MEMORANDUM

To:NextGen Payroll System Users and 1099 Producers

From:NextGen Software Development

Date:January 3, 2014

Subject:Calendar Year-End 2013

W-2/Calendar Year End Related information for Payroll System Users

****Important Notice – Please read!!****

** You will need to set the new Social Securitywage limit ($117,000.00) in the Deduction Master File, zero out the ‘total deducted’ and update the deduction limit ($7,254.00) on the individual employee’s deduction records.Instructions for making these changes are included later in this document.

Again for the tax year 2013, the cost of employer-provided health coverage must be reported on the W-2. The NextGen system is updated to report this information. The system may report the actual withholding and/or matching benefit amounts that have been processed throughout the year as employee checks were generated OR it may report other amounts provided to you by the state insurance program or by your insurance vendors. In the case of the later, our staff can work with you to import data into the W-2 adjustment data file, if the state or insurance company provides you with a file containing the employee’s social security number and the amount to be reported. Additional information regarding this issue is provided in the Calendar Year-End Procedures & W-2 Processing section of this document.

The following information is also included in this document:

  • Federal Income Tax Table for year 2014
  • Federal Personal Exemption for Tax Year 2014
  • Social Security Limits and Withholding Percentage for year 2014
  • Adding the Additional Medicare Tax for wages over $200,000
  • Calculating Fringe Benefits for new year

After all 2013 payrolls arecompleted;please use the instructions on page 6 of this document to update your Federal tax table data. Once updated, please verify the values against the 2014 Circular E.

State Tax Tables may or may not need to be updated. Check with the Department of Revenue in your State for2014 State Tax changes.

1099 RELATED INFORMATION FOR ACCOUNTS PAYABLE USERS

According to the IRS, the deadline for electronic filing of 1099-MISC data is March 31, 2014. Nextgen supports electronic filing. No program changes were required to the Nextgen system based on the specifications for 1099 Electronic Filing for 2014in IRS Publication 1220.

If a vendor’s 1099 is not correct and you HAVE NOT submitted your data to the IRS, the correction is made in Nextgen and reprinted for that vendor. When you are ready to submit your 1099 data, use the Original file option when generating the electronic data submission file.

If a vendor’s 1099 is not correct and you HAVE submitted your data to the IRS, the correction is made in Nextgen. When reprinting the 1099 for the vendor, use the Correction option. Send the file that is generated immediately to the IRS (this is a corrected file). If you have a problem printing the corrected 1099 or creating the electronic data submission file, PLEASE CALL OUR SUPPORT DEPARTMENT IMMEDIATELY BEFORE PROCEEDING ANY FURTHER. A word of warning: Corrected data is permanently updated and the previous amounts are not archived when the 1099 data file is created so be very careful when printing the corrected 1099 and generating the correction electronic data submission file.

We recommend (because of the loss of repetitive corrections to the 1099 data) that you wait until late March to submit your original file to the IRS. This should reduce (or eliminate) the need for submitting a correction file to the IRS.

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Should you have any questions regarding calendar year end processing, please contact the Harris support department at 1-800-239-6224 or eSupport (esupport.harriscomputer.com)

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SOCIAL SECURITY ADMINISTRATION REQUIREMENTS

Beginning with wage reporting for calendar year 2001, the Social Security Administration required a Personal Identification Number (PIN) for each employer that submitted W-2 data. The Social Security Administration stated that the person responsible for the accuracy of the W-2 data should be the person that obtained the PIN number. Your school district should have obtained this PIN number in December 2013 or January 2014. The Social Security Administration requires that you change the password associated with your PIN number at least once a year in order to keep the number active. If you do not change the password, you must obtain a new PIN number from the Social Security Administration before generating your W-2 data for calendar year 2013.

To change your password, create a login for the first time or to update your information, go to the following website:

Click on Loginto change your password and update your information or click on Register to create a new login.

***NOTE*** You must download the 2013ACCUWAGE software. The 2012ACCUWAGE software will not functioncorrectly.

Beginning with tax year 2001, the Social Security Administration began offering a downloadable program that would perform a series of more than 200 edit checks against your W2REPORT magnetic media file. The program (ACCUWAGE) has been updated to accommodate the magnetic reporting requirements for 2013. This program can be downloaded and run on your PC to verify your file before it is sent to the Social Security Administration. To download this program, go to this web page listed below and follow the instructions for downloading and installing the ACCUWAGE software:

GO to:

Click on Download AccuWage – 2013 Tax Year(under Quick Links)

When you see the following pop-up box, click RUN:

Once installed, you will have an “AccuWage2013” icon on your desktop.

