Payroll Balancing and Year End

1
Payroll BalancingandYear End
2002 NCOAUG TRAINING
Dan Rothstein
2
Powerpoint Presentation

• http//www.darc.com/ncoaug
• Dan.Rothstein_at_BOSSCorporation.com
• Leave your business card with me write the
  subject matter on the back.

3
BOSS Corporation

• Better Organization Service Solutions
• Authors of
• Special Edition - Using Oracle 11i
• Special Edition - Using Oracle Applications
• Founded in 1995
• 150 Implementations / Upgrades

4
BOSS Overview

• About BOSS...
• Recent BOSS Leadership OAUG Toronto (May 2002)
• BOSS 11i Training Install Administer Workflow
  (Self Service)
• BOSS 11i Training Oracle Advanced Benefits
• Fast Formulas for Advanced Benefits, PTO
  Accruals, and Payroll
• BOSS 11i Training Multi-Org Financials
• HR/Pay Projects Accommodate Your Changing Org
  Structure

5
Initial Balance Loads

• Group Term Life (GTL) insurance greater than
  50,000.
• Qualified Plan 401K
• Pre-Tax deductions
• Imputed Income
• Deferred Compensation
• Tax year earned
• Tax year paid
• Stock Options
• Relocation Cost
• Nonqualified supplemental pension plans
• Fringe Benefits

6
Dimensions Concerns

• Period to Date
• Month to Date
• Quarter to Date
• Year to Date
• Fiscal Year to Date
• Inception to Date

7
Analyze Tax Views

• FIT Federal Income Tax
• SIT State Income Tax
• LIT Local Income Tax
• City
• County
• School District
• Medicare FICA Tax
• SS FICA Tax
• FUTA Federal Unemployment
• SUI State Unemployment / State Disability
  Insurance
• Head Tax
• Reporting for both employee and / or employer
  tax liabilities.

8
Tax Balance View Concepts

• Date Tracking
• GRE - Government Reporting Entity
• Employee vs. Employer
• Assignment View
• Person View
• Multiple GREs Transfers

9
Tax Balance Values

• No Negative Values
• No Excess Wages for Medicare FICA
• Gross Federal Wage Medicare Taxable Wage
  Pre-Tax Section 125 Dependent Care.
• Federal Income Taxable Wages State Income
  Taxable Wages (When applicable)
• Federal Income Taxable Wages State Income
  Taxable Wages Local Income Taxable Wages. (If
  applicable)
• State Unemployment Insurance Employer Taxable
  Wages Multiplied by the Employers Rate
  Calculated Liability.

10
Tax Eligibility Rules

• Primary Classification
• Supplemental Earnings
• Imputed Income
• Pre-Tax deductions
• Tax Level Agency
• Federal
• State
• County
• City
• Tax Categories

11
Tax Eligibility Rules

• SUBJECT TO Taxable Wages
• FIT
• Withholdable
• Not Withholdable
• EIC
• FUTA
• Medicare
• SS
• Enabling (Check Mark) Categories to Determine if
  the Element is Taxable for Subject To Federal
  Income Tax, Earned Income Credit, FUTA, Medicare,
  and SS.

12
Tax Eligibility Rules
13
Instances

• Test Instance
• Development Instance
• Production Instance
• Patches
• Log of Application Install Dates of Each Patch.
• Reference Numbers and Sufficient Description of
  Subject Matter
• Consider the Timing of Any Changes Made to
  Production- That Could Existence Due to the Date
  of the Snapshot of Test, From Production.
• Formula Changes
• Balance Feed Changes
• Additional Elements
• Costing Conditions
• Patch Applications

14
Instances

• Assignment Set for Testing
• Various Employee Status Conditions.
• Terminated Current Period and Prior Pay Period.
• Salary Basis
• Hourly Basis
• Which Ever Other Basis is Relevant to the
  Organization.
• All Earnings and Deduction Elements Used.
• Test Batches for Input Hours.
• Consistent Input Values
• Perhaps Ten Hours of Each Paying Element
• Consistent Employees and Status

