Medlin Software, Dennis

"employer told them".  Another indicator of employment insecurity for the employees, and full employment for those cleaning up the mess.  I hear this type of thing daily, an employer is getting involved with an employees tax situation.  "I want to make sure the employee does not owe at the end of year" is a good example.  I sometimes try to suggest it is none of the employer's business and that offering tax advice can get them in liability, but I usually get rebuffed.

As an aside, did you backup your data today?  First call of the morning was from someone asking if I have a copy of their data as their computer went BSOD (blue screen of death).  Folks, you can never backup enough since your income depends on it, and just as importantly, TEST your recovery process at least once a year.  Backing up without testing is barely better than no backup at all.

I have to keep current... since at least some of my customers will.

The W10 install/upgrade process was the easiest Windows upgrade ever.  The only problem I had to fix was a hardware issue (touchpad on a cheap relatively current laptop) which was solved via a download from the hardware manufacturer's web site.

The Wifi Sense issue Catherine mentions is easily turned off.  Since I had already set mine off before reading this, I do not remember what the default settings were.

From a programmer's perspective, there is a decision of if/how to deal with W10 having a plain light colored title bar (the color cannot be set as easily as before, but can still be set).  Also had to alter our web site to recognize the new "Edge" browser which replaced IE.

W10 seems to have been properly designed to take away or hide things most do not need.  This is no different than what I have had to do for years.  The majority prefer to install something and just have it work (and/or should not be messing with settings).  I expect there will eventually be some sort of official or unofficial "tweak" program available, similar to the old tweakui" program.

Don't get me wrong, I have no reason to tell anyone they should install W10.  It is probably still best (for the non techie) to heed the old advice of using the OS which the computer manufacturer installed, and if you have an unsupported old OS, you have an old computer you should replace, especially if used for income generation.

I hear something similar from time to time - a form someone says was mailed or efiled and a notice that it was not filed/received.  The notice would be more accurately say the form/return cannot be found, instead of that it was not filed.

All data can be lost, even by a tax agency.  Sometimes it is a small sample, sometimes there is enough to point to a specific issue.  A few years back, an unusual number of our customers reported the IRS was telling them a certain year and quarter 941 was not filed.  Given the number of just our customers reporting this, there had to have been some larger data loss on the machine keeping that year and quarter's scanned paper filed forms.  I say "machine" since if there was a backup, or a backup that was useful, there would not have been an issue.

If you want to sign, it appears you can.  The NY definition of RP is vague enough (as for most tax agencies) that if someone wants to get in on the fun, they can.  Most tax agencies have a list of who is on the hook by law, and do not mind if others want to bite as well.  The more they can seek money from, the better for the agency.

FWIW, NYS came after me for employment taxes, based on a set of sample NYS-45 data which had our actual CA address, with the fake employees having a CA address, with invalid SSN's, unsigned, sent to their forms approval office.  It is clear they have no issue coming after whomever they perceive as being liable.

Keep a CYA note so you can show your solution for something the employee cannot fix.

For me, the most common I get is when an owner/employee does not pay themselves a reasonable wage on a frequency meeting their state requirements, and those who simply do not meet their state requirements for any employee (pay frequency, pay stub, etc.).  In most cases, changing to be compliant is cheaper than what is currently being done, and is absolutely cheaper than defending the position and the penalty payments.

I was just asking my kids how their employers handled the CA Sick Leave notification.  One was handled properly - not subject because his current gig is an exempt gig (entertainment industry).  One is handled properly on his stub, but has not received the required written notice showing the employer's policy (can be inferred it is the state minimum).  One of the girlfriends has received no sick leave on her stub, and no notice.  For the two non-compliant employers, I told the kids to wait it out for a bit since neither is in a position to safely rock the boat.  Showed them how to track themselves.

If a state has a separate form, then I require it, or use S-0 for whichever form I did not get.  Solves any issues where one may get a form and have to decide whether or not the employee meant federal or state.  I do not want to make tax decisions for employees!

I fully use the 30 day allowance when needed.  For those that have a normal reason for change, I simply delay to the next check.  For those that change their form often, I wait until the last check within the 30 day window.  So first change of the year, changes on next check, additional changes in the same year may take longer.

