, Box 12 Codes

Filed under: News — Tags: , , , , , , , — Vision @ 10:48 am

This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. 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 Box 12, codes.

Box Identifiers a, b, c, and d Are not Codes

Enter codes and amounts in boxes 12a, 12b, 12c, and 12d. The letters a, b, c, and d do not relate to the codes, but are strictly for identification purposes. If an employee has code C for $100 and that is the only code for that employee, the employer may enter code C in box 12a; it does not need to be entered in box 12c. If filing copy A on paper, enter only four codes on one Form W-2. Employers should use multiple forms for employees with more than four codes. There is no limit on the number of codes on any other copy of Form W-2. Enter the code and amount without dollar signs or commas.

The codes and their descriptions are as follows:

Code AUncollected social security or RRTA tax on tips
Code BUncollected Medicare tax on tips
Code CTaxable cost of group-term life insurance over $50,000
Code DElective deferrals under §401(k) cash or deferred arrangement (plan)
Code EElective deferrals under §403(b) salary reduction agreement
Code FElective deferrals under §408(k)(6) salary reduction SEP
Code GElective deferrals and employer contributions (including nonelective deferrals) to any governmental or nongovernmental §457(b) deferred compensation plan
Code HElective deferrals under §501(c)(18)(D) tax-exempt organization plan
Code JNontaxable sick pay
Code K20% excise tax on excess golden parachute payments
Code LSubstantiated employee business expense reimbursements
Code MUncollected social security or RRTA tax on taxable cost of group-term life insurance over $50,000 (for former employees)
Code NUncollected Medicare tax on taxable cost of group-term life insurance over $50,000 (for former employees)
Code PExcludable moving expense reimbursements paid directly to employee
Code QNontaxable combat pay
Code REmployer contributions to an Archer MSA
Code SEmployee salary reduction contributions under a §408(p) SIMPLE
Code TAdoption benefits
Code VIncome from the exercise of nonstatutory stock option(s)
Code WEmployer contributions to a Health Savings Account (HSA)
Code YDeferrals under a §409A nonqualified deferred compensation plan
Code ZIncome under §409A on a nonqualified deferred compensation plan
Code AADesignated Roth contributions under a §401(k) plan
Code BBDesignated Roth contributions under a §403(b) plan
Code CCHIRE exempt wages and tips

Employers should combine elective deferrals and elective catch-up contributions into one sum and report under the appropriate elective deferral plan code.

Box 13, Checkboxes Is the Next Topic

The next topic in this continuing series will be Box 13, checkboxes. Contact Vision Payroll with any questions on the 2010 Form W-2.

January 21, 2011

Question of the Week: How Do I Reconcile My W-2 to My Last Pay Stub?

Filed under: News — Tags: , — Vision @ 5:44 pm
How Do I Reconcile My W-2 to My Last Pay Stub?
How Do I Reconcile My W-2 to My Last Pay Stub?
This week’s question comes from Brenda, a company executive vice-president. I compared my Form W-2 to my last pay stub and there are differences between the amounts listed on the Form W-2 and the amounts on my last pay stub. How do I reconcile my W-2 to my last pay stub? Answer: The amounts on the Form W-2 may differ from gross pay on your last pay stub for several reasons. By starting with your last pay stub and adding or subtracting typical adjustments, most employees can easily reconcile the two amounts.

Vision Payroll Document Can Assist in Reconciling Form W-2 To Last Pay Stub

The Vision Payroll web site contains a document that helps employees reconcile their Form W-2 to their last pay stub. It contains the most common adjustments to reconcile a pay stub to the amounts in the various boxes. It also contains explanatory information for coded amounts on the Form W-2.

Visit VisionPayroll.com Regularly for Updated information

Contact Vision Payroll if you have any further questions.

January 18, 2011

2010 Form W-2 Tips, Part 12, Box 11 Nonqualified Plans

This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. 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 Box 11, nonqualified plans.

Box 11 Shows Distributions from Nonqualified Plans

Box 11 shows the amount of distributions from a nonqualified plan or a nongovernmental §457(b) plan. These distributions should also be reported in box 1. Distributions from governmental §457(b) plans are not reported in this box.

