Carefully review the IRS instructions for Form W-2. If you never filed W-2s before, stop here and read the IRS instructions before continuing any further. Responsibility for filing correct W-2s rests with the employer, and Deltek assumes no liability for the advisement regarding IRS policies and requirements.
The W-2s are created and printed using the Employee Earnings table, which you can access on the Manage Employee Earnings History screen. The Employee Earnings table is updated whenever you post the Payroll Journal and contains a record for each paycheck issued to each employee. On the Employee Earnings table, all records are added to obtain the W-2 information.
Costpoint also uses the Deduction Code table (the Manage Deductions screen), the Federal Tax Information table (the Manage Federal Taxes screen), the State Tax Information table (the Manage State Taxes screen), and the Local Tax Information table (the Manage Local Taxes screen) for creating and printing the W-2s. Review the Deduction Codes for 401(k) deductions, 403(b) deductions, Group Life Insurance, and Dependent Care Benefits to ensure that the deduction type(s) and limit(s) are set correctly. Also verify that the federal, state, and local taxability for each deduction is reviewed for the correct input for 401(k) and Cafeteria plans (Section 125). Review the Local Tax tables to ensure that any State Disability Insurance is set up correctly with YTD Tax as the Tax Based On method.
Use the Manage W-2s screen before printing W-2s and creating the W2REPORT file (magnetic media) for submission to the Social Security Administration (SSA). Entries made through this screen into the W-2 table override company-wide specifications made for various fields that are generated when creating the W-2 print file or the W2REPORT file.
The W-2 process consists of validating the year-to-date earnings, creating the W-2 table, editing W-2s if necessary, printing W-2s, and creating magnetic media W-2 files.
The IRS requires that W-2s be given to employees no later than January 31 and filed with the Social Security Administration by February 28. You can print and edit W-2s before or after closing the payroll year.
If you are using the Close Payroll Year function, you must close the payroll year after your last payroll for the current calendar year is posted and before the first payroll of the new calendar year is created ("payroll" meaning paychecks, not necessarily timesheets).
You can edit the Prior Year Earnings table, accessible through the Manage Employee Earnings History screen, after closing the payroll year. You can also print quarterly reports, state unemployment reports, state and local withholding reports, and the Earnings Report after the payroll year is closed.
Deltek guarantees that W-2s print properly only on specific W-2 forms purchased from Deltek-approved compatible forms companies. Single-wide formats are supported; the single-wide mailer is also supported. In addition, laser forms are supported in both the 2-up and the 4-up format. Please note that you cannot use the 4-up laser forms for submission to the Social Security Administration (SSA).
Only certain forms are compatible with Costpoint. The supported forms may change from year to year. A Costpoint User Bulletin is generally mailed each November to all supported Costpoint users, to provide information on which forms are supported for that calendar year.
You can print multiple W-2s for employees who lived in more than one state during the year. The withholding state is recorded in each paycheck record on the Employee Earnings table. Review the Employee Earnings table information to make sure that the correct taxing state is shown for each check for employees that you know moved during the year. Also make sure that the state ID is correct on the State Taxes table for all states for which you withheld income taxes.
A W-2 is printed for each state and/or locality for each employee. If an employee has more than one W-2 because of multiple taxing states, do not check the "void" box on the top copy (Copy A) of any W-2s for that employee. When employees live in more than one state during the year, the federal amounts are printed on the first W-2 and the additional state information is printed on the following W-2(s). For example, if an employee earned $20,000 while living in Maryland and $10,000 while living in Virginia, the employee would have one W-2 with $30,000 showing for federal amounts and $20,000 showing for W/H State of Maryland, and an additional W-2 with $10,000 showing for W/H State of Virginia. States are printed in alphabetical order.
If you have local taxes withheld and SDI withheld for an employee, the SDI is printed in the local boxes as well as any localities. The order in which the localities and SDI information appears on the W-2 is determined by the order in which the localities codes are inserted into the Local Tax table. When an employee has more than one locality or SDI deduction, the federal amounts are printed on the first W-2, and the additional localities are printed on subsequent W-2(s). There is no relationship between the withholding state and the locality being reported.
Wages charged on the timesheet with an exempt pay type (Configure Pay Type Taxability) are automatically stored in Exempt Pay Types on the Manage Employee Earnings History screen. Enter non-cash fringe benefits that must be reported and were not entered on a timesheet, and thus not charged using an exempt pay type, into the Manage Employee Earnings History screen on a "dummy" check on the Pay Types subtask. To arrive at Exempt Wages, the W-2 program reduces gross wages by the amount of Exempt Pay Types and Exempt Deductions on the Employee Earnings table. The amounts for Cafeteria Plans (that is, deductions exempt from federal and/or state withholding in the Deductions table) are subtracted from gross wages when exempt wages are being computed.
You indicate to Costpoint which deduction codes are used for 401(k) plans when you select the deduction type on the Manage Deductions screen. This also applies to any other type of Deferred Compensation Plan, such as a 403(b). The actual amount(s) are deducted from Gross Wages in Box 1 and reported in Box 13, even if they exceed the tax-deductible amount. 401(k) is listed as Code D, 403(b) as Code E.