An elder/medicare lawyer asap is the way to go.  This may not be the only issue, and it is better to have plans in place before need.  The elder care specialist will know what to do and when.

When a random compliance check happens, I am always happy if the result is a single issue, with a clear path to solve.  The random compliance people likely have pressure to "find" something.  There are easy to find bad practices which are very common...  Just finished talking about two with a potential customer (they sometimes look elsewhere because I refuse to give bad advice).  Income shifting, paying an owner/employee once a quarter in CA, and creating separate bonus checks manually changing FWH and SWH to zero.

This is not a new issue.  We hear this from customers who paper and e file.  A few years ago, there was a large number lost, based on the more than a few our customers with this issue.  Thus, we recommend in addition to keeping the paper copy for compliance purposes (the electronic storage regulations are not something I am comfortable with as I do not want to allow the IRS access my computer at will to ensure my compliance, nor do I want to have to report any potential data loss, such as a computer change, versus the no proof required+ assumption the IRS makes that I did keep the paper records), we suggest paper filing.  For those who prefer to get proof of delivery, mailing with some sort of delivery receipt might be a comfort.

As we near the W2 deadline, for me, the most common issue is the S Corp owner who is a DIY payroll and tax person.  Inevitably they had no idea of the ramifications of ACA on their own health insurance.  A large percentage of those are not happy about me directing them to a local tax expert to clean up their mess...  (Had three of these already within my first 30 minutes of opening for the day.)

So far, only one is a one employee setup, and I still suggested they get at least annual outside advice...

If using the Windows methods to print (and few programs do not), programs can only make requests.  Printer software and hardware may or may not offer the requested item, and in some cases, especially with a new model printer requiring new printer software, may not be coded correctly and fail.  (The most common issue with printer software is handling the copy count correctly.)

Personally, duplex is fine for file copies, but I do not use them for submitted items.  The IRS is getting a bt testy if a form fails scanning.  A badly printed/folded/smudged duplex is more likely to fail over a badly printed/folded/smudged single side printed.

The cost of postage and paper is nil compared to a delay waiting for manual processing, or even a penalty for a non-scanable form.

Notes on the front of a check such as two signatures required, void after 60 days, etc. only matter if the check is presented to a teller who uses their vision.  With Check 21, most checks are simply scanned.  If there is some sort of scribble in the signature area, and something the machine can read for an amount, and a valid MICR line, it goes through.

The likely issue is the account number is on the right of the MICR line, the signature had a tail which crossed the MICR line, and the scanner read the account number incorrectly, coupled with another customer at the same bank not watching their account to catch the error.  Likely more prevelant with an optical scanner than a magnetic scanner.
 

easytax,

If your question was for me, we do not offer a payroll "service".  We offer payroll "software".  We try to limit our assistance to the operation of the software, but do get asked about operating a computer, as well as questions on payroll preparation and reporting.  Most of the ACA questions I am getting are based on "someone" telling my customer to alter the W-2.

Since I am not in a position to give tax advice to my customers, I am doing mostly "steering" to information for the employer to refer to.  I sometimes will add something along the lines of "while not specific advice for your situation, I might..., but I would certainly seek the written opinion of a local tax professional who backs their written advice with a written guarantee and E&O insurance."  I also point out, if they are paying for a person/ company to manage/provide their health coverage, part of that payment likely includes advice on administering their plan, including proper reporting advice.

The stories I could tell if this was not a public forum...

Thank you.  The results, as to what yo do for payroll purposes, are easy, once the employer decides what they want to do.  I very carefully stay out of the decision... The trouble (for me) is when my customer has been told something by someone, and that someone really has no idea what they are saying, or will not back up their opinion.

The most common is "I was told" to add the health insurance to Box 1, 3, and 5.  I reply with how/why/for what purpose, without actually collecting the required withholding for the taxable amount increase, reporting it on 941, etc.  The customer eventually get to the realization they should have added the amount to paychecks, and they turn the mess to their tax person to clean up.  I cannot recall any inquires from a single person setup, where the healthcare amount may possibly be excluded from income.

Jack,

This is just for conversation and my education, and is based on what my customers ask, and tell me they are being told to do.  My perspective is from payroll processing and reporting, not tax prep.

