Review these year-end payroll items

December 12, 2018|Deb Lemmer

Important payroll items to review before the year slips away.

With the end of the year in sight, it is time to look at what year-end tasks need attention.


At the end of the year many companies take this opportunity to issue bonuses. Remember, in order to be considered 2018 wages these checks need to be dated and processed through payroll no later than December 31, 2018 so all taxes are calculated properly and paid in a timely manner. As the holidays approach be mindful of your payroll processors’ hours. The sooner you can get this information to them, the better to ensure a smooth process in the timely completion of payroll tasks.

Personal use of corporate auto

When an employee or company owner uses a company vehicle for personal use, such as commuting, this benefit needs to be calculated and added to their W-2 wages. The easiest way to do this is to process this benefit on a regular payroll run so any payroll taxes can be calculated and paid in a timely manner. There are a few different ways to calculate this, with the most common being the Annual Lease Value Method. If you have any questions on the different methods please contact us and we would be glad to help.

S corporation health

This is another calculation that needs to be noted on the W-2. If a company pays medical insurance or makes HSA contributions for any S-corp shareholder who owns more than 2%, these amounts need to be added to the W-2. This is taxable income; however, there is an income adjustment on the Form 1040.

Another thing to consider is whether any third party sick pay was paid. This is usually paid by an insurance company through a short-term or long-term disability policy. You will need to know who is going to be doing the reporting, such as processing the W-2 and preparing Form 8922. The insurance company will provide you the information you need to pay the employer share of the Social Security and Medicare taxes, and you will need the information to be able to prepare your Form 941 correctly.

Check employee information at year-end to help alleviate mistakes on your W-2s, such as making sure Social Security numbers and addresses are correct. Any incorrect information on your W-2 can result in costly penalties, and the IRS is getting more aggressive on these.

During the year employees may have experienced family events, such as a family addition, but they did not make an adjustment on their withholding form. Now is a good time to see if any adjustments need to be made to the W-4s.

ACA reporting

The Affordable Care Act, or health care reform law, outlines benefits and responsibilities for employers. The size and structure of your workforce determines which portions apply to you.

An employer’s size is determined by the number of its full-time employees, including full-time equivalents. The ACA requires employers with at least 50 full-time and/or full-time equivalent employees to offer affordable health care coverage that provides a minimum level of coverage, or pay a penalty.

Applicable large employers who filed 250 or more information returns in the previous year must electronically file Form 1094-C or 1095-C, to report health insurance premiums paid for employees.

Our payroll specialists can be a valuable resource to answer any questions you may have. Contact us or call 800-236-2246 to find out how we can help guide you through this process.

Deb Lemmer, payroll specialist, has more than 15 years of accounting and payroll experience.

Tags: Payroll