Year-End HR Guide

Our payroll experts have compiled monthly tasks, important information, and handy resources to make year-end payroll processing easier.

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October & November

December

January & February

Resources

October & November

Audit employee data to ensure you are not missing critical Form W-2 information like complete Social Security numbers, employee names, and addresses. The Internal Revenue Service (IRS) may impose a penalty for each Form W-2 with a missing or incorrect Social Security number or employee name. If there are errors, you would then be subject to the following penalties:

Large Businesses with Gross Receipts of More Than $5 Million

Time Returns Files/Provided	Up to 30 Days Late	31 Days Late Through August 1	After August 1 or Not Filed	Intentional Disregard
Due 1/1/2022 – 12/31/2022	$50 per return or statement – $556,500 maximum	$110 per return or statement – $1,669,500 maximum	$280 per return or statement – $3,339,000 maximum	$570 per return or statement – No limitation

Small Businesses with Gross Receipts $5 Million or Less

Time Returns Files/Provided	Up to 30 Days Late	31 Days Late Through August 1	After August 1 or Not Filed	Intentional Disregard
Due 1/1/2022 – 12/31/2022	$50 per return or statement – $194,500 maximum	$110 per return or statement – $556,500 maximum	$280 per return or statement – $1,113,000 maximum	$570 per return or statement – No limitation

Last updated 6/13/22 on the IRS website

The maximum penalty is different for small and large businesses and there is no maximum penalty for intentional disregard. See the IRS’ website for more details.

Furthermore, employee Forms W-2 and 1095-C must match what is printed on social security cards. For example, if an employee’s name is hyphenated on their social security card, but not on their Form W-2 or Form 1095-C, the IRS will return this as an error. Failure to verify this information as correct may result in penalties.

If you are not careful, these types of errors can add up to a sizable penalty. For some employees, updated addresses can be garnered from a new W-4 if their withholding allowances have changed or will change next year. Remind employees to fill out a new W-4 if their situation has changed:

Ensure employee names are correct.
Confirm the accuracy of employee addresses.
Confirm the accuracy of employee Social Security numbers.

Employers need to make sure all employee data is accurate, so they can avoid W-2 reprint fees. Employers who use a payroll processing company may have an online service where employees can review and correct data. If so, encourage your employees to use it as a means to review and edit critical data.

W-2 and 1099-NEC Filing Deadlines

Due Date	Deadline
January 31st	Supply W-2s to employees and ex-employees who worked in 2022. Supply 1099s to independent contractors who worked in 2022, as well as other payees.
January 31st	e-File or file paper W-2s and 1099s.

It is recommended you distribute W-2s and 1099s before the end of January. Mail or e-File copies of Forms W-2 and 1099 with government agencies. Send W-2s and W-3s to the Social Security Administration. Submit 1099s along with Form 1096 to the IRS. You may also have to mail or e-File copies of these forms to a certain state(s), along with any state transmittal forms required, so check the requirements. Many localities also require copies of informational returns, so double-check this as well.

Form 940 Filing Deadlines

Due Date	Deadline
January 31st	Submit Form 940 and deposit FUTA if your company owes any remaining amount. If you deposited all the FUTA tax when due, then you have 10 additional calendar days to file Form 940.

Submit Form 940 for Federal Unemployment Insurance (FUTA). The FUTA tax rate is 0.6 percent, which applies to the first $7,000 in wages you paid each employee during the year. However, if you did not pay your state unemployment taxes on time, your FUTA rate will increase to 6.0 percent.

For additional information, please visit our FUTA Credit Reduction page. If your company owes more than $500 in FUTA tax for the calendar year, you must deposit at least one quarterly payment. View the IRS’ Publication 940 Employer’s Annual Federal Unemployment (FUTA) Tax Return for more information.

Something to Consider: If your company is filing 250 or more Form W-2s, the Social Security Administration (SSA) requires they be filed electronically unless a waiver has been granted. You may file electronic W-2s using the SSA’s Business Services Online (BSO) website. There is no charge for this service and you can register online.

