What’s New? Does your organization encourage annual W4 reviews? Each year, employers are forced to have tough conversations with employees that owe more taxes than expected after they file their return. While the employer is responsible for withholding and filing payroll taxes on their employee’s behalf, it is up to the employee to determine how much federal income tax is withheld from their wages. It is also the employee’s responsibility to make sure enough income tax is being withheld to cover their annual tax burden. What Should You Do? The amount of federal income taxes withheld from employee wages is determined by how they fill out their W4 . All employees are required to complete a W4 during the initial onboarding process, but very few review and make adjustments. For this reason, we recommend that employers actively encourage their employees to take these steps each year: Use the IRS tax calculator to get an idea of what tax liabilities will be for the year. Review check stubs to make sure enough federal and state income taxes are being withheld. Submit a new W4 if income tax withholdings are insufficient. Employers should also encourage employees to submit a new W4 if they: Experience a life-changing event (marriage, children, divorce, etc.). Add another source of income (2nd job, “side hustle”, contract work, etc.) Have had to pay additional taxes after filing their annual return for previous year. How Can Time & Pay Help  Detailed Check Stubs: Time & Pay provides detailed earning statements for all employees we process payroll for. Paychecks that we produce include a check stub that shows all wages, deductions, and taxes withheld on the current payroll, as well as year-to-date totals. If your employee isn’t receiving a paper check, check stubs are sent via mail, or electronically to the employer to distribute. If the client is a Payentry subscriber, check stubs are available online through an employee self-service portal, as well as details about how their withholding status is currently set up. There is also a mobile app available on Apple and Android devices that give employees access anywhere they have internet access.

What’s New? The IRS uses a 20 factor test when considering whether a worker is an employee or independent contractor. With a new final rule set to go into effect on March 11, 2024, it’s a good time to review these factors, as well as how workers are classified within your organization. What are the 20 Factors? When considering whether a worker is an employee or independent contractor, you should ask yourself these questions: Instructions – Do we provide instructions on when, where, how to do the work? Training – Do we train the worker? Subcontracting – Can the worker subcontract part of the work, or does the worker have to perform the work? Control of Workforce – Is the worker allowed to hire and terminate their own workers? Length of Employment – how long will the worker be expected to work for us? Schedule – Did we set the schedule? Full Time Work – Are they working full-time for us? Order or sequence – Do we require the work to be done in a specific order or sequence? Work on premise – Does the work have to be done at our office or work space? Reports – Do we require the worker to provide reports and status updates? Pay – Do we pay the worker by the hour, week, month, or job? Expenses – Are we paying or reimbursing the worker for expenses? Tools and Materials – Do we provide tools to the worker? Investment – Does the worker have investment in the essential tools and/or facilities where work is performed? Profit / Loss – Can the worker suffer a profit or loss on the job depending on their performance? Integration – Is the worker doing work that is vital to our operation? Exclusivity – Does the worker perform work for more than one company at a time? Availability – Does worker make their services available to the general public? Termination – Can our company fire the worker without liability? Resignation – Can the worker quit without liability? Overview:  All 20 factors are related to these 3 items: Behavioral Control – Does the company have the right to control how the worker performs their services? Financial Control – Are the business aspects of the worker’s services controlled by the company? Relationship of the Parties – Is the relationship between the worker and the company defined in legal documents? Does the company provide insurance for the worker? Are the worker’s services a vital part of the company’s operations? Fines and penalties assessed due to misclassification of workers could be devastating for businesses. Time & Pay clients have access to complimentary consultations through SESCO HR Management . If you have questions or concerns about how certain workers in your organization are classified, contact us today!