Nationwide Tax Nationwide Tax ForumForum

Nationwide Tax Nationwide Tax ForumForum

W-2 Payroll PointersW-2 Payroll PointersW-2 Payroll PointersW-2 Payroll Pointers

Patricia A. HayesPatricia A. Hayes

Program ExpertProgram Expert

Social Security AdministrationSocial Security Administration

• New W-2 Box 12 Codes:New W-2 Box 12 Codes:

AA – designated Roth contributions AA – designated Roth contributions under section 401(k) planunder section 401(k) plan

BB – designated Roth contributions BB – designated Roth contributions under section 403(b) salary under section 403(b) salary reduction agreementreduction agreement

• New suffix entry – Box e, employee New suffix entry – Box e, employee namename• Employee instructions cont. on Employee instructions cont. on Copy 2Copy 2• Form 944 checkbox – Form W-3, Form 944 checkbox – Form W-3, box bbox b

2006 Form W-2/ W-3 Changes2006 Form W-2/ W-3 Changes

2006 W-2 Reminders2006 W-2 RemindersSoc. Sec. Wage Maximum = $94,200Furnish EE copies by January 31, 2007When to File with SSA:

Electronic by April 2, 2007-or-

Paper by February 28, 2007

•Do not duplicate e-file with paper forms

•Do file on time

•Do not file 250+ on paper

• Official Forms W-2/W-3 Official Forms W-2/W-3 available each available each spring spring (800-829-3676)(800-829-3676)• Use IRS instructions for Use IRS instructions for completing completing paper forms paper forms and electronic W-2sand electronic W-2s• SSA Electronic Filing SSA Electronic Filing SpecificationsSpecifications

• MMREF -1 (W-2s)MMREF -1 (W-2s)• MMREF - 2 (W-2Cs)MMREF - 2 (W-2Cs)

W-2/ W-3 Instructions & FormsW-2/ W-3 Instructions & Forms

W-2 Reporting OptionsW-2 Reporting Options

• ElectronicElectronic

• Paper Copy APaper Copy A

Safe, fast and easy!Safe, fast and easy!

• Diskette (3Diskette (3½½”)”)

– – Final year was tax year 2005Final year was tax year 2005

• Magnetic tape (reel or cartridge)Magnetic tape (reel or cartridge)

–– Final year was tax year 2004Final year was tax year 2004

Magnetic Media EliminatedMagnetic Media Eliminated

Paper W-2 FilingPaper W-2 Filing

• Up to 249 W-2’s per EIN Up to 249 W-2’s per EIN • Must be machine readable – Must be machine readable –

• Official IRS Copy A W-2/W-3Official IRS Copy A W-2/W-3 forms forms -or--or-

• IRS Pub. 1141 compatible IRS Pub. 1141 compatible (vendor Copy A forms or b/w (vendor Copy A forms or b/w software versions software versions approved by approved by SSASSA))

• Send under cover of W-3 to SSASend under cover of W-3 to SSA (See “Where To File” on W-3)(See “Where To File” on W-3)

• Extended due date – March Extended due date – March 3131stst

• Fully electronic – no Fully electronic – no paperworkpaperwork• Immediate electronic Immediate electronic receiptreceipt• Faster processingFaster processing• Fewer errorsFewer errors• Tracking capabilitiesTracking capabilities• Saves $$ for employers and Saves $$ for employers and SSASSA

AAdvantagesdvantages

Electronic FilingElectronic Filing

• 250+ W-2s – Must E-File using 250+ W-2s – Must E-File using SSA’s Magnetic Media Reporting & SSA’s Magnetic Media Reporting & Electronic Filing (MMREF) formatElectronic Filing (MMREF) format

• Under 249 W-2s – E-File preferredUnder 249 W-2s – E-File preferred• Up to 20 W-2s– Up to 20 W-2s–

• W-2 Online (no software required), orW-2 Online (no software required), or• MMREF-1 file uploadMMREF-1 file upload

To connect toTo connect to Business Services Online:Business Services Online:

Point your browser toPoint your browser to www.socialsecurity.gov/employerwww.socialsecurity.gov/employer

and click onand click on Business Services OnlineBusiness Services Online

Go to: www.socialsecurity.gov/employerGo to: www.socialsecurity.gov/employer

Select “Business Services Online”Select “Business Services Online”

TutorialTutorial

See “Vendor List” atSee “Vendor List” atwww.socialsecurity.gov/employerwww.socialsecurity.gov/employer

MMREF Sources MMREF Sources for File Upload Methodfor File Upload Method

• Vendor payroll software Vendor payroll software packagepackage

• Proprietary (in-house) program Proprietary (in-house) program • Payroll/tax filing agent Payroll/tax filing agent

