The 2010 HIRE Act will exempt employer's portion for Social Security Tax for qualified Employees on wages PAID from March 19, 2010 through December 31, 2010. If you have employees who qualify under this Act, you can flag them using the new HIRE Act (HR2847) Employer FICA Tax checkbox on the Fed Tab of the employee list.
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2010 W-2 Information Regarding the HIRE Act |
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HIRE Act Business Rules |
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HIRE Act Report Changes |
The AccuBuild Program has been changed with new business rules for tax calculations and employer burden pro-ration along with a set of revised payroll reports to help track employer FICA taxes on employees who qualify for this plan.
•Two new fields have been added to the PRCHECK table to track the Exempt FICA Wages and associated FICA Tax amounts:
| · | TaxAmount1 – Will hold the Exempt FICA1 tax amount |
| · | TaxAmount2 – Will hold the Exempt FICA1 Wages |
These amounts are updated during the Posting Process for payroll checks and will only apply to checks processed AFTER the AccuBuild 8.5 Update has been installed.
The Employer Tax Burden expense amounts, as well as the associated liability amounts, will be computed automatically on all checks processed AFTER the AccuBuild 8.5 Update has been installed.
These new calculations will be applied to any NEW payroll check dated between March 19, 2010 and December 31, 2010 where the employee record has been enabled for exemption as shown above.
•Exempt Tax for Past Payrolls
| Because of the timing of this law in the middle of a Calendar Year, there could be wages that will be exempt that have already been posted and accrued without the tax exemption and without being tracked in the new TaxAmount1 and TaxAmount2 fields. A new Federal Tax Liability report in MAR has been created to help track all exempt amounts and determine which amounts have not been accrued properly so that appropriate journal entries can be made for the over accrual of exempt FICA taxes if applicable. |
| In addition, since you cannot report any of these exempt amounts until the second quarter of 2010, the IRS has revised form 941 with special boxes 12c, 12d, & 12d which will be used for the 2nd Quarter Only to report and exempt wages from the first quarter. The 8.5 Version of AccuBuild includes a new MAR version of Form 941 to handle the reporting of these amounts going forward. |
•Payroll Reports
| Because of these tax changes, several reports have been modified and/or added to the system to help compute the new Exempt FICA tax amounts and wages for both payroll posted BEFORE and AFTER the install of the AccuBuild 8.5 Update. |
| IMPORTANT: If you have a custom version of any of the following reports, you will need to use the original AccuBuild Version of these reports in order to get accurate totals for FICA Tax Exempt Amounts. Custom versions of any of the following reports will NOT have the new tax exempt calculations. |
•Traditional (Crystal) Reports
| · | Precktax.rpt – The payroll Pre-Check Tax Register report has been modified to adjust the tax burden formula for employees who are marked as exempt. This report is available on the Payroll Menu. Note: This report will continue to show exempt taxes as long as the employee is marked exempt but the posting process will ignore the exemption if the exemption period (December 31, 2010) has elapsed. |
| · | PrecktaxOLD.rpt – The original version of the Pre-Check Tax Register report has been preserved and is available in the Reports Folder under the AccuBuild Program. |
| · | Prrep15b.rpt – The Check Register & Burden Report has been revised for the employer tax burden calculations. This report is printed automatically (when enabled) during the payroll posting process for automatic paychecks and can also be run from the Payroll - Reports Menu. |
| · | Prrep16c.rpt – The payroll report entitled Employee Transaction Report – TOTALS ONLY has been modified for new FICA exempt calculations for the HIRE Act. This report depends on the new TaxAmount1 and TaxAmount2 fields from the PRCHECKS table and therefore is ONLY ACCRUATE for payroll checks posted after the 8.5 Version of AccuBuild has been installed. This report is printed automatically (when enabled) during the payroll posting process for automatic paychecks and can also be run from the Payroll - Reports Menu. |
| · | Prrep16cOLD.rpt – The original version of the Employee Transaction Report – TOTALS ONLY report has been preserved and is available in the Reports Folder under the AccuBuild Program. |
| · | Employee Transaction Report – All versions of the Employee Transaction Reports have been updated to report the Actual amount of the Employer portion of FICA Tax and FICA wages. |
NOTE: These reports depend on the new TaxAmount1 and TaxAmount2 fields from the PRCHECKS table and therefore are ONLY ACCRUATE for payroll checks posted after the 8.5 Version of AccuBuild has been installed. The reports that were modified include the following:
Prrep16a.644 – Employee Transaction Report – Trans Date – Detail
Prrep16b.644 – Employee Transaction Report – Trans Date – Employee Totals
Prrep16c.644 – Employee Transaction Report – Trans Date – Totals Only
Prrep16d.645 – Employee Transaction Report – W/E Date – Detail
Prrep16e.645 – Employee Transaction Report – W/E Date – Employee Totals
Prrep16f.645 – Employee Transaction Report – W/E Date – Totals Only
| · | Federal Tax Liability Report (Prrep17a.644) – This is a new report which can be used to figure out federal tax liability and / or deposit amounts for any period of time. This report will accurately report the new Exempt FICA wages under the HIRE Act and will report any amounts that were NOT accrued properly. |
Note: This report can also be very useful for calculating Federal Tax Deposit amounts.