For state wages, Code D deductions are subtracted from gross wages if the state has E-Exempt selected for Income Taxability on the State subtask of the Manage Deductions screen or if the Federal tab is set as Federal Exempt.
Do not designate a cafeteria plan deduction with a deferred compensation code (D-H).
Payroll deductions for fringe benefit plans that are Federal, Social Security, and Medicare exempt (and possibly state exempt) are identified on the Federal tab or the State and Local subtasks of the Manage Deductions screen. These deductions are subtracted from gross wages to arrive at Box 1 wages. These deductions are also subtracted from gross wages to arrive at Social Security and Medicare, State, and Local wages.
Additional amounts may need to be included on W-2s, such as excess life insurance, reimbursed employee business expenses, and other fringe benefits. A discussion on treatment of these various items follows. Some of these items must be included in Gross Wages in Box 1. You may have already included amounts such as Excess Life Insurance in Gross Wages if you deducted Social Security and Medicare during the year. If the income for these items was not recorded in the Employee Earnings table, you can enter a "dummy" check or checks in the Manage Employee Earnings History screen (enter the amounts as Gross Wages). This includes the amounts in all reports that use the Employee Earnings table, including the W-2s, the quarterly reports, and the Earnings Report. If you do not want the quarterly reports to include a particular additional amount, do not add the amount to the Employee Earnings table until you print the quarterly reports. Amounts entered as Gross Wages are automatically included in Social Security and Medicare Wages unless the amount is also entered as Exempt wages on the Manage Employee Earnings History screen.
Premiums paid for employees for life insurance policies whose value is in excess of $50,000 are taxable. Include the value of group term life insurance (EXLI) in Gross Wages (Box 1), Social Security Wages (Box 3), Medicare Wages (Box 5), and in Box 13 as Code C.
The usual way to handle this is to set up a deduction with an ADDGRS method and process excess life for each pay period. This has the effect of increasing the gross wages, calculating Social Security and Medicare to be withheld, deducting the amount as a deduction, and reducing net pay for the Social Security and Medicare on the gross pay increase (since excess life insurance is not a cash payment to the employee). For state and local wages, the excess life value is added to the respective state and local W-2s' Gross Wages boxes if the State and Local subtasks of the Manage Deductions screen have W-Taxable in the Income Taxability column, or if the Federal subtask is set to Taxable, Not Subject to W/H. If you were not using this method to process excess life each pay period, you must add the amount to a regular paycheck after creating payroll.
Non-cash fringe benefits are generally included in gross wages (Box 1). If these benefits were not added to gross wages, enter the amount as gross wages on a "dummy" check dated in the last calendar quarter on the Manage Employee Earnings History screen. You must also associate the pay type that you are using for the non-cash fringe benefits with Box 12.
If the amount you reimbursed employees for business expenses exceeds the government specified rates, you must include this excess amount as income to the employee. This income is subject to Federal Income Tax, Social Security Tax, Medicare Tax, and FUTA Tax. To include this amount in Gross Wages and Box 1, add this amount as Gross Wages on a "dummy" check on the Manage Employee Earnings History screen. Enter the amount you reimbursed equal to the government-specified rates on the Manage W2s screen in Box 13 as Code L.
If the total reimbursement is less than or equal to the amounts allowed under government-specified rates, do not add any amounts to Gross Wages or in Box 13 as Code L.
Employer-paid dependent care benefits must be shown in Box 10. Add amounts in excess of $5,000 paid during the year to Gross Wages by adding the amount as Gross Wages on a "dummy" check on the Manage Employee Earnings History table. If the dependent care benefits provided are deducted from employees' paychecks, this deduction is identified when creating W-2s by the deduction type established on the Manage Deductions screen; the year-to-date amount deducted is printed in Box 10. If the amount of the dependent care benefits was not deducted from the employees' paychecks, or if the total amount provided was greater than the amount deducted, use the Manage W2s screen to enter the amounts for Box 10.
Distributions to employees from Non-Qualified Deferred Compensation Plans or Section 457 plans must be included with wages in Box 1 and in Box 11. To add the amounts to Box 1 and Box 11, use a "dummy" check to enter the amount as Gross Wages on the Manage Employee Earnings History screen with a pay type whose taxability is associated with Box 11 on the Configure Pay Type Taxability screen.
If you had employees who received sick pay from an insurance company or other third-party payer, and the third party notified you of the amount of sick pay involved, enter a "dummy" check for the taxable amount as Gross Wages on the Manage Employee Earnings History screen. If Federal Income Tax, State Income Tax, Social Security, and/or Medicare taxes were withheld, enter these amounts on the same "dummy" check.
If the employee contributed to the sick pay plan, a portion of the sick pay is not taxable. This is computed as:
Amount the employee contributed = Sick Pay Percentage
Cost of the plan for the employee
Multiply the sick pay percentage by the sick pay income to arrive at the amount of the "dummy" check. On the Manage W2s screen, enter the amount that is not taxable in Box 13 with a Code of J.
For example, if an employee's sick pay insurance premium is $40 per month, and the employee has $10 per month deducted, the employee is paying 25% of the cost of the sick pay plan. Therefore, if the employee received $1,000 in sick pay from the third party, 25% of the sick pay is not taxable to the employee. $750 is entered on the "dummy" check and $250 is entered in Box 13, Code J.