Additionally, AccuWage 2013 will automatically open and you will be ready to run AccuWage against your 2013 W-2 magnetic media file.

NOTE **** AccuWage has added a new message this year for third-part entities submitting information on behalf of others, which would apply to all of our clients. The message reads“Submitters EIN and the Employer/Agent EIN is the same”. This message may appear to be an error but can be ignored. There is nothing you need to do regarding this message.

2014FEDERAL TAX TABLES

Tax Code / Wage Over / Wage Not Over / Amount / Rate
M / 0.00 / 8,450.00 / 0.00 / 0%
M / 8,450 / 26,600.00 / 0.00 / 10%
M / 26,600.00 / 82,250.00 / 1,815.00 / 15%
M / 82,250.00 / 157,300.00 / 10,162.50 / 25%
M / 157,300.00 / 235,300.00 / 28,925.00 / 28%
M / 235,300.00 / 413,550.00 / 50,765.00 / 33%
M / 413,550.00 / 466,050.00 / 109,587.50 / 35%
M / 466,050.00 / 9,999,999.99 / 127,962.50 / 39.6%
S / 0.00 / 2,250.00 / 0.00 / 0%
S / 2,250.00 / 11,325.00 / 0.00 / 10%
S / 11,325.00 / 39,150.00 / 907.50 / 15%
S / 39,150.00 / 91,600.00 / 5,081.25 / 25%
S / 91,600.00 / 188,600.00 / 18,193.75 / 28%
S / 188,600.00 / 407,350.00 / 45,353.75 / 33%
S / 407,350.00 / 409,000.00 / 117,541.25 / 35%
S / 409,000.00 / 9,999,999.99 / 118,118.75 / 39.6%

Federal Personal Exemption: $3950.00

Tax Code M = Married

Tax Code S = Single

UPDATING TAX TABLES IN NEXTGEN

From the PR Setup menu, select Tax Table Maintenance. Select tab 8 – Tax Table Update. Check the Federal Tax Table and Update Annual Federal Exemption boxes as shown below:

Click on the Change button and the Save button will become enabled. Click on the Save button to update the data selected. You will be given a warning message notifying you that continuing will replace the selected tax tables in your system. You should click on the Yes button to continue with the update.

Once updated, your screen will appear as shown below. Please verify that your new Federal Tax Amounts on tab #3 in NextGen now agree with the 2014 table listed above before processing any payrolls.


UPDATING SOCIAL SECURITY

Verify the Social Security Employee Rate and update the Withholding and Wage Limit, as shown below:

  • PR Setup Menu
  • Deduction Master Maintenance
  • Deduction # – Social Security Withholding

Select 3.Deduction Type Options and setthe Employee Wage Limit and the Employer Wage Limit are set to $117,000.00 as shown below. The Employee Deduction Limit should be $7,254.00.

Run the Mass Change Deductions to set Limiton Deduction Employee on the Social Security deduction to $7,254.00

Run the Mass Change Deductions to set Total Deducted on the Social Security deduction to $0.00.

NOTE: Any other deductions that have a limit that is regulated by calendar year, must have the total deducted cleared as well.

MCAI Next Gen Payroll

Calendar Year-End Procedures & W-2 Processing

1)Make sure all payrolls for 2013 are complete.

2)Perform all Quarterly payroll procedure.

(You may also want to run the Payroll Verification Report for Quarters 1 thru 4 and verify the Quarterly Totals - Update, if necessary.)

3)Verify that W2 codes are properly set up. To do so, go to:

  • PR Setup Menu
  • Payroll Code Maintenance I
  • 1. W2 Code

The following is a list of the W2 Codes that should be set up.