Submit Form 940 for Federal Unemployment Insurance (FUTA). The FUTA tax rate is 6.0 percent, which applies to the first $7,000 you paid each employee as wages during the year. However, if you pay your state unemployment taxes on time, your FUTA rate will be reduced to 0.6 percent. For additional information, please visit our FUTA Credit Reduction page. If your company owes more than $500 in FUTA tax for the calendar year, you are required to deposit at least one quarterly payment. See the IRS’ Publication 926 Household Employer’s Tax Guide for more information.

Form 940 Filing Deadlines

Due Date	Deadline
January 31st	Submit Form 940 and deposit FUTA if your company owes any remaining amount. If you deposited all the FUTA tax when due, then you have 10 additional calendar days to file Form 940.

Something to Consider: If your company is filing 250 or more Form W-2s, the Social Security Administration (SSA) requires they be filed electronically unless a waiver has been granted. You may file electronic W-2s using the SSA’s Business Services Online (BSO) website. There is no charge for this service and you can register online.

This timeline can vary depending on your company’s benefits year. Review benefits renewals with current carriers and prepare an eligible employee/participant census to market a group for optional coverage with carriers.

Carriers require a complete census showing all eligible employees and all employees currently enrolled in benefits, along with the following:

Dates of birth and genders of all employees, spouses, and dependents
Zip codes for residence and work-site locations

Utilize your benefits administration system to conduct your benefits renewal reviews and prepare your census. Doing so will ensure all your data is accurate before submitting benefits plan information to your providers.

How APS Can Help

If your organization is not utilizing a benefits administration system, conducting open enrollment can be a challenge. APS’ Benefits Administration solution houses this necessary information in a unified database, making it easy to manage the following:

Online Open Enrollment: Cloud-based open enrollment is available for organizations with multiple locations in one state or across multiple states.
Multiple Plans: Design your benefits plans and assign employees to their respective plans. Employees can view only the information that applies to them.
Employee Self Service: Employees can access the system with a simple internet connection, securely log in, and choose elections in a matter of minutes.
Online Document Management: The APS Doc Vault allows for additional benefits information to be loaded into the system for employees to access.
Comprehensive Reporting: APS’ Report Manager houses 80+ out-of-the-box reporting forms, depending on HR needs. The Report Builder allows you to create, store, and email reports easily.

Determine if you had 50 or more full-time and full-time equivalent (FTE) employees in the previous calendar year and what type of insurance (self-insured or fully insured) you offered. If your provider offers an FTE Calculator, you can use it to determine how many full-time and FTE employees you had in the previous calendar year. Using this number and the type of coverage you offer, determine what forms you must use to report:

Fifty or More Employees: Complete and file Forms 1095-C and 1094-C.
Less Than 50 Employees (Self-Insured): Complete and file Forms 1095-B and 1094-B.
Less Than 50 Employees (Fully Insured): Insurer is responsible for filing on behalf of the employer.
Less Than 50 Employees (No Insurance): Reporting is not required.

Note: When the combined total of full-time and FTE employees in a controlled group is 50 or more, each individual employer is subject to reporting.

If you are required to report, gather the information you need to complete the applicable forms and determine which reporting method you will be using. Depending on how you report, you will need to compile data, including:

The employee’s name, SSN, or date of birth (if SSN is unavailable), and address.
The employer’s name, EIN, telephone number, and address.
The months in which the employer offered coverage.
The employee’s share of the monthly premium for self-only coverage (in some instances).
The months in which a safe harbor (or other situation) applied (i.e., the employee was not a full-time employee).

ACA Annual Reporting Deadlines

Due Date	Deadline
January 31st (automatic extension to March 2nd)	Supply Forms 1095-C to employees.
February 28th*	File paper Forms 1095-C with transmittal Form 1094-C.**
March 31st*	e-File Forms 1095-C with transmittal Form 1094-C.**

*Employers that file 250+ information returns with the IRs are required to file them electronically.

**Filers can obtain a 30-day extension with the IRS by submitting Form 8809 by the filing due date.

Check out our online Year-End HR Resources for more information about ACA annual reporting options, requirements, and penalties.

