As the pandemic hit, many programs were put in place to help aid businesses during such a difficult time. With the addition of these new programs and benefits, certain changes were made to your standard end of year processes with Justworks.
Form 941 has been revised multiple times since the summer of 2020. Luckily for you, this is already something that is handled by Justworks and even with the new updates, there is no action required on your end. Justworks will still file this on your behalf. As this is filed in aggregate with all Justworks customers, we are not able to provide this on a company level. You can learn more about this report here.
If an employee received payments for qualified leave under the FFCRA, qualified FFCRA wages will be reported in Box 14 of their W-2. Employees who were paid FFCRA in Q1 of 2021 and then took FFCRA leave again in either Q2 or Q3 may have the wages listed twice. This is because FFCRA was initially exempt from Social Security tax but became subject to taxation in Q2. You can learn more about how to read a W-2 here.
The CARES Act
The CARES Act allowed eligible small businesses to temporarily defer payment of the employer share of Social Security taxes through the end of 2020.
Your company will be obligated to repay 50% of all deferred amounts by December 31, 2021 and the remainder by December 31, 2022.
Justworks is here to help! The IRS recently released COVID Tax Tip 2021-99 explaining that while the employer is solely liable for repayment of the deferred tax, customers of PEOs should repay the deferred tax via their PEO for reporting purposes. We will keep you updated on how this will work with Justworks.
If you were not active on Justworks prior to January 1, 2021 and had Social Security tax deferral, you’ll want to work with your previous provider to help take care of this by the IRS deadlines.
Best Practices for End of Year
We know there can be a lot to cover as you begin to close out the year. In order to help streamline the process, we’ve put together some best practices for your employees to ensure a smooth and successful finish to the year.
Employees should only update their home address and office location if their move during COVID-19 is permanent. Taxes will not reflect any changes unless either a home or office location has been changed. Justworks suggests working with your own tax counsel on when it is best to update an employee's address.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.