To provide a 1099 or not to provide…  That is the question.

Let’s clarify a few things.

If you paid someone for services, such as paying commission for items he/she sold for you, shoveling your sidewalk, or preparing your payroll, etc., then you are required to issue a 1099-Misc to that person, provided you paid him/her more than $600 in a year and made the payments to an individual and not to a corporation.

If you paid someone for any type of product or merchandise, you do NOT issue a 1099; 1099s are for service only.  This includes items sold on consignment.

How you report the expense on your tax return is not affected by whether or not you issue a 1099-MISC.  You report it the same way.

In summary, you issue a 1099-MISC only for payments for services, not for merchandise.  So if you buy merchandise from someone, you do not issue a 1099-MISC, no matter how much you paid.

When an employee loses that W-2:  What are the employer’s obligations?

It is inevitable, someone is going to lose their W-2 this year.  As the employer, what and how do you respond to the request for a “new W-2”?

First of all, the experts all recommend that you respond to requests for duplicate W-2’s ONLY if they are made in writing.

When you issue a duplicate W-2, the following guidelines should be followed:

1. Type in the upper right-hand corner on each copy of the W-2, “REISSUED STATEMENT”.
2. You MAY send as a replacement, a copy of the employer’s copy.
3. If you mail a duplicate W-2 to a former employee, copy the envelope in a way that shows the address you used for that terminated employee.  Write on the copy the date you mailed the duplicate.
4. If a W-2 is returned undeliverable, keep it in the original envelope.
   1. If the employee contacts you, make a copy of the W-2 showing the post mark, and put it into a second envelope and mail it to the new address the employee gives you.
   2. If the employee does not contact you, keep it for at least 4 years as proof that the W-2 was mailed by the federal deadline.

To protect your company, your client and yourself, we suggest you make a Request for W-2 Form, a sample of which can be found on our website, www.wisconsinpay.com, Click on Employee Services, then click on Request for W-2 Form.

In Wisconsin, you can post the W-2’s online with the employee’s paystubs; however, you must have written permission from each employee prior to doing so.  Most of our employees have gone to paperless payrolls, but no one has gone to paperless W-2’s yet.

As a side note, if you do have your employees’ paystubs posted on line with us (ESS), your employees’ W-2’s will also be posted online.

Beginning in January 2015, applicable large employers (ALE) must file Form 1094-C that indicates they have offered affordable health insurance coverage to at least 70% of their full-time employees (30 hours per week or 130 hours per month average).  (The 70% threshold will increase to 95% in 2016.)

If an employer does not meet the percentage threshold, it may be liable for a nondeductible “Assessment” of $2,080 for each full-time employee (30 hours per week or 130 hours per month) in excess of 80 (excess of 30 in 2016).

Because the assessment is determined separately for each month, if you think you will owe a penalty for the early months of 2015, it’s time to take corrective action now and offer affordable health coverage to your full-time employees to avoid additional penalties later.

Employers must also understand that even if they file correctly and follow the ACA regulations, they may still be assessed a “Shared Responsibility” penalty.  What happens if an employee deemed full-time throughout the “stability period”, later changes to part-time status?   If that happens and the employee goes to the Public Exchange (Marketplace) and receives a tax credit, the employer would be liable for an “Employer Shared Responsibility” (a/k/a affordability penalty) payment for that employee, which is $3,120 annually (indexed) for each full-time employee who receives health coverage through the Exchange with a premium tax credit.

WHERE do I start?

Where DO I start?

Where do I START?

Wherever you put the emphasis, the question remains on the tongues of those who “think” they may have to do something with this, as well as those who “know” they have to do something with this.

The IRS.gov website indicates that first you need to make several determinations:

1. Is your organization an applicable large employer (ALE)?  Basically do you have 50 full time or full time equivalent (FTE) employees yourself or with like ownership.  At the end of the day, if in doubt, file.
2. Know what kind of health insurance coverage you offered to full-time employees (30 hours per week or 130 hours per month) and their dependents.
3. Identify your full time employees for each month and track health coverage in 2015 to complete your forms.

…more to follow as information becomes available.

We often get questions from our clients as to whether or not they have to provide paid breaks for their employees.   Many employees are “convinced” that their employer must provide two fifteen minute breaks and at least a one-half unpaid lunch break.  For the sake of this writing, let’s talk about employees who are over the age of 18 and the regulations for the State of Wisconsin.