W2 Code / W2 Description / W2 Box / W2 Identifier / Amount Type
0 / Section 501(c)(18)(D) / 12 / H / Employee
1 / Section 125 (Caf. Plan) / 14 / CAF / Employee
2 / Section 401(k) Plan / 12 / D / Employee
3 / Section 403(b) Plan / 12 / E / Employee
4 / Section 414(h) Plan / 14 / 414 / Employee
5 / GTL Fringe Benefit / 12 / C / Employee
6 / Section 457 Non-Qualified Plan / 11 / Employee
7 / Section 457(b) Plan / 12 / G / Employee
8 / Section 408(k)(6) Plan / 12 / F / Employee
9 / Section 409(a) Non-Qualified / 12 / Y / Employee
A / Section 401(a) Plan / 14 / 401 / Employee
B / Roth Contributions 403(b) / 12 / BB / Employee
C / Charitable Contribution / 14 / CON / Employee
D / Dependent Care 10 / 10 / Employee
E / Roth Contributions 401(k) / 12 / AA / Employee
H / Employer Cont to Health Saving / 12 / W / Employer
I / Medical Ins. Premiums / 14 / MED / Employee
J / Third Party Sick Pay / 12 / J / Employee
K / Third Party Sick Pay / 14 / SCK / Employee
M / Employer Cont to MSA / 12 / R / Employer
N / Retirement 14-RT (Mississippi) / 14 / RET / Employee
O / Non-Qualified, Non 457 Plan / 11 / Employee
P / Professional Dues / 14 / DUE / Employee
R / Roth Cont under Govt Sec 457b / 12 / EE / Employee
S / Section 408(p) SIMPLE / 12 / S / Employee
T / Retirement 14-RET / 14 / RET / Employee
V / Vehicle Fringe Benefit / 14 / VEH / Employee
W / Hire Exempt Wage / 12 / CC / Employee
X / Moving Expense / 12 / P / Employee
Y / Empr Sponsored Health / 12 / DD / Employer
Z / Empr Sponsored Health / 12 / DD / Both

Please Note:

a) W2 Codes should be set up as shown above so that the appropriate amounts will be included in the W2REPORT Magnetic Media submitted to the Social Security Administration.

b) For W2 Codes J, K, and T which are printed on the W2 in Box 14, you should determine if Box 13 should be marked for Retirement Plan or Third Party Sick Pay.

c) Additional W2 codes may be set up for Box 14 for informational purposes.

d) Codes Y and Z are used for the requirements of including the cost of employer provided health coverage on the W2.

4)Verify that Fringe Benefit Types are set up. To do so, go to

  • PR Setup Menu
  • Payroll code Maintenance II
  • 6. Fringe Benefit Type

The following is a list of the Fringe Benefit Types that should be set up.

FB Type / Fringe Benefit Description / W2 Code / Life Insurance
Fringe Benefit
L / Life Insurance / 5 / Yes
M / Miscellaneous / No
V / Vehicle / V / No

5)Verify that all appropriate Deductions have the correct W2 Code. To do so, go to:

  • PR Setup Menu
  • Deduction Master Maintenance
  • 1. General

The cost of employer sponsored health insurance must be included on the W2. In an effort to accommodate this and to allow you to continue reporting information as you have in the past, the Deduction Maintenance transaction has been modified to allow a user to specify up to two W2 Deduction Codes. The example below illustrates how a deduction may be defined if the employee’s portion of the deduction needs to be reported as Section 125 (Cafeteria Plan), as well as be reported as Employer Sponsored Health Coverage.

W2 Deduction Codes Y and Z have been reserved for reporting Employer Sponsored Health Coverage. Code Y is set to report on the Employer portion of a deduction. This code would likely be used for reporting Health Flexible Spending Account information. Per the IRS, “Health FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits”, is reportable. Code Z will report the sum of employee and employer amounts for a deduction. The majority of your health insurance deductions would likely be identified with this code.

Please contact your insurance provider to determine the appropriate reporting for your health insurance deductions. Harris School Solutions cannot provide you with specifics regarding what is reportable, only how to setup the system to report this data.

The following is an example of a deduction (in this case # 8), which will print the employee withholding in Box 14 with an identifier of CAF, as well as print the sum of the employee and employer amounts for the calendar year in box 12 with identifier DD.

***The information that follows is for Alabama clients only. All others should skip to step 6. ***

The Retirement Systems of Alabama is providing the districts with the cost of PEEHIP insurance that should be reported for each employee based on the COBRA cost rather than actual withholding and matching. Harris has provided the districts with an automated procedure for importing this data. You will need to download the data from the Retirement System portal using the information provided to you by them. Once downloaded, you will need to run the W2 Table Maintenance transaction located on the Calendar Year-End Procedures Menu. Upon entering the transaction, you will receive the following message if you have not imported the data for the calendar year to be reported (current year minus one).