15
Instances

• Payroll Processing
• Regular
• Supplemental
• Quick pay
• Operational Reporting-Anticipated Results
• Gross to Net
• Tax Summary and Details
• G/L Costing

16
Verifying Run Result Values

• Run results are the source values calculated in
  the data base.
• Tools to increase internal controls regarding the
  accuracy of payroll output.
• Input values of data entry for each element
• Hours
• Dollars
• US Gross to Net Report
• Tax Remittances
• GRE Totals
• NACHA Report Count and Dollar Totals
• Unacceptable Tax balance report
• Compare prior similar type payroll totals for
• Gross Wages
• Imputed Income
• Tax Liabilities
• NACHA Deposit

17
Balance Adjustments

• Adjust Tax
• Adjust Tax Balance
• Build Adjusting Elements- Use ALL 15 inputs
  fields.
• Refunding
• Taxable Wages
• Taxes Withheld
• Tax Withholding Deductions
• Self Adjusting System Entries- Dont Forgot FICA
  is Self Adjusting in the Application
• Timing of Adjustments, with Payroll Processing

18
Terminations

• Termination Date is Required! Changing the Status
  to Ex-employee
• Prevents Elements from Being Paid After
  Termination Date.
• However, Final Process Date is NOT Required !!!
• Exception is Rehiring a Previously Terminated
  Employee
• At sites including Oracle payroll it is best to
  leave the Final Process date blank, so that you
  can make corrections to the final payments or
  make other future adjustments.
• No Balance Processing is Allowed if Final Process
  is Activated
• Adjust Tax Balances
• Adjust Balances
• Payroll Processing Activity

19
Report Parameters

• Numerous Requirements for Each Report.
• Contingent Upon the Concepts with in the Report.
• Date Tracking for One Point in Time
• Date Ranges for a Period in Time.
• Government Reporting Entity (GRE)
• Element Types

20
Reports

• Invalid Address
• Determines continuous primary address and invalid
  zip codes or tax jurisdictions relating to Vertex
  GEO codes.
• Unacceptable Tax Balance
• Identifies employee records that are not accurate
  based on predefined equations. This report has
  two time dimension parameters.
• Quarter to Date
• Year to Date
• Ideally, this report should be completely in
  balance. (Report output is blank,)

21
Reports

• Invalid Address
• Determines continuous primary address and invalid
  zip codes or tax jurisdictions relating to Vertex
  GEO codes.
• Unacceptable Tax Balance
• Identifies employee records that are not accurate
  based on predefined equations. This report has
  two time dimension parameters.
• Quarter to Date
• Year to Date
• Ideally, this report should be completely in
  balance. (Report output is blank,)
• Over Limit
• Items that have federal and state wage bases of
  which have exceeded established limitations.
  Items included in this report are
• 401K
• SS (social security) FICA Taxable Wages
• FUTA Taxable
• SUI Taxable
• SDI Taxable

22
Reports

• Invalid Address
• Determines continuous primary address and invalid
  zip codes or tax jurisdictions relating to Vertex
  GEO codes.
• Unacceptable Tax Balance
• Identifies employee records that are not accurate
  based on predefined equations. This report has
  two time dimension parameters.
• Quarter to Date
• Year to Date
• Ideally, this report should be completely in
  balance. (Report output is blank,)
• Over Limit
• Items that have federal and state wage bases of
  which have exceeded established limitations.
  Items included in this report are
• 401K
• SS (social security) FICA Taxable Wages
• FUTA Taxable
• SUI Taxable
• SDI Taxable
• GRE Totals
• Taxable wages per Government Reporting Entity.

23
Reports

• State Quarterly Negative
• Identifies Any Negative Values per Employees
  Reportable State Tax Jurisdictions.
• State Quarterly Wage Listings (SQWLs)
• File to Report Employees Wages on a Quarterly
  Basis.
• Requires Specific Media Means Per State
  Requirements.

24
Year End Reports

• Year End Negative Balance
• Identifies Negative Values for the Year to Date
  Dimension.