How APS Can Help

APS’ Affordable Care Act solution takes the complexity out of the ACA. Our error-checking algorithm ensures codes are valid and data is formatted correctly for reporting. Accurately capture and report health plan coverage information to the IRS with pre-populated forms. ACA tracking has never been easier. We’ll even e-file for you.

Review employee classifications on a regular basis to ensure compliance. Refer to the duties tests and guidance provided by the Department of Labor to manage your employee classification.

For employer-sponsored plans providing prescription drug coverage, Medicare Part D reporting is due on October 15. Also, distribute creditable coverage disclosure notices to Medicare-eligible participants on October 15. The Centers for Medicare and Medicaid Services (CMS) provides guidance and sample notice forms.

Now is the time of year to start reviewing your existing budget and planning for next year. Here are some items to consider:

Consult All Departments: You need a clear picture of what is required to oversee each department smoothly.
Estimate Your Revenues for the Year: Know how your company is ending the year to determine the budget needed to reach next year’s revenue goals.
Determine Your Expenses: Some expenses are concrete, while others can be moving targets. Take everything into consideration when coming up with a figure.
Don’t Forget Other Expenditures: Factor items like computers, company vehicles, and furniture into budgeting.
Calculate Your Cash Flow: Generating your existing income statement is essential to determining your projected cash flow for the following year.
Be Conservative in Your Budget: It’s helpful to have optimistic projections for the next year and be realistic. Leave some wiggle room just in case company goals are not met.
Start Planning Early: Ideally, you want to begin talking about the budget in October to ensure there is as much detail as possible. However, it’s never too late to start, as an annual budget should be monitored and adjusted.
Monitor and Evaluate: Don’t create a budget just to forget about it in a few months. It’s essential to monitor your budget to see how things are trending and make necessary changes.

Year-End Tips:

Open Enrollment

Open enrollment is a huge and overwhelming part of your yearly HR tasks – but it doesn’t have to be. Ask yourself the following questions and consider using a unified solution that can simplify your benefits administration:

What is your open enrollment process currently like?
How many transactions are involved in your enrollment process?
How confident are you with your current enrollment process?
What happens if you do or don’t make a change?
What are the long-term effects of the changes made?

A core HR solution using a centralized database that includes benefits administration with carrier connections for transmission of paperwork to benefits providers makes open enrollment a much easier process to manage.

Disaster Assistance and Emergency Relief

Special tax law provisions may help businesses recover financially from the impact of a disaster. Depending on the circumstances, the IRS may grant additional time to file returns and pay taxes. Visit the IRS website for more information.

December

Large Businesses with Gross Receipts of More Than $5 Million

Time Returns Files/Provided	Up to 30 Days Late	31 Days Late Through August 1	After August 1 or Not Filed	Intentional Disregard
Due 1/1/2022 – 12/31/2022	$50 per return or statement – $556,500 maximum	$110 per return or statement – $1,669,500 maximum	$280 per return or statement – $3,339,000 maximum	$570 per return or statement – No limitation

Small Businesses with Gross Receipts $5 Million or Less

Time Returns Files/Provided	Up to 30 Days Late	31 Days Late Through August 1	After August 1 or Not Filed	Intentional Disregard
Due 1/1/2022 – 12/31/2022	$50 per return or statement – $194,500 maximum	$110 per return or statement – $556,500 maximum	$280 per return or statement – $1,113,000 maximum	$570 per return or statement – No limitation

Last updated 6/13/22 on the IRS website

The maximum penalty is different for small and large businesses and there is no maximum penalty for intentional disregard. See the IRS’ website for more details

If you are not careful, these types of errors can add up to a large penalty. For some employees, updated addresses can be garnered from a new W-4 if their withholding allowances have changed or will change next year. Remind employees to fill out a new W-4 if their situation has changed:

Ensure employee names are entered correctly
Confirm accuracy of employee addresses
Confirm accuracy of employee Social Security numbers

Employers need to make sure all employee data is accurate so they can avoid W-2 reprint fees. Employers who use a payroll processing company may have an online service where employees can review and correct data. If so, encourage your employees to use it as a means to review and edit critical data.

