- Posted by: Winter Green-Ike
- Category: Risk & Compliance, Small and Mid-Sized Business
We’re already at the end of the year and that means we have to start preparing for the next one. December is always the time where we have to rush to get all of the last-minute end of the year stuff finished before the holidays roll around in the last two weeks of the month.
On top of the work that normally needs to be done before the year is over, the pandemic has also given us a range of new legal obligations and workforce issues that we need to work out.
This year though we thought we would make it a little easier for you so you’re not playing catchup come January. We put together a short end of the year checklist that will make sure that you have all of your tax, payroll, benefits, and compliance in order before the new year starts.
- Calculate your Employee Retention Credit– The CARES Act provided a retention credit to applicable employers that retained employees during the pandemic. The refundable credit was equal to 50% of qualified wages paid to employees after March 12, 2020, and before January 1, 2021.
- Review Requirements for Tax Credit Provisions Under FFCRA– under the Families First Coronavirus Response Act (FFCRA), applicable employers with fewer than 500 employees are required to provide employees with paid sick leave or expanded family and medical leave specified reasons related to COVID-19. The federal government will reimburse you for costs associated with providing employees that paid leave.
- Prepare FICA and FUTA forms– IRS (FICA) Form 941 is due January 31, 2021, for Q4, and Federal unemployment tax (FUTA) Form 940 is due January 31, 2021.
- Prepare Tax filings for Wages and Nonemployee Compensation– Employers must distribute appropriate tax forms to individuals who received cash payments during 2020 by January 31, 2021.
- Prepare IRS Form 1096– If you paid freelancers or independent contractors in 2020, you must file an Annual Summary and Transmittal of U.S. Information Returns (Form 1096) for each of Forms 1097, 1098, 1099, 3921, 3922, 5498, or W-2G, if filing by paper.
- Check IRS guidance on Payroll Tax Holiday– On Aug. 28, the IRS issued Notice 2020-65 ?in conjunction with the President’s Executive Order, allowing employers to suspend withholding and paying of the employee’s portion of Social Security payroll taxes as part of COVID-19 relief. The payroll tax holiday runs from September 1 through Dec. 31, 2020, and applies only to employees with wages less than $4,000 for a biweekly pay period, including salaried workers earning less than $104,000 per year. Employees (or, if unable, employers) would be required to repay deferred Social Security taxes by April 30, 2021.
- Check ACA Requirements– if subject to the requirements of the ACA, then by January 31, 2021, your company must distribute a Form 1095-C to all full-time employees reporting their offer of health insurance for 2020. Then, the Form 1094-C employer coversheet, along with copies of the Form 1095-Cs, must be submitted to the IRS by Feb. 28, 2021, if paper filing or March 31, 2021, if filing electronically.
- Audit FTEs for ACA Compliance– Audit your FTEs for each month of 2020 to determine if you have reached or exceeded 50 full-time and/or full-time equivalent employees in 2020 and are therefore required to comply with the Affordable Care Act (ACA) beginning in 2021.
- Review All Insurance Policies– Contact your insurance broker to determine if you need to adjust your liabilities to cover any additional exposure.
- Review FFCRA Paid Leave Revisions– The US Department of Labor (DOL) issued revised regulations regarding the availiabili8ty of paid sick leave and expanded family and medical leave under the (FFCRA). You should review their FFCRA policies to ensure that they are consistent with the DOL’s updated guidelines.
- Review your Employee Benefits Package– The pandemic has changed how we worked and that also changes the needs of your employees. Review your benefits package and make adjustments accordingly.
- Review FFCRA and CARES Act for Mandated Coverage of COVID-19 Testing– Effective March 2020, and until the national COVID emergency is over, the FFCRA requires group health plans to cover COVID-19 diagnostic testing.
- Review Employee Records & Form I-9 files– Review your employee records, I-9 files, and check record retention guidelines to see if you are meeting them. Take this time to also dispose of outdated termination and job applications properly.
- Update your employee handbook and distribute your 2021 calendar– review and update your employee handbook to make sure it addresses employment law updates, COVID policies, telecommuting, privacy policies, and any other procedures that your company needs to address. Also, distribute your 2021 calendar of vacation time, pay dates, and company-observed holidays for 2021.
Some of these deadlines are subject to change, so it’s best that you keep up to date with the appropriate organizations or government agencies. Depending on your type of business you may have a different or more complex checklist, if so don’t hesitate to reach out to us and ask us some questions. We’ll be sure to help you out.
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