| · | Payroll Quarterly 941 (Rev 1-2008) – This report has NOT been changed and represents the original MAR Version of IRS Form 941. (Report Name: PRREP7Q1.622) |
Note: Although the formatting on this report has not been changed, the payroll data for this report will contain all the new FICA Exemption Amounts under the HIRE Act.
| · | Payroll Quarterly 941 (Rev 4-2010) – This report is based on the new 941 Format for April 2010 based on the IRS Draft as of March 22, 2010. In addition to containing all the new lines for the HIRE Act, additional lines and input fields have been added to handle COBRA premium assistance payments. (Report Name: PRREP7Q3.622) |
The report dialog for the 941 Report contains the following new fields which may be edited by the user before printing the form:
| · | 5e section 3121(q) tax on unreported tips |
| · | 6a number of qualified new employees FIRST paid |
| · | 6b number of qualified new employees paid |
| · | 6c exempt wages and tips paid this quarter |
| · | 12a COBRA premium assistance payments |
| · | 12b number of individuals provided COBRA assistance |
| · | 12c No. of qualified employees paid 1st quarter |
| · | 12d exempt wages for 1st quarter |
Note: According to the IRS, Box 12c & 12d should ONLY be filled out for the 2nd quarter of 2010 and left blank for the 3rd and 4th quarters of 2010.
IMPORTANT (PLEASE READ) – While we have made every attempt to reproduce the new Form 941 (Rev 4-2010) as accurately as possible, the IRS has NOT updated Publication 4436 since 2008 which lays out the specifications for creating substitute forms. We have been requesting updates to this publication since the new changes for COBRA were introduced in 2009 but this department of the IRS is understaffed and therefore has not updated the publication.
Since this form has not been officially approved, you should use it as a reference for filling out the Actual Form. We have submitted our form for approval but we are not sure if or when we will receive approval.
•Payroll Form 941 Schedule B - The data calculations for the MAR Schedule B Report have been modified (Feb 10, 2011) for the tax liability computation in order to be compatible with all payroll quarters for all years as outlined below:
•Payroll Prior to 2010 – Handles liability based on employer and employee portions being the same.
•2010 Payroll – Exempts employer portion of Social Security for payroll on employees who qualify for the 2010 HIRE Act.
•2011 Payroll – Handles liability based on separate rates for employee and employer Social Security Tax (as set up in the Payroll Properties) and matching amounts for the Medicare Portion of FICA.
2010 W-2 Information Regarding HIRE Act
•If you used the HIRE Act tax exemption on any of your employees in 2010, you do NOT need to uncheck the box before doing payroll in 2011. AccuBuild will only calculate the exemption on payroll checks that were dated between 3/19/2010 and 12/31/2010.
•The W-2 Box 12 Info Group on the Payroll > Employees > Federal Tab has the new option 'CC' for 2010 W-2s which is used to report the exempt FICA wages under the 2010 HIRE Act. When option 'CC' is selected for any of the Box 12 Fields (A-D), the system will calculate the FICA wages for all payroll checks that were written within the qualified period which runs from 03/19/2010 through 12/31/2010 and update the Box 12 amount automatically.
•A new MAR report has been created called the '2010 HIRE Act Exempt Wage Report' which will list all employee wages for 2010 on employees who are marked for the NEW HIRE Act. This report will be helpful in determining the amount for Box 12 on the W-2s. Make sure your qualified HIRE Act employees are marked in the employee list before running this report. Please note that all 2010 payroll checks are included on this report and only the checks that were dated between 03/19/2010 through 12/31/2010 inclusive will be included in the Exempt Wage Totals for the HIRE Act.
•Note: This report will show the Box 12 (CC) Amount for each employee as well as the total amount that will be required on Form W3 in the new box number 12b titled 'HIRE Exempt wages and tips'.