Preparing for Year-End: A Payroll Professional's Guide

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  Vicki M. Lambert, CPP

  Vicki M. Lambert, CPP, is President and Academic Director of The Payroll Advisor™, a firm specializing in payroll education and training. The company offers a payroll news service which keeps payroll professionals up-to-date on the latest rules and regulations.With over 35 years of hands-on experi [...]

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• Audit 01:20:13
• Backup Withholding 00:13:50
• Business Services Online (BSO) 00:05:03, 00:42:29, 01:05:57, 01:08:52, 01:18:35, 01:26:34
• Child Support 00:49:56, 00:52:14
• Contract 00:20:21
• De Minimis  01:23:47
• Department of Labor (DOL) 00:04:40
• Due Dilligence 00:31:47
• EITC - Earned Income Tax Credit 00:09:23
• Exempt 00:08:52, 00:15:13, 00:43:03, 01:37:58
• Fair Labor Standards Act (FLSA) 00:19:46, 00:20:36
• Federal Insurance Contributions Act (FICA) 00:46:59
• Federal Unemployment Tax Act (FUTA) 00:38:22
• Foreign Earned Income Exclusion (FEIE) 00:07:31, 00:10:22
• Form 1040 00:18:48, 01:32:40
• Form 940 00:04:35, 00:36:41
• Form 941 00:04:29, 00:40:31, 00:48:42, 01:32:03
• Form 941-X 00:44:25
• Form 944 01:34:04
• Form W-2 00:04:31, 00:10:05, 00:17:57, 00:21:53, 00:26:20, 00:42:57, 01:08:42, 01:14:39, 01:22:12, 01:32:00
• Form W-2C 00:41:28, 01:25:57
• Form W-3 00:26:14, 00:41:21, 01:05:53, 01:14:47
• Form W-3C 00:42:04
• Form W-4 00:04:33, 00:26:08, 01:37:46
• Fringe Benefits 00:03:58, 00:08:01, 00:28:20
• Garnishment 00:24:12, 00:49:48
• Income Withholding for Support (IWO) 00:50:01
• Independent Contractor 01:21:09
• IRC Section 6721 01:22:26
• Levy 00:15:10, 00:16:09
• Minimum Wage 00:03:31, 00:54:38, 01:21:51
• Nonresident Alien (NRA) 00:26:10, 00:26:46
• OASDI 00:04:54
• Office of Child Support Services (OCSS) 00:49:54
• One Big Beautiful Bill Act (OBBB) 00:04:04, 00:08:04, 00:11:42, 00:12:51, 00:16:44
• Overtime 00:19:13, 00:20:38, 00:26:31, 00:43:42, 00:54:39
• Pension Plan 00:03:50
• Per Diem 00:03:50, 00:07:50
• Publication 1494 00:15:20, 00:24:45
• Publication 15-T 00:26:44
• Reconciliation 01:18:46
• Regular Rate of Pay 00:19:36
• Regular Rate of Pay 01:20:19
• Safe Harbor 01:25:16
• Standard Mileage Rate 00:03:51
• State Unemployment Insurance (SUI) 00:03:29, 00:50:45
• Tax Cuts and Jobs Act 00:09:05
• Temporary Disability Insurance (TDI) 00:46:
• Temporary Disability Insurance (TDI) 01:36:21
• Wage 00:04:42, 00:13:45, 00:47:07, 01:08:28, 01:25:28, 01:32:37, 01:34:14
• Wage Base 00:03:30, 00:05:32, 00:50:46, 01:05:40, 01:06:09

Accounts Payable (AP): The amount of money a company owes creditors (suppliers, etc.) in return for goods and/or services they have delivered.

Backup Withholding: Backup withholding is the tax that is levied on investment income, at an established tax rate, as the investor withdraws it. Backup withholding helps to ensure that government tax-collecting agencies (such as the IRS or Canada Revenue Agency) will be able to receive income taxes owed to them from investors' earnings. (www.investopedia.com)

Business Services Online (BSO): The Business Services Online (BSO) Suite of Services allows organizations, businesses, individuals, employers, attorneys, non-attorneys representing Social Security claimants, and third-parties to exchange information with Social Security securely over the internet.

Child Support: Child support is an ongoing, periodic payment made by a parent for the financial benefit of a child following the end of a marriage or other similar relationship.

Contract: A written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.

De Minimis: Too trivial or minor to merit consideration.

Department of Labor (DOL): The United States Department of Labor is a cabinet-level department of the U.S. federal government responsible for occupational safety, wage and hour standards, unemployment insurance benefits, reemployment services, and some economic statistics; many U.S. states also have such departments.