25
Year End Reports

• Year End Negative Balance
• Identifies Negative Values for the Year to Date
  Dimension.
• W2 Exception Register
• Identifies Negative or Zero Box 1 Values, which
  will Not Create a W-2 Form. Justification
  Analysis Required to Accept that a W-2 Form Will
  Not be Produced, or that Adjustments will be
  Required.

26
W2 Exception Register
27
Year End Reports

• Year End Negative Balance
• Identifies Negative Values for the Year to Date
  Dimension.
• W2 Exception Register
• Identifies Negative or Zero Box 1 Values, which
  will Not Create a W-2 Form. Justification
  Analysis Required to Accept that a W-2 Form will
  Not be Produced, or that Adjustments will be
  Required.
• W-2 Register
• Views for Each Box Number on the W-2.
• Utilize this Report PRIOR to Actually Printing
  Your W-2 Forms.

28
W2 Register
29
W2 Register
30
Year End Reports

• Year End Negative Balance
• Identifies Negative Values for the Year to Date
  Dimension.
• W2 Exception Register
• Identifies Negative or Zero Box 1 Values, which
  will Not Create a W-2 Form. Justification
  Analysis Required to Accept that a W-2 Form will
  Not be Produced, or that Adjustments will be
  Required.
• W-2 Register
• Views for Each Box Number on the W-2.
• Utilize this Report PRIOR to Actually Printing
  Your W-2 Forms.
• Annual FUTA Tax Return (Form 940) File.

31
Year End Reports

• Year End Negative Balance
• Identifies Negative Values for the Year to Date
  Dimension.
• W2 Exception Register
• Identifies Negative or Zero Box 1 Values, which
  will Not Create a W-2 Form. Justification
  Analysis Required to Accept that a W-2 Form will
  Not be Produced, or that Adjustments will be
  Required.
• W-2 Register
• Views for Each Box Number on the W-2 Form.
• Utilize this Report PRIOR to Actually Printing
  Your W-2 Forms.
• Annual FUTA Tax Return (Form 940)
• Year End Preprocessor
• Archive Data Tables Populated

32
Year End Data Reporting

• Taxable Fringe Benefits
• Withholding Taxes
• Gross Up for Taxes
• Moving Expenses
• Personal Use of Company Cars
• Prizes and Awards
• Adoption Assistance

33
Year End Data Reporting

• Deferred Compensation
• Qualified Plans
• Nonqualified Plans
• Stock Options
• Income and Tax Withholding
• Dependent Care Benefits
• Cafeteria Plans and Flexible Benefit Plans

34
Feeding Balances for W-2 Boxes

• Date Tracking of Element Based on Effective Date
  Established in Feed Set Up.
• Balances feeds are established from the Balance
  screen in the Compensation and Benefits area of
  the menu.
• If Current Year Issue, Effective Date to January
  1 of Current Year to Insure Entire Year of
  Processing is Accumulated in the Balances. The
  Value will be Summarized Based on Effective Date
  Through 31 December of Current Year.

35
Balance Feed W-2
36
W-2 Forms

• Actual Form Paper Supply (Have EXTRAS)
• Printing Capabilities
• Laser
• Xerox
• Distribution
• Postage
• Meter
• Prepaid Envelops
• Mailing
• Pick Up
• Delivery to Post Office

37
W-2 Forms

• Outside Resources- (They may do it ALL)
• File Transfer of W-2 Data
• Provide Forms
• Printing
• Mailings
• Form Free Printing
• 1099 Etc., Moore Business Forms

38
W-2 2002

• Certain information must always be included on
  Form W-2, including
• The employers name, address, and EIN
• The employees name, address, and SSN
• The total amount of wages, tips, and other
  reportable compensation and
• Withheld federal income, social security, and
  Medicare taxes.