If I am following correctly, it is not just a matter of altering a W2, the amount needs to be added as taxable wages on the paycheck(s), likely as paid (not at EOY) and both the EE and ER must pay all the appropriate taxes on the "extra wages".  This would create a proper W2, 940, 941, state reports, UI reports, worker's comp reports, and so on - showing the amount as taxable wages.

It appears to be a Catch-22 as far as the tax preparer "end" and the payroll "end" - to get the employer to do what they are supposed to have been doing.  The tax preparer (rightly so) cares only about a proper W2, and tells the employee (or in some cases, their client is an employer) to create/get a correct W2.  The employer then asks me how to edit a W2.

So, selfishly, I am trying to come up with a non-official recommendation for the payroll end.

In the example in this thread (pls correct me if I am wrong):

In this case, money given for medical is now wages, and should be added to the paychecks when given.  This allows proper taxation (increase subject wages).  This will properly include the amount on all payroll reports.  Employees handle any deductability through their personal tax return.

Opinions?

Any ACA changes are not part of this particular issue, the person asking says they are a CPA and the plan in question meets ACA.

Person wants the company paid amount to also show as taxable on CA DE9 (state quarterly wage report, not just W2 and W3.  (In this case, 941 is not being asked, although I have yet to find any IRS direction to add it to a 941, we allow it if the customer chooses.)

For the CA DE9:

do you show the amount as taxable wages?

if so, as paid?  Just Q4?  Something else?

Also, since it is clear CA wants this as taxable, at least on W2, should the company be withholding tax on the company paid amount, and if so, when?

Thank you...

For me, paper. 1. The requirements put on me by the various tax agencies are unacceptable, should I choose only electronic records. 2. I only keep what I am required to, for no more than the required time. What you are not required to keep (voice ot Jack Webb here) can and will be used against you...

Always timely advice.  Having watched others go through this, as well as family, our kids have told us to get our stuff together.  We worked through a sucession plan for work as well - as our customers deserve it.  This is something many small operations forget to plan for.  Plan to be replaced!

Computer hardware is likely to fail shortly after new, or several years down the road... not much in the way of failures in between.  The last time I looked, hard drives (for example) had a MTBF of about 3 years.  IIRC, this figure has been stable for many years.  The reason it is so low is because of the incidence of failure when new.  If you were to exclude failures when new, it is probably 5 or more years to average failure.

For backups, I have one local (never reuse media, use good CD's).  A local USB drive (one).  A set I take to another location.  A set on a server I control in a different geographic location.  A set on a public cloud backup system.  All are double encrypted by me before saving.  The real key though is routinely testing said backups (at least twice a year).  Backing up without testing is only slightly better than no backups.

My other "backup" is having a nearly instant way to reroute incoming phone calls, a second and third way to access internet, and alternate computers almost ready to go.  All of these which I can access from more than one location.  In my case, we do have natural disasters (earthquake and flood) in my community, which have both caused me to use part of my backup sustems in the last few years.  The worst was many years ago when we were without public utilitues for several days, and could not get across town due to all river crossings being unavailable.  That experience makes it easy for me to plan for failure, and not blink at time spent doing so, as failure does happen.

Fou our recent quake, the only unexpected item was the "luxury" of having a battery powered vaccum to clean up glass.  I now consider the battery vaccum a necessity... and have obtained several extra batteries as recharging from the cars took longer than I would have preferred.  Those car batteries and assuming some sort of generator or working vehicle, are our power lifeline.  Lived off them for 3 days during the '86 flood.

I neglected one other old time advice - don't be the person who thinks a new computer, USB stick, portable drive, etc., means no issues.  That new item was not always in your control, and may have an issue.  This is less frequent these days, but can still happen.  Like others have said for other topics, trust, but VERIFY.

Safe Hex is still the best prevention.  Know what you download and from where.  Know what sites you are opening.  Disable Javascript except for trusted sites.  TUrn off the preloading of web pages.  Don't open attachments you did not ask for - read questionable email in text format only.  Etc.

Personally, I will never pay for a protection program.  Those who depend on my payment have a much higher incidence of "false positives".  The idea being to get my payment, I have to see they are "doing" something.  There are plenty of free protection programs available which are very good.  What good is it to have a protection program when you have to turn it off to install and used trusted software?

