In the United States, December is a busy month for payroll departments and in 2020, the challenges of end of year payroll have been made more complex.
The economic effects of the coronavirus pandemic have made it an even more challenging time and with that in mind, to manage the payroll challenges, US employers should ensure their employees are familiar with their administrative obligations and the various important tasks that must be completed at the end of the year. Those tasks include:
- Checking for discrepancies in employee payroll records, including changes to addresses and social security information.
- Reviewing wage, tax and benefits data, including Medicare withholding rate, ACA information, disability insurance, and state unemployment tax.
- Checking for excess retirement contributions to ensure that IRS limits have not been exceeded.
- Processing all year-end Form W-2 adjustments before the last payroll of 2020 - which means verifying that all non-cash and cash income has been recorded and taxed appropriately.
- Checking the applicability of special procedures and measures, such as 2021 month-end close-out dates and the new schedule of holidays and weekends that may affect pay dates.
US Payroll 2021 Deadlines and Contribution Limits
In addition, administrative deadlines, 2021 will see adjustments to US tax and social security contribution limits. In 2021, those deadlines and contribution limits are as follows:
Deadlines for Year End 2020 and New Year 2021
2021 Tax and Social Security Contribution Limits
For more insight and information on payroll and tax in the United States, Global Insight Guide to the USA.