Wisconsin employers do not have to provide any breaks, or lunch breaks of any kind to any employees (again – 18 or older).  However, if the employer does choose to be so kind as to provide a break the guidelines are as follows:

1.  Anything less than 30 minutes, must be a paid break.  If the employee punches in and out and the clocked out time is only 29 minutes, the employer must pay for the whole break

2. The employee must be free to leave the premises.

3.  When the employee takes their break and decides to sit at their desk, if they so much as answer a work email or answer the phone, the 30 minute break is no longer a 30 minute break and it must be paid.

4.  Many employers use an auto break which automatically clocks the employees out for 30 minutes. This is fine provided the employees are free to leave, are not expected to do any company business during this time and do not do any company business (even if it is “volunteer”).

As for the employees at Wisconsin Pay – they don’t get any unpaid breaks – but we do have a beautiful painted picture on a window for them to gaze at.

This is a subject that has long been a topic of discussion and debate among business owners, employees, and independent contractors; however, the feds and states are very clear on one thing –  you’d better be darn sure that you are classifying your workers correctly because the penalties are stiff and the consequences just became more severe.

Because it is very tempting for employers to convert or hire workers as “independent contractors” and the workers even agree to it, the DOL has initiated the “misclassification initiative.”   In doing so, millions of dollars are being collected from employers for back overtime for misclassified employees.

In the past, if the IRS held an audit and discovered a worker misclassification, they passed out their penalty, etc. and that is where it ended.  Today, as part of the initiative, the feds and states are now sharing information so everyone gets their piece of the pie.

In the event you have hired an independent contractor here are some tips to prevent an unfavorable decision if you are audited.

Review all current independent contractor relationships and make adjustments if necessary.

1. Have a written contract.
2. It is much safer if contractor is a legal entity (LLC or Corp).
3. Contractor should have a business card to pass out trying to grow their business.
4. Contractor should be receiving a 1099 from more than just you.
5. Contractor uses his own equipment and tools.
6. Contractor can lose money on the job if they don’t produce the desired results.
7. Contractor is paid by the job and not by the hour.
8. Contractor sets their own hours including start and end times.

In the end, if in doubt – get the W-4 and I-9 and report your newly hired employee to the new hire registry.

 

I really do think that Easter is my favorite Christian holiday.  Don’t get me wrong, I do so love Christmas with all the decorations and cookies and lights and music.  But that is also exactly why I so cherish Easter.  The Easter Bunny never gained the notoriety of ole Kris Kringle and there is only one (outside of church) Easter song that I remember learning as a child  …la la la Hippity Hoppity, Easter’s on its way. Read more Happy Easter ›

Mistakes happen, no argument there. Whenever humans are involved, there are going to be mistakes. One “little” mistake can sometimes create a mountain of work to rectify and can be extremely costly – especially in the payroll world.

Let’s say that an employee was underpaid at the end of a calendar year. It is now 3 months into the following year and the error is discovered when the employee goes to file their tax return. What now?

Following are the steps that need to be taken:

1.  Confirm the error was made and confirm the underpayment amount.
2. Calculate the gross pay, deductions, and payroll taxes and pay the employee the net.  Does a portion of the amount need to be withheld and paid to the 401k provider?  (If so, those records will need to be revised and provided to the 401k administrator).
3. Pay the taxes to the proper taxing authorities (Federal (941 and Futa), State (Withholding and UI), any local taxes.
4. Complete and file a 941-X, 940-X, Revised State Withholding Return, and a Revised State Unemployment Return for the company (and local taxes if applicable).
5. Prepare a W-2C for the employee.
6. File the W-2C with the SSA and the State.
7. Prepare for penalty and interest that will be incurred because of the late deposits on the taxes.

Yep, mistakes happen – but it sure is worth checking and double checking to avoid as many as possible!

Customer Service.  Customer Care.  Customer Assistance.  Whatever you call it, it has definitely become the buzz word of the day.

Don’t get me wrong, I am all about great customer service.  We, at Wisconsin Pay, strive to go above and beyond our client’s expectations all day, every day.  However, with that being said, sometimes it feels as though you can never do enough.

Back in the day, if a phone call was returned within 24 hours – that was great customer service.  Today, if we don’t hear back from a vendor within a couple of hours, we are all up in arms.  If a mistake occurs, the customer demands it be rectified and then expects to be compensated for their inconvenience.  Why is it so hard for us to put ourselves in someone else’s shoes.   Why do we believe that we are “victims” if a mistake occurs with our food order, appliance order, tax return?

Just stop for a minute and imagine if, in every situation, we treated each other the way we would like to be treated.  Oh what a wonderful world it would be!