Only use one at a time, but have another for cross checking.  Use virustotal to cross check against more than 50 protection programs "if" you get a hit in your two installed programs.

The piece which is usually not mentioned is a protection program can only accurately protect you from known threats.  They "guess" as to what might come down the pike, but often guess wrong.  Those wrong guesses cause people to tire of the incorrect warnings, and turn off the protection.  Nefarious folks (the experts, not the "script kiddies") know how to fool the guessing, it can be as easy as changing one letter in their code from upper to lower case, or vice versa...  If you ponder this a bit, we have had protection programs for many years, yet there are still new (really new, not just a rehash of some old scam) which hurt, since the protection programs can only guess at new things.  If a protection program really could protect you, there would be no more new scams... since they would never get past a "protection" program.  If you practice good safe hex, you do not need a protection program, and you will not get "hit".  On the other hand, we are all human, and a little protection can save us from a wanton keypress or click..

I miss DOS on occasion.  Looking for the "any" key.  Explaining the CD carrier was not a cup holder.  The main key was the Return key instead of Tab.

Just yesterday, heard from someone who was still using one of our DOS programs.

Sat... use it for TV.  Would not like to use it for internet - too much latency. Tried it once, worse (to me) than using my phone as a hotspot.

Hardware:  I never keep current.  I like yo use several year old hardware.  If I use current, my comptuer would be faster than my customers, which can cause issues.  Hardware is so far ahead of what we can physically type and what the common graphics systems can display, there is little need to keep up.  Sure, if you are doing something special, you can buy special gear (think flight sim with a huge frame rate), but for general usage, anything within the last 5 years is fine.  I happen to be using a sub 200 laptop at present, hooked to a large monitor and USB keybard and mouse.  Plenty fast enough.

Not an ATX user, but I have one comment on network issues.  WIndows has settings which control how "network" connctions are refreshed.  We use a small network to pass backup files (instead of sneaker net).  At random times, one computer will not be seen by another.  Yes, ours will sleep/hibernate.  One gets turned on and off during the day.  Does not happen often enough for us to look into it, but it concievably be a clue as to the ATX issue.  Remember, "server" and 'network" absolutely may be something on the very same computer - it does not have to be on a different computer.

With my developer hat on:

Cloud removes some very nasty headaches.  No support for installation, maintenance, updates, backing up data, etc.  Factoring in support for just these issues is a HUGE part of software cost.  Like it or not, modern computer users are insulated from having to know how computers function, and expect software vendors to train them if needed.  This is not a bad thing, as it means more can use the wonderful tool, it is just different.  (Imagine if GM had to teach me how to drive, give directions, make repairs, fill the gas tank, etc., all for free, because I bought a GM vehicle.)  Much more easily to handle proper licensing as one can monitor exact access and cut it off as needed.

Costs go up as one has to charge enough to cover customers being online 24/7 and moving large amounts of data.  But, those costs get passed on, and if the customer is not all that active, I might make more money.  (I would not want to have to run a meter and bill for access.)

Unless I am sloppy and do something incorrectly, I have zero liability for lost data, so no new risk there.

The bad is all on the customer.  Outages.  Intuit has suffered them, as has Amazon.  If these two, expecially Amazon, cannot keep up 100% of the time, then how can anyone else?  Intuit's online payroll was unavailable for more than 24 HOURS not too long ago...  Amazon is the back end for MANY cloud services, so it is safe to say they are the best, and yet they cannot be perfect. If data is lost, the customer has likely trusted they did not need an online backup and are in bad shape.  Slower data entry is almost a given, and a bad thing for even a lousy keyboarder.  For safe data, each entry must be stored and added, slowing down entry.  Well, unless you live in a Google fiber area and your cloud service is in the same loop...  (For example, I am writing this using a remote connection to my main computer, and even at slow typing, I have to "wait" a few ms for the remote software to send the keystrokes to the main computer, update the display, and send the restults back to me and update my display.  This is a very fair comparison to cloud or even network based software speed.)

So for now, we remain softare installed on the customer's computer and do not require internet access at all.  We continue to consider a cloud offering, but nothing on the horizon.