Payroll Resources for Accountants
Accountants, bookkeepers, and others working with QuickBooks Payroll services pose questions for answers by their peers at the Intuit Accountant Community Forum. Here is a sampling of helpful payroll tips on three payroll topics taken from the forum:
Visit the forum at http://www.intuitaccountants.com/webx/forums/.
Day Laborers and Form 1099
In this example from earlier this year in the QuickBooks General Forum, JoeyEA1, ldion, and NIwasa (accountant user names) provide guidance on working with clients who are hiring day laborers. The comments have been edited lightly for presentation here.
Situation. You may have a client who is using day laborers. One forum posting that raised this subject inspired a number of responses, three of which are presented here.
Response from JoeyEA1. The IRS would say that the client is not supposed to be using day labor in the first place, unless the client is using a legitimate service such as Manpower that supplies them. The service then keeps track of the ID numbers and pays the laborers.
Too often, "day labor" is a euphemism for illegal aliens that stand on corners waiting for companies to pick them up and pay them cash for the day's work. According to the law, you are not supposed to pay anyone without first getting their full name, address, and Social Security number for the 1099 form, so you can report the amount you paid, if it is $600 or more in a calendar year. If the laborers are not citizens, they are supposed to furnish you other additional documentation.
Good luck catching up with day laborers after you drop them off at the end of the day, much less giving them a 1099.
Response from ldion. I am in New England, so I have less of an issue concerning illegal workers than Florida or California.
I have a client who has several fishing vessels. We pay the laborers by cash or check, but 1099 them for the whole amount.
Another client—who installs windows, roofs, and siding—pays the workers by check and also issues 1099s to them.
The important thing is, as Joey said, to get the full name, address, and Social Security number on file so that you can keep your records clean. We don't hand out the check until the form is filled out.
Response from NIwasa. You should check out the instructions for 1099-MISC at www.irs.gov. Generally, any unincorporated business that provides services to another business and receives $600 or more during a year should be issued a 1099. The penalty for failure to file is $50 per return. I'm not sure if there's a maximum penalty....
The Social Security Administration makes it very easy to check Social Security numbers (SSNs). For contractors who typically have a higher risk of providing incorrect information, I recommend the SSNs be verified prior to issuing any checks. The link is http://www.ssa.gov/employer/ssnv.htm.
Please also note that the backup withholding rate is currently 28 percent, not 31 percent, and is mandatory when incorrect SSNs are provided.
Editor's Note: Visit the Forum
To find more tips from other practitioners or post your own questions, visit the Accountant Community Forum at http://www.intuitaccountants.com/webx/forums/.
Keeping Mileage Expenses out of Payroll
In this example from earlier this year in the QuickBooks General Forum, QAS (an accountant's user name) provides guidance on a user's difficulties in dealing with mileage reimbursements, so they won't be treated as wages. Several postings have been edited together for presentation.
Situation. PW19990 on the forum asks: I have a client who wishes to pay staff for mileage on payroll checks as well as bill clients for that mileage. Is it possible to pay staff for the mileage on a payroll check and have it appear when doing billing to the customer? If I understand correctly, the mileage reimbursement would have to be set up as a "wage" in order for it to be in the section that allows tagging to a customer. If that is correct, won't the mileage amount show up on the W-2?
Response. When creating a paycheck, choose the customer name to be billed for the mileage under Customer Name. When you create an invoice for that customer, fill in the Customer Name at the top of the invoice form, then click Time/Costs. Then click the Time tab and you should see the mileage that was paid to your employee. Choose that and it will show as an item on the invoice.
If you set up the mileage reimbursement as a wage item, it will show as a taxable item on the employee's W-2, which you don't want to happen in this case.
Set up the mileage reimbursement item as an addition. Also, very important: all addition and company contribution items must have the Track Expenses by Job option clicked (you can edit the item to check this box).
When you are creating the paycheck, in the Other Payroll Items box, choose the Mileage Reimbursement you have set up. Enter the rate and the number of miles. This amount will be calculated and added as an after-tax item to the employee's paycheck. Most importantly, the customer name needs to be chosen in the Earnings section.
As explained in QuickBooks Help, you can keep track of payroll expenses by:
- Customer and job
- Class
- Service item
Expenses you can break down include:
- Salary and hourly wages
- Company-paid payroll taxes
- Additions, commissions, and company contributions
QuickBooks can prorate an employee's company-paid expenses in the same proportions as it prorates the dollar amounts of the employee's earnings. You can also set up QuickBooks to prorate each addition, commission, or company contribution.
To keep track of payroll expenses by customer and job:
- Turn on the payroll preference for reporting payroll taxes by Customer:Job.
- On every payroll item for an addition or company contribution, select the Track Expenses by Job checkbox.
- On each paycheck you write, associate every salary or hourly wage with the correct job or jobs.
- Alternatively, if you use timesheets to enter hours, associate every hourly wage with the correct job or jobs.
This feature is available only in the Pro, Premier, and Enterprise Solutions editions.
Editor's Note: Visit the Forum
To find more tips from other practitioners or post your own questions, visit the Accountant Community Forum at http://www.intuitaccountants.com/webx/forums/.
Getting a Fringe Benefit into Box 14 of the W-2
In this example from earlier this year in the QuickBooks General Forum, DSimsBCS (an accountant's user name) provides guidance on a user's difficulties in dealing with fringe benefits and Form W-2. Several postings have been lightly edited for presentation here.
Situation. On the forum, Actionbsns asks: I am going nuts trying to get the W-2 to be correct ... the Auto Fringe Benefit ... dollar amount [is not printing] in box 14. Whatever I try seems to increase the income in box 1 and/or the FICA and MC wages. What am I overlooking or doing wrong?
Response. Check how the fringe benefit is set up. It should be a Company Contribution as the Type and the Tax Tracking Type should be Fringe Benefit (which explains that it will go to box 14). If the setup is wrong, it won't print in box 14.
Editor's Note: Visit the Forum
To find more tips from other practitioners or post your own questions, visit the Accountant Community Forum at http://www.intuitaccountants.com/webx/forums/.
|