Due Diligence: Due diligence is a process or effort to collect and analyze information before making a decision or conducting a transaction so a party is not held legally liable for any loss or damage. The term applies to many situations but most notably to business transactions.

EITC - Earned Income Tax Credit : The United States federal earned income tax credit or earned income credit is a refundable tax credit for low- to moderate-income working individuals and couples, particularly those with children. The amount of EITC benefit depends on a recipient's income and number of children.

Exempt : Exempt employee is a term that refers to a category of employees set out in the Fair Labor Standards Act. They do not receive overtime pay, nor do they qualify for the minimum wage

Fair Labor Standards Act (FLSA): The Fair Labor Standards Act of 1938 29 U.S.C. § 203 is a United States labor law that creates the right to a minimum wage, and "time-and-a-half" overtime pay when people work over forty hours a week. It also prohibits most employment of minors in "oppressive child labor".

Federal Insurance Contributions Act (FICA): The Federal Insurance Contributions Act is a United States federal payroll contribution directed towards both employees and employers to fund Social Security and Medicare—federal programs that provide benefits for retirees, people with disabilities, and children of deceased workers.

Form 1040: Form 1040 is used by U.S. taxpayers to file an annual income tax return. The form calculates the total taxable income of the taxpayer and determines how much is to be paid or refunded by the government.

Form 1094-B: Form 1094-B is essentially a cover sheet used by insurance providers when they send the Internal Revenue Service (IRS) information about who has health coverage that meets the standards of the Affordable Care Act. The 1094-B is a brief form that takes up less than a page.

Form 1094-C: Form 1094-C is used to report to the IRS summary information for each employer and to transmit Forms 1095-C to the IRS. Form 1095-C is used to report information about each employee.

Form 1095-B: Form 1095-B is used as proof of Minimum Essential Coverage (MEC) when filing your state and/or federal taxes. It should be kept with your other tax information in the event the Internal Revenue Service (IRS) or Franchise Tax Board (FTB) requires you to provide it as proof of your health care coverage.

Form 1095-C: Form 1095-C provides information about the health coverage offered by your employer and, in some cases, about whether you enrolled in this coverage. Use Form 1095-C to help determine your eligibility for the premium tax credit.

Form 940: Use Form 940 to report your annual Federal Unemployment Tax Act (FUTA) tax. Together with state unemployment tax systems, the FUTA tax provides funds for paying unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax. Only employers pay FUTA tax.

Form 941: Federal form 941, also called a quarterly federal tax return, is an IRS return that employers use to report their FICA taxes paid and owed for the period. The IRS uses this form to calculate the amount of employer tax payments made during the year as well as the amount of taxes due at the end of the year.

Form 941-X: Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund.

Form 944: Form 944 is designed so the smallest employers (those whose annual liability for social security, Medicare, and withheld federal income taxes is $1,000 or less) will file and pay these taxes only once a year instead of every quarter.

Form W-2: Form W-2 is an Internal Revenue Service tax form used in the United States to report wages paid to employees and the taxes withheld from them. Employers must complete a Form W-2 for each employee to whom they pay a salary, wage, or other compensation as part of the employment relationship. - Wikipedia (https://en.wikipedia.org/)

Form W-2C: W-2C is a form used to make corrections on previously issued wage/tax information (W-2s) from current or prior years. Like Form W-2, it is a multi-use form used to report corrected wages to the IRS (Internal Revenue Service), FTB (Franchise Tax Board), and SSA (Social Security Administration).

Form W-3: Form W-3 is a tax form used by employers to report combined employee income to the Internal Revenue Service (IRS) and the Social Security Administration. Employers who send out more than one Form W-2 to employees must complete and send this form to summarize their total salary payment and withholding amounts.

Form W-3C: Form W-3c is the transmittal of W-2c Forms (Corrected Wage and Tax Statements). Form W-3c is submitted with Form W-2c in most situations when you're paper filing with the SSA. It provides a summary of the data found in the W-2c Form(s) accompanying it.

Form W-4: Form W-4 (otherwise known as the "Employee's Withholding Allowance Certificate") is an Internal Revenue Service (IRS) tax form completed by an employee in the United States to indicate his or her tax situation (exemptions, status, etc.) to the employer.

Fringe Benefits: An extra benefit supplementing an employee's salary, for example, a company car, subsidized meals, health insurance, etc.

IRC Section 6721: If an employer fails to file a correct Information, return by the due date, and cannot show reasonable cause, the employer may be subject to a penalty as provided under IRC Section 6721.