Forms W-2 and 1099 Filing Deadlines

Due Date	Deadline
January 31st	Supply W-2s to employees and ex-employees who worked in 2022. Supply 1099s to independent contractors who worked in 2022, as well as other payees.
January 31st	e-File or file paper W-2s and 1099s.

It is recommended you distribute W-2s and 1099s before the end of January. Mail or e-File copies of Forms W-2 and 1099 with government agencies. Send W-2s and W-3s to the Social Security Administration. Submit 1099s along with Form 1096 to the IRS. You may also have to mail or e-File copies of these forms to a certain state(s), along with any state transmittal forms required, so make sure to check the requirements. Many localities also require copies of informational returns, so double-check this as well.

Form 940 Filing Deadlines

Due Date	Deadline
January 31st	Submit Form 940 and deposit FUTA if your company owes any remaining amount. If you deposited all the FUTA tax when due, then you have 10 additional calendar days to file Form 940.

Review and modify existing records, documents, and systems for updated laws, regulations, internal operations, jobs, compensation, benefits, and employees’ situations:

Policies: Review policies in your employee handbook and make changes according to new or modified laws, regulations, or internal operations.
Job Descriptions: Modify job descriptions if any employee’s job duties, titles, or FLSA exemption status have changed.
Compensation and Payroll: Adjust payroll to reflect changes in salary/wage adjustments, merit increases, minimum wage increases, and changes to withholding for benefits or taxes.
Benefits: Change benefit levels for defined contribution and benefit plans; adjust benefit contributions; and modify plans per healthcare reform provisions.
Performance Reviews: Update employees’ files with their year-end performance review. Document the evaluation in your HR information system (or another applicable database).
Rewards and Training: Update employees’ files and your HR information systems/databases with their documented rewards, recognition, training, and development from this past year.
Employee Information: Update employees’ addresses, personal, demographic, and emergency information in your HRIS or files.

For most states, the computation date used to determine SUI tax rates for the 2023 calendar year is June 30, 2022.

Because of the unprecedented volume of initial claims during the COVID pandemic, the accumulation of benefits may significantly impact calendar year 2023 rates. You must provide any rate change notices you receive to your provider as soon as possible.

If you have determined you need to report, review your information to avoid any errors. If your payroll provider offers ACA reporting with an error-checking algorithm, you can automatically perform the following tasks:

Complete your Form 1094-C.
Import and populate your 1095-C data.
Review your 1095-C forms, make edits, correct any conflicts, or manually add a 1095-C.
Approve and print your 1094-C and 1095-C forms for distribution to employees and reporting to the IRS.

Verify your department is adhering to record retention standards by keeping or purging individual records each year. Below are record retention guidelines with the length of time to keep records and which documents to retain:

Length of Time	Records to Keep
1 year	Physical exam results; employment tests, results and validation; ADA applications and other personnel records and requests for reasonable accommodation (keep for 1 year after personnel action).
2 years	VETS-100; applications, resumes, other inquires sent to employer; help wanted ads, job opening notices, notices for opportunities for training, promotions, overtime, job opening notices sent to employment agencies or labor unions; employee personnel files (including hiring, disciplinary notices, promotions, demotions, discharges, training, tests, physicals, transfers, layoffs and recalls, job evaluations, merit systems, seniority systems).
3 years	I-9s (or 1 year after termination); FMLA documentation (3 years after hire or 1 year after termination); polygraph tests; business records, including yearly total sales volume, total goods purchased; union contracts and individual employee contracts.
5 years	Drug testing; OSHA forms 101, 200, 300A, and 301; compensation insurance, or for occupational injury or disease; first aid records of job injuries causing loss of work time.
6 years	Standard ERISA documents (benefits plan, disclosure of Plan Description, Annual Reports Summary of Annual Reports, and Summary Plan Description).
7 years	Employee wage records (time cards, wage rate tables, shift schedules, hours and days) explaining wage differentials, deductions from pay; all payroll records.
30 years	Required medical exams and exposure records (OSHA).

Review your retirement plan contributions and prepare annual or semi-annual employer contributions to retirement plans.

To give people a needed temporary financial boost, the Coronavirus, Aid, Relief, and Economic Security (CARES) Act allowed employers to defer payment of the employer’s share of Social Security tax. You should have received an IRS Notice LTR3064C indicating the balance due and payment dates for each applicable period.