39
W-2 2002
All entries on Form W-2 should be typed in dark
black ink in 12-point Courier font, if possible,
since handwritten entries and other color inks
hinder data entry processing, and should not be
in script type, inverted font, italics, or dual
case alpha characters. Entries in the boxes
should not cross any of the vertical or
horizontal lines that separate the boxes.
Employers should not erase, white out, or strike
over an entry. Paper Copies A of Form W-2 should
be filed either alphabetically by employees last
names or numerically by employees SSNs to help
the SSA locate specific forms.
40
W-2 2002

• Box-by-box 2002 Form W-2 instructions. Which
  contain several minor changes from the 2001
  version.
• Box aControl number. This is not a required
  field and is for the employer to use in
  identifying individual Forms W-2.

41
W-2 2002
Void. This box should be checked only if the form
is incorrect and is being corrected before Copy A
has been filed with the SSA. The voided Copy A
should not be sent to the SSA (unless it is on a
page with a correct W-2), with corrected employee
copies being sent to the employee. Do not include
any amounts shown on Void Forms W-2 in the totals
on Form W-3. Box bEmployer identification
number. Enter here the employer identification
number (EIN) assigned by the IRS and used on the
employers quarterly or annual employment tax
returns (e.g., 941 or 943). Enter Applied for
if the number has not yet been received. Box
cEmployers name, address, and ZIP code. Enter
here the employers name, address, and ZIP code
as they are shown on the quarterly or annual
employment tax returns. (Form 941 / 943)
42
W-2 2002
Box dEmployees social security number. Enter
here the number shown on the employees social
security card. If the employee does not have an
SSN, advise the employee to apply for one and
write Applied for in Box d. A Form W-2 or W-2c
with the correct SSN must be filed when the
employee receives a social security card and
shows it to the employer, depending on whether
Copy A has already been filed with the SSA.
Box eEmployees name.
Enter here the employees name as shown on the
employees social security cardfirst name and
middle initial to the left of the vertical line,
and last name to the right of the vertical line
(use first initial instead of first name if the
employees name wont fit and ignore the vertical
line). the employees name has changed, use the
name on the original card until a new card is
shown. Do not show titles or academic degrees at
the beginning or end of the employees name
(e.g., Mr., Ms., Dr., MD or PhD). Do not use Jr.,
Sr. or a numerical suffix (e.g., III, IV) after
the last name.
43
W-2 2002

• Third-party payers of sick pay filing third-party
  sick pay recap Forms W-2 must enter Third-Party
  Sick Pay Recap in place of the employees name
  in Box e.
• Box fEmployees address and ZIP code. Enter
  here (can be close enough to the employees name
  to allow mailing in a window envelope or as a
  self-mailer) the employees last known address.
  If part of the address is missing (street
  address, state name, and/or ZIP code), make sure
  the W-2 form can be located quickly by creating
  an exception report, in case the form cannot be
  delivered. This box is combined with Box e on all
  copies except Copy A. For a foreign address, give
  the information in the following order city,
  province or state, postal code, and the name of
  the country (no abbreviation for the country
  name).

44
W-2 Box 1

• Wages, tips, other compensation. Report all
  wages, tips, and other reportable compensation
  actually or constructively paid to the employee
  during the calendar year, even though they may
  have been earned during the previous year. Such
  amounts include
• Total wages, prizes, and awards, but not elective
  deferrals unless made under a 501(c)(18)(D) plan
• Total non cash payments (including reportable
  fringe benefits)
• Total reported tips (not allocated tips)
• Certain employee business expense reimbursements
  
• Cost of accident and health insurance premiums
  paid on behalf of 2 shareholder-employees by an
  S corporation
• Distributions from a nonqualified deferred
  compensation plan or a 457 plan
• Payments to statutory employees

45
W-2 Box 1

• The value of group-term life insurance in excess
  of 50,000
• Employee contributions to a medical savings
  account
• Employer contributions to a medical savings
  account to the extent they are includible in
  the employees income
• Employer contributions for long-term care
  services to the extent the coverage is provided
  through a flexible spending arrangement
• Employee taxes paid by the employer
• Employer payments or reimbursements for
  nonqualified moving expense
• Taxable benefits (cash) paid under a cafeteria
  plan and other reportable compensation from
  which no federal income tax was withheld (e.g.,
  scholarships).

