Please see the year-end payroll reporting checklist below that covers a lot of the most common benefits that are paid on behalf of or for an employee. If any of these apply to you, please include them on one of your December payrolls. If you have a payroll provider please notify them as soon as possible as they run W-2’s very quickly after the last payroll for the year. In addition, if you prepare your payroll in house and have questions on how to add these benefits, please do not hesitate to contact Robin Neas at (804) 888-8479 in our office.
One benefit that gets missed by S Corp owners is company paid health & dental benefits of greater than 2% owners of the S-Corporations. This must be added to the shareholder’s W-2 in order for the company to deduct the expense on the corporate return and for the shareholder to get the deduction on the individual return.
Another commonly missed employee benefit is personal use of a company vehicle. If you provide a vehicle to an employee and they are allowed to use it personally, a mileage log must be maintained and the value of those miles must be included in the employee’s W-2. Please contact us if you need assistance in calculating this amount. Please note that the value is not just the personal miles times the standard business mileage rate!
If you process your own payroll using QuickBooks and need assistance please do not hesitate to call us so we can walk you through how to add the benefits.
Year-End Payroll Reporting Checklisvances not repaid in the time required by the IRS.
- Flat rate auto allowances (not substantiated mileage or per diem).
- Business expense—unsubstantiated or in excess of government approved allowances.
- Group‐term life insurance coverage over $50,000 on an employee.
- Group‐term life insurance coverage over $50,000 on a former employee.
- Group‐term life insurance coverage over $2,000 on a spouse or dependent.
- Disability pay—taxable portion.
- Taxable portion of reimbursed employee moving expenses.
- Personal use of company vehicle.
- Cash achievement awards.
- Compensation bonuses.
- Employer‐paid dues and fees for employee’s membership in a country club, athletic club, or social club.
- Dependent care assistance over $5,000 ($2,500 for employees married and filing separately).
- Reimbursed employee (not employer) employment agency fees.
- Group legal services plan costs.
- Pay while on jury duty.
- Tips reported to the employer by the employee.
- Cash received through a cafeteria plan.
- Life, health, accident, and disability insurance premiums paid for S corporation shareholder‐employees with interests of more than 2% [for FITW, and for FICA (social security and Medicare) and FUTA taxes if the exclusions under IRC Secs. 3121(a) and 3306(b), respectively, are not satisfied]. (Similar payments to partners are reported as guaranteed payments.)
- Meals or lodging furnished for the convenience of the employer, and qualified transportation fringe benefits paid for S corporation shareholder‐employees with interests of greater than 2%. Similar payments to partners are reported as guaranteed payments.
- Personal use of business aircraft or of business‐paid commercial aircraft.
- Cash Christmas bonus.
- Wages paid to an employee performing work outside normal duties (casual labor).
- Cash gifts to employees.
- Differential wage payments (supplemental military pay, for FITW but not for FICA and FUTA).
- Cash parking allowance (other than pursuant to a bona fide reimbursement arrangement or a pretax salary reduction plan that reimburses employees’ qualified transportation expenses).
- Supplemental unemployment compensation plan payments.
- Retirement inducements.
- Employee’s taxes paid by the employer.
- Pretax employee contributions to a Section 401(k) or a SIMPLE retirement account (for FICA taxes but not for FITW).
- Cash allowances for nonovernight travel.
- Loans with below‐market interest (for FICA taxes but not for FITW).
- Financial counseling.
- Severance or dismissal pay (including golden parachute payments).*
- Season tickets to entertainment or sporting events for personal use.
- Uniform allowances for uniforms that are (a) not required as a condition of employment or (b) street wearable.
- Qualified educational assistance that is over $5,250, unless such assistance qualifies as a job‐related working condition fringe benefit.
- Excess employer and all employee contributions to an employee’s Archer medical savings account (Archer MSA) or health savings account (HSA).
- Employer‐provided coverage under a long‐term care insurance contract if provided through a cafeteria plan or if reimbursed under a flexible spending account.
- Payments of qualified adoption assistance under an adoption assistance program (for FICA taxes but not for FITW).
*Under certain circumstances, severance pay may not be taxable compensation for FICA purposes.