Employers can make deferral payments through the Electronic Federal Tax Payment System or by credit or debit card, money order, or with a check. These payments must be separate from other tax payments to ensure they are applied to the deferred payroll tax balance. IRS systems won’t recognize the payment if it’s included with other tax payments or sent as a deposit.

EFTPS has a new option to select deferral payment and change the date to the applicable tax period. A separate notice was sent for each period, along with a coupon to send with payments by mail. Please visit the IRS’ website for more information.

Reconcile your accounts and prepare for W-2s and 1099s to be distributed to employees and contractors in January. You’ll also want to take this time to prepare employer-required tax filings.

Year-End Tips

Is the Minimum Wage Rate Changing in Your State?

The federal minimum wage rate is $7.25 an hour. Find out the minimum wage rate in your state by visiting our Minimum Wage Rates by State page.

Are You Prepared for ACA Annual Reporting?

Did you know there are 18 potential conflicts between lines 14 and 16 on the Form 1095-C? An ACA reporting solution with an error-checking algorithm ensures codes are valid and data is formatted correctly for reporting to the IRS. Learn more about Form 1095-C reporting codes.

Are You Eligible for Disaster Assistance and Emergency Relief?

January & February

Review existing policies and procedures, accrual balances, and next year’s communications to employees, including holiday schedules and pay schedules. Plan for operations, upcoming projects, and strategic/continuous improvement initiatives. These may include:

Planning Topic	What to Review
Hiring & Staffing	Meet with your hiring managers to evaluate their staffing needs by department staffing needs and plan sourcing strategies. Consider retirements, terminations, promotions, turnover, company strategy, and other changes to staffing levels.
Training & Development	Review employee development plans, training needs and/or requests, performance reviews, or training needs assessments to evaluate training needs. Schedule training and development activities for 2023.
Employee Relations	Plan an employee engagement survey to evaluate morale. Plan, schedule, and update critical employee events, activities, initiatives, paid holidays, etc. Distribute attendance and vacation calendars/planners to supervisors and managers.
Performance Management	After reviews are finished, plan for the next performance management cycle, including goal setting for 2023. Work with managers to schedule follow-up, feedback, and support activities to enhance performance.
Management Development	Review exit surveys, employee feedback, and other information about managers. Schedule recently promoted supervisors or managers requiring additional training for supervisory training or leadership development.
Compensation	Evaluate compensation and incentive practices for each of your employees and plan new pay programs. Schedule which salary surveys you will participate in next year. Budget for 2023 pay adjustments and/or merit increases.
Benefits	Review ACA compliance and reporting regulations in effect in 2023 and schedule dates and tasks for compliance. Plan your benefits strategy for the upcoming year including benefit additions, enhancements, and removals.
Compliance	Conduct an HR audit. Review federal and state compliance trends for 2023. Plan proactive efforts to maintain compliance or modifications to existing practices to ensure compliance.
Continuous Improvement	Plan initiatives (like deploying an HRIS) to streamline and make HR processes more efficient. Enhance processes and systems to reduce errors and improve the quality of deliverables. Evaluate vendors for HR services. For other systems in use, install updates for the most efficient use of systems and reporting.

Review your company’s OSHA Form 300A for the required annual posting from February 1 – April 30 in a common area for employees.

How APS Can Help

APS provides a tracking system that makes it easy to manage work-related injuries and illnesses. The APS system generates the required OSHA reports in the format needed for simplified OSHA reporting.

It is essential to post the appropriate compliance posters, or employers may be subject to penalties. Depending on the employer, these posters may include:

Job Safety and Health Protection (OSHA)
Equal Employment Opportunity
Fair Labor Standards Act (FLSA)
Family Medical Leave Act (FMLA)

Visit the Department of Labor (DOL) for assistance with poster compliance requirements. Ensure you also visit your state’s labor department page to determine which state compliance posters you must post.