46
W-2 Box 2

• Box 2- Federal income tax withheld. Enter here
  the total federal income tax withheld from
  employees wages, including that withheld from
  third-party sick pay (unless the third party has
  reporting responsibilities). Also include the 20
  excise tax withheld on excess golden parachute
  payments.

47
W-2 Box 3

• Box 3Social security wages. Enter here the
  total wages paid subject to employee social
  security tax, but not including tips and
  allocated tips. This includes employee business
  expense reimbursements report- ed in Box 1 and
  elective deferrals to plans described in Box 12,
  Codes D, E, F, G and S (even though not included
  in Box 1). It also includes the value of
  group-term life insurance coverage over 50,000
  that is tax- able to former employees (see
  Section 3.3-1). Amounts deferred under a
  nonqualified deferred compensation plan and
  elective and non elective deferrals to 457 plans
  must be included here if they are no longer
  subject to forfeiture and the services giving
  rise to them have been performed (see Section
  4.6-10). Also include employee and non excludable
  employer contributions to a medical savings
  account, employee contributions to a SIMPLE
  retirement account, and adoption benefits. The
  total of Boxes 3 and 7 should not exceed 84,900
  for 2002 (maximum social security wage base).

48
W-2 Box 4

• Box 4Social security tax withheld. Enter here
  the total employee social security tax withheld
  (not the employers share) or paid by the
  employer for the employee. Do not subtract any
  advance EIC payments. For 2002 the amount should
  not exceed 5263. 90.

49
W-2 Boxes

• Box 5Medicare wages and tips. Enter here the
  total wages paid and reported tips subject to
  employee Medicare tax. This includes the same
  types of wages and tips subject to social
  security tax. However, there is no limit on the
  amount of wages and tips subject to Medicare tax.
• Box 6Medicare tax withheld. Enter here the
  total employee Medicare tax withheld or paid by
  the employer for the employee. Do not subtract
  any advance EIC payments. If the employer is a
  government (public sector) employer with
  employees paying only the Medicare tax (not
  social security), enter the Medicare tax in this
  box.

50
W-2 Boxes

• Box 7Social security tips. Enter here the amount
  of tips reported by the employee to the employer
  during the year even if employee funds were
  insufficient to collect the social security tax
  on the tips. The total of Boxes 3 and 7 should
  not exceed 84,900 for 2002.
• Box 8Allocated tips. Large food or beverage
  establishments should enter here the amount of
  tips allocated to the employee (see Section
  3.4-26). The amount should not be included in Box
  1, 3, 5, or 7.
• Box 9Advance EIC payment. Enter here the amount
  paid to the employee as advance earned income
  credit.

51
W-2 Boxes

• Box 10Dependent care benefits. Enter here the
  total amount of dependent care assistance
  benefits provided by the employer under IRC 129
  . The amounts reported indicate amounts were paid
  or incurred by the employer for the employee,
  including the fair market value of
  employer-provided or employer-sponsored day care
  facilities and employee pre-tax contributions
  under a 125 plan. Any amount reported in Box 10
  which exceeds 5,000 must also be entered in
  Boxes 1, 3, and 5.

52
W-2 Box 11

• Box 11Nonqualified plans. The instructions for
  Box 11 have undergone significant changes
  recently, since there has been much confusion
  over the years regarding what the information is
  used for and who uses it. According to the Form
  W-2 instructions, the purpose of Box 11 is to
  help the SSA determine if any portion of the
  amounts reported in Box 1, 3, or 5 was earned in
  a year earlier than the year being reported. SSA
  uses this information to verify that they have
  properly applied the social security earnings
  test and paid the correct amount of benefits,
  since employees from age 62 - 64 who are
  collecting social security benefits face a
  reduction in benefits if they earn more than a
  certain amount in a year.
• continued