(outsource)(outsource)

W-2 & W-2C OnlineW-2 & W-2C Online•No forms or software needed•Key data into forms online

• 20 W-2s per W-3• 5 W-2Cs per W-3C

•Built-in surface edits•Ability to print all copies of forms•Restricted to prior tax year, only

Common W-2 Reporting ErrorsCommon W-2 Reporting Errors

• Wrong tax yearWrong tax year• Money fields out of balanceMoney fields out of balance• Wrong data (e.g., partial/ prior Wrong data (e.g., partial/ prior year)year)

• Name/SSN mismatchesName/SSN mismatches• Wrong EINWrong EIN• Incorrect formatIncorrect format

Filing Corrections (W-2C)Filing Corrections (W-2C)

• 250 or more W-2Cs – must file 250 or more W-2Cs – must file electronically electronically • Applies to immediate prior tax yearApplies to immediate prior tax year• File upload (MMREF-2 format), orFile upload (MMREF-2 format), or• W-2C OnlineW-2C Online

• Filing paper? Filing paper? • Use January 2006 version from IRS, orUse January 2006 version from IRS, or• IRS Pub. 1223 compatible formsIRS Pub. 1223 compatible forms

Name/ SSN Mismatch NoticesName/ SSN Mismatch Notices• Sent to all mismatched employeesSent to all mismatched employees• Sent to employers who:Sent to employers who:

• report more than 10 mismatches , report more than 10 mismatches , andand• number exceeds 0.5% of total W-2s in reportnumber exceeds 0.5% of total W-2s in report

• File any W-2Cs within 60 daysFile any W-2Cs within 60 days• Document efforts and keep 4 yearsDocument efforts and keep 4 years• Use SSNVS to avoid mismatchesUse SSNVS to avoid mismatches

What is SSNVS?What is SSNVS?

• SSN Verification ServiceSSN Verification Service• Web-based verification of Web-based verification of

employee name and SSN employee name and SSN • CannotCannot be used to screen be used to screen

potential hires – for potential hires – for employees, onlyemployees, only

• Users must register for PIN/ Users must register for PIN/ password and request access password and request access

Foreign WorkersForeign Workers

• Verify with DHS for foreign workers before SSN issued• Immediate

verification• Delayed verification

• How to file report without an SSN

No SSN by W-2 Time?No SSN by W-2 Time?

• Paper FilersPaper Filers• Enter “Applied For” on all copies Enter “Applied For” on all copies

• Electronic FilersElectronic Filers• ““Applied For” on employee and Applied For” on employee and

employer copiesemployer copies• All zeroes in W-2 Online or MMREF-All zeroes in W-2 Online or MMREF-

11• File W-2c after employee File W-2c after employee

receives SSN (E-File preferred) receives SSN (E-File preferred)

ITINITIN • Individual Taxpayer Identification Number Individual Taxpayer Identification Number

99xx-xx-77x-xxxxx-xxxx

99xx-xx-88x-xxxxx-xxxx• NotNot valid for U.S. employment valid for U.S. employment• Issued by IRS to non-citizens for tax filing of Issued by IRS to non-citizens for tax filing of

non-work incomenon-work income• Apply for ITIN on IRS Form W-7 Apply for ITIN on IRS Form W-7

Basic PilotBasic Pilot• Dept. of Homeland Security and Dept. of Homeland Security and

SSA pilotSSA pilot• Now web-based and nationwideNow web-based and nationwide• Participating employers verify all Participating employers verify all

new hiresnew hires• Checks both SSN and I-9 Checks both SSN and I-9

informationinformation• Voluntary ― to enrollVoluntary ― to enroll

Contact DHS at (888) 464-4218, orContact DHS at (888) 464-4218, or

www.vis-dhs.com/employerregistration www.vis-dhs.com/employerregistration

Items ReconciledItems Reconciled

Social SecuritySocial Security MedicareMedicare WagesWages Wages and Tips Wages and Tips TipsTips Tax Withheld Tax Withheld Tax WithheldTax Withheld

Federal Income Tax WithheldFederal Income Tax Withheld Advance EIC PaymentAdvance EIC Payment

• W-2s less than 94x – SSA sends notice• W-2s more than 94x – IRS sends

notice

How to Contact UsHow to Contact Us

Employer Issues: Select “How To Reach Us” at

www.socialsecurity.gov/employer

Employer Reporting Service Center(800) 772-6270

General Inquiries:www.socialsecurity.gov

(800) 772-1213