Box 11 May Show Earnings and Deferrals That Became Taxable

Box 11 should show deferrals and earnings that became taxable for social security and Medicare purposes in 2010 because the deferrals and earnings were no longer subject to a substantial risk of forfeiture, but only if the amounts were for services before 2010 and no distributions were made in 2010. These amounts must also be reported in box 3, up to the $106,800 wage limit, and box 5.

Box 11 Not to Be Used for Deferrals Included in Box 3 and/or Box 5

Box 11 should not be used for deferrals that are included in box 3, up to the wage limit, and box 5 and that are for services performed in 2010.

Use Form SSA-131 to Report When Payments and Deferrals Are Made in the Same Year

Box 11 should also not be used when payments are made from a nonqualified plan and deferrals are included in box 3, up to the wage limit, and box 5. Employers should use Form SSA-131, Employer Report of Special Wage Payments, but only if the employee was age 62 or older by the end of 2010. Generally the employer should report the amount from box 1 of Form W-2, plus any amounts deferred during 2010, less any payments from the nonqualified plan.

Amounts for Form W-2
Wages$50,000
Distributions from nonqualified plan75,000
Sub-total125,000
Less amount deferred35,000
Form W-2, box 1 amount$90,000
  
Wages$50,000
Form W-2, box 3 amount$50,000
  
Wages$50,000
Form W-2, box 5 amount$50,000

Assume Jessica retired during 2010. She earned $50,000 in wages, but deferred $35,000 of that amount in a nonqualified deferred compensation plan. Since she retired, she also received $75,000 in payments from the plan. Since there are both distributions and deferrals in 2010, no amount is reported in box 11. Box 11 should also not be used to report special wage payments earned in a prior year such as accrued sick pay or vacation pay. These amounts should be reported on Form SSA-131, however, so that the Social Security Administration may accurately calculate the recipient’s social security benefits.

Amounts for Form SSA-131
Form W-2, box 1 amount$  90,000
Plus 2009 deferral    35,000
Sub-total   125,000
Less distributions from nonqualified plan    75,000
Form SSA-131, item 6 amount$  50,000

Box 12, Codes Is the Next Topic

The next topic in this continuing series will be Box 12, codes. Contact Vision Payroll with any questions on the 2010 Form W-2.

January 17, 2011

2010 Form W-2 Tips, Part 11, Box 10 Dependent Care Benefits

This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. 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 Box 10, dependent care benefits.

2010 Annual Exclusion Limit Is $5,000

Box 10 shows the amount paid or incurred by the employer under §129 of the Internal Revenue Code (IRC) for dependent care assistance provided to the employee if the assistance is furnished pursuant to a “dependent care assistance program” under that section. This box should include amounts paid or incurred for dependent care assistance in an IRC §125 (cafeteria) plan. The fair market value of any employer-sponsored or employer-provided day care facilities should also be included. Even though there is an annual exclusion limit of $5,000, the total amount paid or incurred must be reported in box 10. Amounts over $5,000 must also be reported in box 1 and box 5 and box 3, subject to the wage limitation. Amounts that cannot be excluded for other reasons such as benefits for highly compensated employees in plans described in IRC §129(d), must also be reported in box 1 and box 5 and box 3, subject to the wage limitation.

Box 11, Nonqualified Plans Is the Next Topic

The next topic in this continuing series will be Box 11, nonqualified plans. Contact Vision Payroll with any questions on the 2010 Form W-2.

January 16, 2011

2010 Form W-2 Tips, Part 10, Box 9 Advance EIC Payment

Filed under: News — Tags: , , , , , , — Vision @ 11:37 am

This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. 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 Box 9, advance EIC payment.

Maximum EIC Advance Payment in 2010 Was $1,830

Box 9 shows the amount of any advance EIC (earned income credit) payment paid to the employee. Employees must meet four criteria and file Form W-5, Earned Income Credit Advance Payment Certificate in order to receive advance EIC payments. For 2010, the maximum advance EIC was $1,830. Employees entitled to additional EIC are eligible to receive it when filing Form 1040, US Individual Income Tax Return.

Box 10, Dependent Care Benefits Is the Next Topic

The next topic in this continuing series will be Box 10, dependent care benefits. Contact Vision Payroll with any questions on the 2010 Form W-2.

January 15, 2011

2010 Form W-2 Tips, Part 9, Box 8 Allocated Tips

This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. 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 Box 8, allocated tips.