53
W-2 Box 11

• Box 11Nonqualified plans continued.
  Generally, enter here the amount of
  distributions to an employee from a nonqualified
  deferred compensation plan or 457 plan. Put that
  amount in Box 1 as well. If no distributions were
  made to the employee, show the amount of any
  deferrals under the plan (plus earnings) that
  became subject to social security and Medicare
  taxes during the year (but were for prior year
  services) because they were no longer subject to
  a substantial risk of forfeiture. The deferral
  amount should also be put in Boxes 3 and 5. If
  the deferrals that are included in Boxes 3 and 5
  relate to current year services (services
  performed in the year to which the Form W-2
  relates), do not report them in Box 11.
• continued

54
W-2 Box 11

• Box 11Nonqualified plans continued.
  Also, if
  the employee received distributions and had
  taxable deferrals during the year, do not
  complete Box 11. These amounts are subject to
  special reporting rules outlined in IRS
  Publication 957, Reporting Back Pay and Special
  Wage Payments to the Social Security
  Administration, and must be reported on Form
  SSA-131, Employer Report of Special Wage
  Payments. Government employers should enter in
  Box 11 amounts deferred to ineligible 457(f)
  plans (see Section 4.6-4) when the substantial
  risk of forfeiture ends. These amounts should
  also be entered in Boxes 1, 3, and 5. Amounts
  deferred under eligible 457(b) plans should be
  entered in Boxes 3, 5, and 11 for the year when
  the substantial risk of forfeiture ends, and in
  Boxes 1 and 11 for the year when plan
  distributions are made. The Box 11 amounts for
  457 plans should be preceded by Code G and a
  space if the employer is entering only
  distributions from 457 amounts in Box 11.
  Distributions from nonqualified deferred
  compensation plans or 457 plans paid to
  beneficiaries of deceased employees should be
  reported on Form 1099-R . Military retirement
  plan payments should also be reported on Form
  1099-R.

55
W-2 Box 12

• Box 12See instructions for Box 12. Enter here
  only items described in the following
  explanation, with the alphabetical code to the
  left of the vertical line in Boxes 12 a-d and the
  amount to the right of the vertical line and the
  dollar sign. Use capital letters for the codes.
  Paper Forms W-2, Copy A must contain no more than
  four items in Box 12, although magnetic media
  filers can include more. For paper filers,
  another Form W-2 can be used to report the
  additional items, but do not include any entries
  in Boxes 1-11. As with other Form W-2 entries, do
  not use dollar signs or commas in Box 12 amounts,
  only decimal points.
  continued

56
W-2 Box 12

• Code AUncollected social security or RRTA tax on
  tips. Enter here the amount of social security or
  Railroad Retirement Tax Act (RRTA) tax on an
  employees tips that could not be collected
  because of insufficient employee funds (regular
  wages and amounts contributed by the employee for
  withholding purposes). This amount should not be
  included in Box 4. The Code A amount Box 4
  should (Boxes 3 7) x 6.2.
• Code BUncollected Medicare tax on tips. Enter
  here the amount of Medicare or RRTA Medicare tax
  on an employees tips that could not be collected
  because of insufficient employee funds (regular
  wages and amounts contributed by the employee for
  withholding purposes). This amount should not be
  included in Box 6. The Code B amount Box 6
  should Box 5 x 1.45.
• Code CCost of group-term life insurance coverage
  over 50,000. Enter here the taxable cost of
  employer- provided group-term life insurance
  coverage over 50,000, minus the employees
  after-tax contributions. Also nclude ths amount n
  Boxes 1 3 and 5.