When forecasting future hiring, it’s essential to look at your company’s current and future goals. Are you planning for growth? Most companies want sustainable expansion from year to year. The way to achieve those goals and stay on target is to grow your workforce. Here are some questions to consider when planning for future hiring:

Will your company launch new products that will require additional talent for a smooth process?
Is your company planning to expand into other states or open other locations?
What is your current employee turnover rate?
Do you anticipate any changes in your workforce? For example, do you have several employees who will be retiring soon?
Is your company planning to invest in any new technology? For example, are you planning to implement new HR software next year?
Are there going to be any changes to your company’s goals going into next year?

How APS Can Help

APS Hire provides a complete applicant tracking, recruiting, and onboarding system to recruit, hire, and onboard talent for your company:

Find the best candidates for the job quickly.
Create an onboarding process tailored to your company’s needs.
Build a solid recruiting strategy using high-level dashboards and detailed reports.

Before your first 2023 payroll

The first payroll of the year is an opportune time to review and update your employee deductions. You’ll want to check deductions like:

Medical
Dental
Life Insurance
Retirement deductions such as 401(k)
Other voluntary deductions

Retirement plan regular and catch-up contributions will deduct automatically out of the first payroll for 2023. Review your retirement plans, report any changes needed, and submit those updates to your first payroll for 2023.

Make sure you wrap up ACA annual reporting and filing to avoid penalties for late or incomplete paperwork:

Failure to file complete and accurate Forms 1094-C by the form deadlines will result in penalties equal to $270 per return.
Failure to file and provide correct information on Form 1095-C could result in a $270 penalty per return.

Click here to get complete Minimum Wage Changes by state. If any changes apply to your business, be sure to update the information with your payroll provider.

END OF JANUARY 2023

If your employees receive paper copies only, communicate when they can expect to obtain their Form W-2s in the mail. If you have the option to provide your employees with online access to their W-2s, let them know how they can access their copies.

January 31, 2023, is the deadline to file Forms W-2 and 1099-NEC by paper or electronically. The deadline is also to distribute W-2s to your employees and 1099-NECs to independent contractors.

Employers must file Form 1099-NEC for non-employees paid compensation of $600.00 or more (including fees, commissions, prizes, and awards) during the year, like independent contractors. 1099-NECs are filed with Form 1096 each year. Form 1099-MISC is now primarily used to report miscellaneous income like rent or payments to an attorney.

January 31, 2023, is the deadline to file your 1099s with a Form 1096.

Form 1099-NEC is the income form employers must file for non-employees paid compensation of $600.00 or more (including fees, commissions, prizes, and awards) during the year. Employers typically issue Forms 1099 to contractors.

January 31, 2023, is the deadline to distribute W-2s to your employees and 1099s to contractors.

January 31, 2023, is the deadline to distribute Forms 1095-C to your employees.

END OF FEBRUARY 2023

February 28, 2023, is the deadline to file paper Forms 1094-C and 1095-C. If you are filing electronically, you have until March 31, 2023, to file.

Year-End Tips

You’re Almost Done with Year-End Processing!

Make sure you distribute Form W-2s to your employees by January 31, 2023.

What’s Your Plan for ACA Reporting Next Year?

If ACA compliance and reporting was a headache this past year, make 2023 the year of change! Take the complexity out of ACA compliance and reporting with a solution that unifies your human capital management processes.

Are You Eligible for Disaster Assistance and Emergency Relief?

Resources

Year-End HR Guide

Download the HR Buyer’s Guide

How APS Can Help

How APS Can Help

Year-End Tips:

Open Enrollment

Disaster Assistance and Emergency Relief

Forms W-2 and 1099 Filing Deadlines

Form 940 Filing Deadlines

Year-End Tips

Is the Minimum Wage Rate Changing in Your State?

Are You Prepared for ACA Annual Reporting?

Are You Eligible for Disaster Assistance and Emergency Relief?

January & February

How APS Can Help

How APS Can Help

Before your first 2023 payroll

END OF JANUARY 2023

END OF FEBRUARY 2023

Year-End Tips

You’re Almost Done with Year-End Processing!

What’s Your Plan for ACA Reporting Next Year?

Are You Eligible for Disaster Assistance and Emergency Relief?

YEAR-END RESOURCES

APS SOlutions for your business

YEAR-END LINKS

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