Use Form 8027 to Determine Box 8 Amount

Box 8 shows the amount of allocated tips. Large food and beverage establishments use Form 8027, Employee’s Annual Information Return of Tip Income and Allocated Tips to determine the amount of tips to report in Box 8. A large food and beverage establishment meets all three of the following criteria:

  1. Food or beverage is provided for consumption on the premises.
  2. Tipping is a customary practice.
  3. More than 10 employees who work more than 80 hours were normally employed on a typical business day during the preceding calendar year.

Do Not Duplicate Box 8 Entries

The amount in this box is not to be reported in box 1, box 3, box 5, or box 7.

Box 9, Advance EIC Payment Is the Next Topic

The next topic in this continuing series will be Box 9, advance EIC payment. Contact Vision Payroll with any questions on the 2010 Form W-2.

January 11, 2011

2010 Form W-2 Tips, Part 8, Box 7 Social Security Tips

This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. 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 Box 7, social security tips.

Boxes 3 and 7 Combined Cannot Exceed $106,800

Box 7 shows the amount of tips reported by employees. In many situations, the cash wages paid are insufficient to collect the entire amount of social security and Medicare tax. Reported tips must still be shown in this box, even if social security or Medicare tax was not withheld on them. For 2010, the combined total of Boxes 3 and 7 cannot exceed $106,800. The reported tips should be included with amounts reported in Box 1, wages, tips, other compensation and Box 5, Medicare wages and tips. Since social security benefits are based on the amount of social security tips reported to the Social Security Administration (SSA), it is important that employees periodically review their social security earnings record and provide the SSA with the Form W-2 to update any incorrectly posted earnings records.

Box 8, Allocated Tips Is the Next Topic

The next topic in this continuing series will be Box 8, allocated tips. Contact Vision Payroll with any questions on the 2010 Form W-2.

January 10, 2011

2010 Form W-2 Tips, Part 7, Box 6 Medicare Tax Withheld

Filed under: News — Tags: , , , — Vision @ 6:24 pm

This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. 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 Box 6, Medicare tax withheld.

No Limit in 2010 on Medicare Tax Withheld

Box 6 shows the total amount of employee Medicare withheld, including the amount withheld on tips. It does not include any employer contribution toward Medicare on the employee’s behalf. The 2010 rate was 1.45% and unlike social security, there is no taxable wage base. Therefore, there is no upper limit to the amount entered in this box. If the employer paid the employee’s share of such taxes rather than withholding them, the tax must be grossed up and included in boxes 1, 3, and 5.

Box 7, Social Security Tips Is the Next Topic

The next topic in this continuing series will be Box 7, social security tips. Contact Vision Payroll with any questions on the 2010 Form W-2.

January 9, 2011

2010 Form W-2 Tips, Part 6, Box 5 Medicare Wages and Tips

Filed under: News — Tags: , , , — Vision @ 12:39 pm

This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. 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 Box 5, Medicare wages and tips.

No Limit in 2010 on Medicare Wages

Box 5 shows the total amount of wages subject to Medicare tax. For most employees, this amount equals the sum of boxes 3 and 7, with one exception. There is no limit on the amount of Medicare wages as there is with social security wages. Additionally, depending on the date of hire, some governmental employees may have Medicare wages, but not social security wages.

Box 6, Medicare Tax Withheld Is the Next Topic

The next topic in this continuing series will be Box 6, Medicare tax withheld. Contact Vision Payroll with any questions on the 2010 Form W-2.

January 4, 2011

2010 Form W-2 Tips, Part 5, Box 4 Social Security Tax Withheld

Filed under: News — Tags: , , , , — Vision @ 10:00 am

This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. 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 Box 4, social security tax withheld.

Maximum Withholding for 2010 Was $6,621.60

Box 4 shows the total amount of employee social security tax withheld, including the amount withheld on tips. It does not include any employer contribution toward social security on the employee’s behalf. Since the 2010 rate was 6.2% and the taxable wage base was $106,800, the amount in this box should not exceed $6,621.60. If the employer paid the employee’s share of such taxes rather than withholding them, the tax must be grossed up and included in boxes 1, 3, and 5.

Box 5, Medicare Wages and Tips Is the Next Topic

The next topic in this continuing series will be Box 5, Medicare wages and tips. Contact Vision Payroll with any questions on the 2010 Form W-2.

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