57
W-2 Box 12

• Code DSection 401(k) contributions. Enter here
  the employees total elective deferrals to a
  401(k) cash or deferred arrangement and amounts
  deferred to a SIMPLE retirement account that is
  part of such an arrangement, even if they exceed
  the annual elective deferral limit (not employer
  non elective or matching contributions or
  employee after-tax contributions). Do not report
  any excess deferral in Box 1.
• Code ESection 403(b) contributions. Enter here
  the employees total elective deferrals to a
  403(b) salary reduction agreement to purchase an
  annuity contract, even if they exceed the annual
  elective deferral limit (not employer non
  elective or matching contributions or employee
  after-tax contributions). Do not report any
  excess deferral in Box 1.
• Code FSection 408(k)(6) contributions. Enter
  here the employees total elective deferrals to a
  408(k)(6) salary reduction Simplified Employee
  Pension plan, even if they exceed the annual
  elective deferral limit (not employer non
  elective or matching contributions or employee
  after-tax contributions). Do not report any
  excess deferral in Box 1.

58
W-2 Box 12

• Code GSection 457(b) contributions. Enter here
  the total elective and non elective contributions
  made to 457(b) deferred compensation plan for
  government employees or tax-exempt organizations,
  even if they exceed the annual elective deferral
  limit. Do not report amounts contributed to an
  ineligible 457(f) plan or amounts deferred under
  a 457(b) plan that are subject to a substantial
  risk of forfeiture.
• Code HSection 501(c)(18)(D) contributions. Enter
  here the total elective deferrals to a
  501(c)(18)(D) tax-exempt organization plan (not
  employer non elective or matching contributions
  or employee after-tax contributions). Also
  include this amount in Box 1. Beginning n 2002
  employees who are 50 years or older can defer an
  extra 1000 into an eligible retirement plan
  above the statutory or plan limits as a
  catch-up contribution. Any catch-up
  contribution amount should be added to the
  employees elective deferral under such plans for
  purposes of reporting the amount n Box 12.
• Code JNontaxable sick pay. Enter here the amount
  of third-party sick pay that is not included in
  income because of the employees after-tax
  contributions to the sick pay plan.

59
W-2 Box 12

• Code K20 excise tax on excess golden parachute
  payments. Enter here the 20 excise tax on excess
  parachute payments (see Section 3.4-14) made to
  key corporate employees after a merger or If the
  excess payments are considered wages, also enter
  the 20 tax in Box 2 as federal income withheld.
• Code LSubstantiated employee business expense
  reimbursements. Enter here the amount of employee
  business expense treated as substantiated
  (nontaxable) only if the employer reimburses its
  employees for expenses under a per diem or
  mileage allowance that exceeds the
  government-approved rates. The taxable portion
  must be included in Boxes 1, 3, and 5.
• Code MUncollected social security or RRTA tax
  on cost of group-term life insurance coverage
  over 50,000. Enter here the amount of
  uncollected social security or RRTA tax on the
  value of excess group- term life insurance
  coverage for former employees. (Box 3 Box 7) x
  .062 Code M Box 4.

60
W-2 Box 12

• Code NUncollected Medicare tax on cost of
  group-term life insurance coverage over 50,000.
  Enter here the amount of uncollected Medicare or
  RRTA Medicare tax on the value of excess
  group-term life insurance coverage for former
  employees. Box 5 x .0145 Code N Box 6.
• Code PExcludable reimbursed moving expenses.
  Enter here the amount of moving expense
  reimbursements paid to employees (not payments
  made to third parties on behalf of employees)
  that were not included in the employees income
  because they were paid for qualified moving
  expenses. Payments to third parties for qualified
  moving expenses are no longer reported by the
  employer on Form W-2.
• Code QMilitary employee basic quarters,
  subsistence and combat pay. Military employers
  that provide employees with basic quarters,
  subsistence allowances, or combat zone pay must
  enter the amount here.

61
W-2 Box 12

• Code RMedical savings account contributions.
  Enter here the amount of employer contributions
  to a medical savings account. Amounts that are
  not excludable from the employees gross income
  must also be included in Box 1. To the extent
  that it was not reasonable at the time of payment
  to believe that the employer contributions would
  be excludable from the employees gross income,
  the employers contributions must also be
  included in Boxes 3 and 5.
• Code SSIMPLE retirement account contributions.
  Enter here the amount of employee salary
  reduction contributions to a SIMPLE retirement
  account, but not if the retirement account is
  part of a 401(k) cash or deferred arrangement
  (such amounts are reported with Code D). Do not
  report this amount in Box 1, even if there is an
  excess deferral, but the amount must be reported
  in Boxes 3 and 5.

