*This webinar recap was updated on January 12th, 2023.*
Chris Hadden, CPP, Vice President of Revenue Strategy & Operations at Greenshades, presents 2022 Compliance Considerations, as part of our Year-End Forms Webinar Series. Compliance is an essential part of a successful year-end. Non-compliance can bring major risks like data losses, a damaged reputation, security breaches, lost customers, and even financial fines and penalties. The best way to mitigate these risks is to stay vigilant and compliant. This webinar includes a high-level overview on navigating different tax filing requirements, form distribution, and the software and service that can make your year-end process run smoothly and securely.
This webinar is comprised of five significant topics:
Legal Disclaimer: This content and the webinar series are not formal legal advice, and you should always consult your organization’s legal and accounting teams. Greenshades partners with myHRcounsel to provide affordable, online, and on-demand legal advice.
Watch the replay:
Read the recap:
There are ways to help you stay compliant as we move into year-end and get closer to filing. Here are 4 things to do right now:
The 2022 Social Security Wage Base is $147,000. Employee social security withholdings should not exceed $9,114 in 2022. The 2023 Wage Base will be $160,200.
The 2022 maximum employee deferral contribution (49 years or younger) is $20,500; in 2023, this number will increase by 2k ($22,500).
The 2022 employee catch-up contribution limit (50 years or older) is $6,500; in 2023 this number will increase by 1k ($7,500). Keep in mind that the catch-up contribution limit for participants 50 or older applies from the start of the year to those who turn 50 at any time during the year.
Employee only withholding of 0.9% (in addition to the standard 1.45%) on all wages over $200,000 in a calendar year. There is no employer portion of the Additional Medicare Tax.
Imputed income includes benefits that aren’t included in an employee’s wage or salary, but they still pay taxes on. For example: :
Pay special attention to highly compensated employees who may not be eligible for the tax–exempt fringe benefit:
Box 12 Codes:
Truncated SSNs (social security numbers) are allowed on the W-2
Truncate, by definition, is shortening something by removing part of it.
What does this mean? This means that an employer may truncate an employee’s social security number – however ONLY on recipient copies, for example, (XXX-XX-1234). Keep in mind you CANNOT use truncated SSNs on Copy A if filing on paper or in electronic files to the SSA.
Employer Identification Numbers (EIN) may never be truncated, and you should always check with your state to see if it allows or restricts the truncation of social security information.
File On Time
Recipient Copies and filing copies (whether on paper or electronic) are due January 31, 2023.
You should consider electronic filing with the SSA even if you do not have the form count that would make it required. Promoting electronic consent and distribution of W-2 is a great way to reduce liability and avoid issues with delivery (I.e., misdelivered, missing, or late recipient copies) while also reducing the accessibility of information through mail fraud.
The Taxpayer First Act allows for increased electronic filing of IRS forms including W-2s. In 2022, if you send 100 or more W-2s to the SSA, you must file them electronically. In 2023, that limit is lowered to 10.
Disclaimer: This information is pending as the IRS has not issued final regulations, and the threshold for electronic filing is currently 250 or more W-2s. There has been an effort to lower the threshold for years now, and it appears to be getting closer. However, the IRS regulations have not been updated yet and if you choose not to file electronically, proceed with caution.
Please be aware of increased penalties as deadlines are crucial and immovable.
Truncated identification numbers for other form types
Similar to the truncated SSNs on the W-2s, taxpayer identification numbers can be truncated on recipient copies only (copy B):
Keep note that you may never truncate your own identification number (EIN).
Types of identification numbers that can be masked include:
Some 1099 type forms are now fillable PDFs
On www.irs.gov, the following form types can be submitted to the IRS through a fillable PDF and in black and white (copy A).
The Taxpayer First Act
The Taxpayer First Act allows for increased electronic filing of IRS forms including 1099s.
In 2022, if you send 100 or more 1099s to the IRS, you must file them electronically.
Disclaimer: Like stated above, this information is pending the IRS issuing final regulations.
When are 1099s due?
The program is set up to simplify information returns filing for issuers. Through CF/SF, the IRS electronically sends information returns (original and corrected) to participating states. The following information returns may be filed under the CF/SF Program:
These are the states participating in CF/SF:
More about the Combined Federal/State Filing program
Keep note that filing through the program does not guarantee the state filing requirements are met. The company is responsible for validating that submission through the Combined Federal/State Filing Program will satisfy all of their 1099 filing requirements:
Greenshades creates files that are compliant with reporting through the Combined Federal/State Filing Program:
The IRS will report to all states that have a “B” record in the e-file
The “B” Record includes payment information including State Income Tax Withheld and Local Income Tax Withheld. These fields are for the convenience of filers, as the information will not be used by the IRS.
1099 record must include the “K” record
For states that do not participate in the Combined Federal State Program, many will take the IRS Pub 1220 formatted file WITH the “B” and “K” records, filed directly to the state.
When does the IRS report to the states?
The CF/SF Program files are provided to participating states six times a year approximately:
*Runs are not cumulative, meaning the files are separate and distinct.
Instructions are still in draft
Electronic filing is required for employers with 250 returns or more.
Greenshades can print, stamp, and mail year-end forms for you...including to independent contractors. This process is easy, secure, and ERP-agnostic!
We support multiple form types including:
1. Check out our Year-End Resources page!
We've compiled all of year-end forms resources on one page for easy access.
2. Don't know where to start?
The Beginner’s Guide to Year-End Forms is available now!
3. Download the deck from the Webinar presentation
Compliance Considerations 2022 Slide Deck PDF
Need help with compliance and mitigating risks during year-end? Contact sales@greenshades.com or visit go.greenshades.com for information.
Watch the full webinar, 2022 Compliance Considerations.
Visit go.greenshades.com and click on the resources tab, where we keep you in the know about future webinars.