The Employer’s 2020 Year-End Guide

Last Updated on December 2, 2020 by bigfish-admin

Below are some very important items for you to be aware of and act upon before this calendar year ends. Failure to follow appropriate timing could result in inaccurate data being filed, which could be time consuming and costly to correct. Please take 5 minutes to read this information completely. 

Employee Information Verification

Please verify that employee information, specifically social security numbers and addresses, are correct and adjust in iSolved or notify us of any adjustments to be made before Friday, December 18, 2020. This will prevent W2s from being produced with incorrect information and reduce the chance of having to file W2 corrections. You can also run the “SSN Verification Report” to locate any duplicate, invalid or missing SSNs. We provide an SSN Verification Service to assist in verifying the accuracy of employee data. If you are interested or would like more information about the SSN Verification Service, please contact your Relationship Manager. 

Health Care Information on W2s

As a reminder, any employer with more than 250 employees is required to report the total cost of employer-sponsored health care on employee W2s in Box 12, Code DD. If you have over 250 employees, please be sure to get over to us the per-employee year-to-date employer contribution amounts before your last payroll of the year. These amounts will be added to the employee YTD health deductions to produce the informational-only line item in Box 12, Code DD, of the W2. ACA clients will be receiving an email with step-by-step instructions for the form’s approval process. 

Note: If we already have Benefits Administration setup for your company, the Health Costs are already available in iSolved and no further action is required.

Bonus Payrolls, S-Corp Medical Expenses, Fringe Adjustments

Any bonus payrolls, adjusted figures, or S-Corp medical expenses will need to be processed before Friday, December 18, 2020, to be recorded in 2021. Payrolls processed after the quarter has closed will incur additional processing fees.

Manual and Void Checks

Important: Please make sure that all pending 2020 Manual and/or Void checks are processed before any 2021 payrolls are processed. It is your responsibility as the employer to notify your Relationship Manger if any of these Manual or Voids that are added after your last payroll in 2020.

Payroll Adjustments

Make sure payroll adjustments (e.g., voided checks) are done before your last payroll of 2020 is processed. Voiding checks or processing adjustments after a check date of 2021 has been processed requires us to ‘Re-Open’ the year which results in additional fees. 

Year-End Adjustment Cut-off Date

For adjustments processed after December 31, 2020, please remember that tax agencies may consider tax payments late and you the customer will be responsible for penalties and interest that any agency may assess. Payroll adjustments processed after December 31st may require amendments and/or a W2C. 

Minimum Wage Increases

It is important to be ready for minimum wage increases in 2021. Many states have already announced their increases, such as California (increasing to $13.00 per hour for Employers with 1-25 employees & increasing to $14.00 per hour with employers with 26 or more employees on 1/1/21). Any employee who is paid below minimum wage in their state will require a rate adjustment be made by their employer before the effective date of the new minimum wage in their state and/or city. As an employer, it is your responsibility to update rates in the system. Please contact your Relationship Manager if you have any questions.

ACA Reporting

If you are an Applicable Large Employer (ALE) and are signed up with our ACA Services, we will be reporting information to the IRS with the health care coverage offered to your ACA full-time employees using Forms 1094 and 1095.  You must also distribute copies of Form 1095 to your employees, which contains information they may need to report as part of their income tax submission for the 2020 tax year. You will be receiving an email from our Benefit Specialist with instructions on how to preview, review, approve your forms before we print and ship them out.   

Important Deadlines for ACA Reporting 

  • Furnishing Forms to employees no later than March 2, 2021 
  • Filing paper forms with the IRS by February, 28, 2021 
  • Filing electronically with the IRS by March 31, 2021 

Additional ACA Resources 

Healthcare.gov

IRS Q&A

Treasury Dept ACA Fact Sheet

Important Tax Information

The IRS requires that the following paragraph be communicated by all US payroll companies to their clients. We are required to communicate this to you at least quarterly, effective Nov. 2012:

“Please be aware that you are responsible for the timely filing of employment tax returns and the timely payment of employment taxes for your employees, even if you have authorized a third party to file the returns and make the payments. Therefore, the Internal Revenue Service recommends that you enroll in the U.S. Treasury Department’s Electronic Federal Tax Payment System (EFTPS) to monitor your account and ensure that timely tax payments are being made for you. You may enroll in EFTPS online at www.eftps.gov, or call (800) 555-4477 for an enrollment form. State tax authorities generally offer similar means to verify tax payments. Contact the appropriate state offices directly for details.”

(Rev. Proc. 2012 – 32 http://www.irs.gov/pub/irs-drop/rp-12-32.pdf)

If you have any questions about your year-end responsibilities, please call us immediately at 714.769.3410 or email support@bigfishemployerservices.com. Thank you for allowing Big Fish to be of service to you!

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