Income Withholding for Support (IWO): The IWO is the OMB-approved form used for income withholding in tribal, intrastate, and interstate cases as well as all child support orders that were initially issued in the state on or after January 1, 1994, and all child support orders that were initially issued (or modified) in the state before January 1, 1994 if arrearages occur. This form is the standard format prescribed by the Secretary in accordance with USC 42 §666(b)(6)(A)(ii). The OMB-approved IWO must be issued to employers or other income payers to collect child support.

Independent Contractor: An independent contractor is a person or entity contracted to perform work or provide services to another entity as a non-employee. As a result, independent contractors must pay their own Social Security and Medicare taxes. - Investopedia (https://www.investopedia.com/)

Levy: A tax levy, under United States Federal law, is an administrative action by the Internal Revenue Service under statutory authority, generally without going to court, to seize property to satisfy a tax liability. The levy "includes the power of distraint and seizure by any means".

Minimum Wage: The lowest wage paid or permitted to be paid specifically fixed by a legal authority or by contract as the least that may be paid either to employed persons generally or to a particular category of employed persons.

Nonresident Alien (NRA): This income is taxed at a flat 30% rate, unless a tax treaty specifies a lower rate. Nonresident aliens must file and pay any tax due using Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens with No Dependents.

OASDI: OASDI stands for old age, survivors, and disability insurance tax, and the money that your employer collects goes to the federal government in order to fund the Social Security program.

Office of Child Support Services (OCSS): OCSS is the federal agency that oversees the national child support program.

One Big Beautiful Bill Act (OBBB): The One Big Beautiful Bill Act, or the Big Beautiful Bill, is a U.S. federal statute passed by the 119th United States Congress containing tax and spending policies that form the core of President Donald Trump's second-term agenda. The bill was signed into law by President Trump on July 4, 2025.

Overtime: Overtime is time and a half of what an employee earns for every hour worked over 40 in a workweek. The FLSA salary threshold is the minimum salary employers must pay employees for them to be exempt from overtime wages.

Pension Plan: A pension fund, also known as a superannuation fund in some countries, is any program, fund, or scheme which provides retirement income. Pension funds typically have large amounts of money to invest and are the major investors in listed and private companies.

Per Diem: (Latin for "per day" or "for each day") or daily allowance is a specific amount of money an organization gives an individual, often an employee, per day to cover living expenses when traveling for work. - Wikipedia (https://en.wikipedia.org)

Publication 1494: The IRS mails Publication 1494 (PDF) with the levy which explains to your employer how to determine the amount exempt from levy.

Publication 15-T: Employers use Publication 15-T to figure the amount of federal income tax to withhold from their employees' wages.

Reconciliation: Payroll reconciliation is when you compare your payroll register with the amount you're planning to pay out to your employees to confirm those numbers match. The simplest way to think about it is double-checking your math to ensure that you pay your employees correctly. Payroll reconciliation should happen frequently.

Regular Rate of Pay: An employee’s regular rate is the hourly rate an employee is paid for all non-overtime hours worked in a workweek. When calculating an employee’s regular rate, all compensation received by the employee in a workweek must be included, including wages, bonuses, commissions, and any other forms of compensation.

Safe Harbor: A safe harbor is a provision of a statute or a regulation that specifies that certain conduct will be deemed not to violate a given rule. It is usually found in connection with a vaguer, overall standard. Under the safe harbor, a “rental real estate enterprise” is treated as a trade or business for purposes of Sec. 199A if at least 250 hours of services are performed each tax year with respect to the enterprise. ... The safe harbor requires that separate books and records be maintained for the rental real estate enterprise.

Standard Mileage Rate: The standard mileage rate, also known as the mileage per diem or deductible mileage, is the default cost per mile set by the Internal Revenue Service (IRS) for taxpayers who deduct the expense of using their personal vehicles for business, charitable, or medical purposes.

State Unemployment Insurance (SUI): The Federal-State Unemployment Insurance Program provides unemployment benefits to eligible workers who are unemployed through no fault of their own.

Tax Cuts and Jobs Act: The Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, Pub.L. 115–97, is a congressional revenue act of the United States originally introduced in Congress as the Tax Cuts and Jobs Act, that amended the Internal Revenue Code of 1986.

Temporary Disability Insurance (TDI): Temporary Disability Insurance provides cash benefits to workers who suffer an illness, injury, or other disability that prevents them from working, and wasn't caused by their job.

Wage: A fixed regular payment, typically paid on a daily or weekly basis, made by an employer to an employee, especially to a manual or unskilled worker.

Wage Base: The taxable wage base is the amount of an employee's income from which the IRS calculates an individual's tax liability for Social Security. In other words, the taxable wage base is the income an employee earns on which Social Security taxes must be paid.