62
W-2 Box 12

• Code TEmployer-provided adoption benefits. Enter
  here the total amount paid or expenses incurred
  by the employer for qualified adoption expenses
  provided to an employee under an adoption
  assistance pro- gram. Also include benefits from
  the pre-tax contributions made by the employee to
  a 125 adoption plan account. Do not include this
  amount in Box 1, but it must be included in Boxes
  3 and 5.
• Code VIncome from the exercise of non statutory
  stock options. Enter here the spread (i.e., the
  fair market value minus the exercise price) from
  your employees (or former employees) exercise
  of non statutory stock options. Also include this
  amount in Boxes 1, 3, and 5 .Use of this code is
  optional for the 2002 Form W-2.

63
W-2 Box 13

• Check the following boxes if they apply.
• Statutory employee. Check this box if the
  employee is a statutory employee whose wages are
  subject to social security and Medicare taxes,
  but not federal income tax withholding (see
  Section 1.3-1).
• Retirement plan. Check this box if the employee
  was an active participant in an employers
  retirement plan, including 401(a) qualified
  plans (including a 401(k) plan) 403(a) and
  403(b) annuity plans government employer plans
  other than 457 plans 408(k) Simplified
  Employee Pension plans 408(p) SIMPLE retirement
  accounts and 501(c)(18) tax-exempt trusts. Also
  check this box if the employee actively
  participates in a collectively bargained union
  retirement plan. Do not check for contributions
  made to a nonqualified deferred compensation plan
  or a 457 plan. contin
  ued

64
W-2 Box 13

• An active participant is defined differently
  depending on the type of plan. For defined
  benefit plans, all employees who are eligible to
  participate, even if they have chosen not to, are
  active participants in the plan. For defined
  contribution plans, employees who receive
  allocations to their accounts in a plan year
  ending during the calendar year are active
  participants in the plan. Employers should be
  careful because allocations are not always made
  in the same year as contributions, especially
  employer matching contributions.
• Third-party sick pay. Check this box only if you
  are a third-party sick pay payer filing a Form
  W-2 for an insureds employee.

65
W-2 Box 14

• Box 14Other.
• If the employer treats 100 of the lease value of
  a company provided car as income to the employee
  and reports it in Box 1, the employer must also
  report this amount in Box 14 or in a separate
  statement to the employee.
• This box also serves as an optional field where
  the employer may report other information such as
  
• State disability insurance tax withheld
• Union dues
• Uniform payments
• Health insurance premiums
• Nontaxable income
• Educational assistance payments c
  ontinued

66
W-2 Box 14

• Box 14Other.
• This box also serves as an optional field where
  the employer may also enter the following
  retirement plan contributions
• Non elective employer contributions made on
  behalf of an employee
• Voluntary after-tax contributions deducted from
  an employees
• Required employee contributions and
• Employer matching contributions.

67
W-2 Boxes 2002

• Boxes 15 through 20State and local income tax
  information.
• Report state and local tax information in these
  boxes. It may be required by state and local
  agencies if the same W-2 form copies are used for
  the employers state and local returns. They are
  not required for any federal amounts. Enter the
  two-letter postal abbreviation for the name of
  the state to the left of the vertical line in Box
  15 and the employers state ID number to the
  right of the vertical line. There are enough
  boxes to report amounts for two states and two
  localities, with one state and/or locality above
  and one below the broken line. If only one state
  and/or locality is reported, place the amounts
  above the broken line. If information for more
  than two states or localities must be reported,
  use a separate Form W-2.

68
References

• The American Payroll Association
• The Payroll Source
• Federal Payroll Tax Laws and Regulations
• Federal Payroll Non-Tax Laws and Regulations
• Oracle Payroll Users Guide
• Oracle Year End Guide
• Special Edition Using Oracle Application - BOSS
  Corporation
• Years Of Experience!