Happy new year everyone. I hope you had a wonderful holiday season. But, now it’s time to take care of all those beginning-of-the-year duties. You know, getting ready for tax time, setting goals for the year, and don’t forget all the new human resources laws, employee required notices, and updates.
So, it today’s episode, I’m going to give you a hot list of things that should be on your radar for new year employee tasks.
Let’s start by talking about taxes – yes, I know – I great place to start, right?
Employee W-2s have to be distributed to your team no later than January 31st. So, if you haven’t already, double check things like home addresses, and year end totals to make sure the right information gets to the right place. If you find any discrepancies, reach out to your payroll company right away. If it turns out something is off, it’s better to catch it before they actually file your year end taxes than having to do a re-filing. It’s less expensive too.
The other thing that has to happen by the end of January is delivery of the 1095c forms to employees. What’s a 1095c you ask? Well, if you have less than 50 employees, you can skip this section. But if you have 50 or more, you are under the Affordable Care Act guidelines (also known as ACA). And that means you have to do year end reporting to your employees.
“… if you have an employee who claimed exempt on their federal W-4 form, the are required to complete a new W-4 form each year…”
I won’t go further into what the 1095c is, or how to complete them – it’s a huge topic. I’ll just say, make sure you are on top of your ACA reporting responsibilities – it can be really expensive if you miss the deadlines. And speaking of deadlines, keep in mind it may get pushed this year (in fact there is a pending extension proposal to give everyone until March 2nd to get this filing done. I’m not surprised, in the past couple of years, due to the state of the world, the deadline has been pushed. So, it’s likely it will get pushed this year as well. But maybe not – so be sure to keep an eye out.
One other thing about ACA filings, the 1095c isn’t the only notice with a filing deadline. There is also the required filing of the 1094 c with the IRS – and those deadlines come up in Feb and March, depending on how you file. So, final word – stay on top of your ACA reporting requirements.
And now – circling back to the subject of taxes for a minute. January is the perfect time to distribute what we call the tax package. It includes new tax withholding forms for the new year (mainly because at the beginning of the year people start thinking about their take home pay, or talking to their accountants, and want to do adjustments to their tax withholding levels. Also, if you have an employee who claimed exempt on their federal W-4 form, the are required to complete a new W-4 form each year – so they will need a new one in any event.
Additionally, your state may require that you notify your employees of the Earned Income Tax Credit – or EITC. The EITC helps moderate and low income workers by providing a tax break. It’s a federal program, but many states, like California, Texas and New Jersey – just to name a few; may have their own programs, and require that you notify employees each year. So, we always recommend that everyone get the notice – that’s a better alternative to accidentally missing someone.
The beginning of the year will also bring changes to some benefit limits. For instance, the maximum contribution limit for retirement plans, and things like Flexible Spending Accounts and transportation plans change each year. So be sure to check out the 2022 limits, and adjust the maximum deduction amounts in your payroll system.
Oh, while you’re in the payroll system – take a moment to re-check the benefit deduction amounts. Did they get correctly updated when you finished your last open enrollment period? Even if it was 6 months ago, it’s better to find and correct the mistake now, than to miss it and have it uncorrected until a full plan year has passed.
And then there are new employment laws – oh, don’t forget about the new employment laws. Every year there are new or updated guidelines, and many times they don’t actually get signed until at the 11th hour of last year. So you do have to stay aware of what’s coming down the road, and make preparations to update your policies or practice, revise the handbook, do the notifications, post the posters etc.
Other items to put on your beginning-of-year list:
So, again, I say – I hope you had a great holiday season…because now, it’s back to work!