**If download is provided, then the W2 Code Z DOES NOT need to be on your PEEHIP deduction because it will then be doubled on w2’s

Click “Yes”. The program will allow you to browse to the location of the file you have downloaded from RSA. After you have located the file to be imported, the transaction will prompt you to enter tax year of the adjustments to be imported. For this year, you must enter a value of 2013. After the data has been imported, you must exit the transaction. You may rerun this transaction or you may run the W2 Adjustment Table Report to view the data that was imported.

6)If necessary, enter W-2 Adjustment Amounts. To do so, go to:

  • Calendar YE Procedures Menu
  • W2 Adjustment Amount Entry

Use this program to enter employee wage, withholding or benefit adjustments for boxes 10, 11, 12 and 14 on the W-2 form, as well as, adjustments to YTD wages, withholdings, or benefits as needed. These adjustments are reflected on the employee’s W-2 form and in the magnetic media file. Make sure to enter the appropriate calendar year.

**NOTE** The calendar year selected should be 2013 when running this transaction. Also, note that EIC has been removed from this transaction as it is no longer valid as an advanced payment to employees.

For additional instructions select “Help” from the Toolbar, then “Transaction Level Help”

7)If W-2 Adjustments were entered, print the W2 Adjustment Maintenance Report. Use this program to verify all adjustments are correct. To print the report, go to:

  • Calendar YE Procedures Menu
  • W2 Adjust Maintenance Report

**NOTE** The calendar year should be 2013 when running this transaction.

For additional instructions select “Help” from the Toolbar, then “Transaction Level Help.

8)Generate the W2 Magnetic Media File and create W2 Tables. To do this, go to:

  • Calendar YE Procedures Menu
  • Generate W2 Data

Enter the appropriate information on the following screen and generate the magnetic media file.

**NOTE** The calendar year should be 2013 when running this transaction. It is STRONGLY recommended that you check the box “Submitting Magnetic Media to State”. A number of districts omitted this last year and then encountered problems when attempting to upload their file to the state due to the records being omitted during the generate process.

**NOTE FOR GA USERS** An additional file path will be displayed at the bottom of this form which will allow the user to specify where the G1003 file should be created. This file was required as of your 2010 submission and is now created electronically by this transaction.

For additional instructions select “Help” from the Toolbar, then “Transaction Level Help”

The W2 Generate is very important in that it combines all of the W-2 adjustments that were entered for the employees with the employee’s payroll yearly data to output a file for storing and printing W-2 information. So, any time you add adjustments or pay an employee for the calendar year, you must generate again before printing W-2’s for said calendar year.

If Warnings or Errors are encountered, they will be displayed as followed:

Errors highlighted in RED will be rejected by the Social Security Administration. All employees displayed in the list view may be included or excluded at your discretion. To include an employee displayed in the list view, make sure that the box beside the SSN is checked. Then press the Close button to continue.

NOTE: If an employee shows up with a negative amount, you will need to do a W2 Adjustment to clear the negative amount. Under the W2 adjustment Table Maint. Transaction, enter the employee and select the W2 Code that is causing the negative (you may need to search for the code). Then enter a positive wage amount to offset the W2 error amount.

The negative may be due to a refund and there was nothing to offset the amount the remainder of the year.
Once the file has been generated final totals will be displayed for verification.

Print this screen for future reference.

Verify that the above totals match to the total of all four (4) of the Quarterly 941 Reports for the calendar year previously submitted to the Social Security Administration plus any adjustment amounts that were entered through the W2 Adjustment Amount Entry transaction. If any employees were excluded on the Errors/Warning screen, make sure to adjust quarterly/year-to-date wage and withholding totals on other payroll reports to balance to the W2 Totals displayed on the above screen.

The Quarterly Procedures Menu and the Calendar YE Procedures Menu contain several reports that may be used to balance and verify W2s. For additional instructions select “Help” from the Toolbar, then “Transaction Level Help.

9)Test the W2 Magnetic Media file with the Social Security Administration’s AccuWage System. (Refer to the attached document “AccuWage Software”.) Note that this software must be downloaded each year to perform required edits for the new calendar year. If the AccuWage software identifies any errors in the W2 Magnetic media file generated by the Nextgen Payroll software and you do not know how to correct them, please contact the Harris eSupport website and report the error. After correcting errors, you must Generate W2s again (i.e., re-run step # 8 above)