The end of the calendar year is upon us. It tends to be an exciting time for everyone, including your small business HR consulting company, Suitless. This is even more true in 2020 because the year was such an anomaly. As December winds down we start to move into the holidays by thinking about celebrations and the New Year. And while many of us will have no problem turning the page on 2020, this time of year is a great time for employees to take a few simple actions that could end up saving them a ton of time and energy in the new year. Take a look at these 6 end-of-year employee to-dos that we recommend as your small business HR consulting experts:
1. Review your Final Paystub.
The end of the year is the perfect time check your final paystub. Things that you should double check include your gross wages for the year: your withholdings and deductions; your hours worked (if you are a non-exempt employee); and your benefits contributions/calculations. You can do a ‘back of the envelope’ calculation to determine if you’ll be getting a tax refund (and for how much). You can also make sure that your total wages match up with your salary for the year – assuming you worked the whole year and are paid semi-monthly or monthly.
2. Check employee end of year FSA balances.
Will you have any leftover FSA money from 2020? You may want to check with your employer to see if that money is eligible for a rollover into the new year. Or if your FSA plan has implemented a grace period through mid March. Plans can have one or the other. These are two options that an employer has to opt into for their plan. (This info should also be included in plan documentation). Knowing whether your FSA plan has a rollover or grace period option will help you plan accordingly for qualified medical expenses. And remember… FSA money is “use it or lose it”, so make sure you do what you can not to forfeit that money back to your employer.
3. Look at Imputed Income.
Did you receive anything of taxable value from your employer throughout the year? If so, you may be taxed on these ‘Taxable Fringe Benefits’ in your final paycheck. One of the most common items that employees get taxed on is Group Term Life Insurance. The IRS requires employers to tax employees on any Group Term Life Insurance benefits that exceed $50,000. The tax calculation is based on the amount over $50k, months covered, and the employees’ age (as outlined in the IRS Pub15b). Imputed Income is often noted on a paystub as Taxable Fringe Benefits, TFB, TaxFrBen, or something of that nature.
4. Review your W2.
Most employers provide their employees with a W2 after the first of the year, sometimes around the middle of January. These few weeks provide the employer with enough time to generate and file W2’s or provide additional information to their payroll companies. Now adays, many employers/payroll companies issue W2’s virtually. It’s important to double check this document so that you get your taxes right. If an error occurred, make sure to note it with your employer so that they can fix the error and generate a W2c (c being for “corrected”) as quickly as possible. Note that W2’s are issued for every employer you’ve been employed by. (And 1099s are issued if you received more than $600 in payments as an independent contractor). So be sure to gather all of these documents for tax time.
5. Be Aware of New Insurance.
Did you elect new or different insurance coverage for 2021? Many companies have calendar year plan years, meaning that 2020 coverage ends on December 31, 2020, and the new coverage goes into place on January 1, 2021. If this is the case, you may need to put your new medical, dental, or vision plan insurance cards on file with your existing providers. If you were issued a new FSA/transit debit card, you may also need to update this with with any vendors that have it on file. You should also look at your first pay stub in 2021. Make sure your withholdings, deductions, contributions, and wages reflect what you thought they would. And finally, you should confirm with your insurer(s) that they have added or removed any dependents that may have changed effective as of January 1, 2020.
2020 was a tough year, so pat yourself on the back for getting through it. You deserve it, and 2021 is going to be awesome! These end of year employee to do’s are just wrapping up a massive season and getting your ready to start fresh in 2021.
Make sure to “check the box” for all of these items. If you have any questions about them contact your employer, your payroll company, or the folks at Suitless for guidance. As a dedicated HR consulting service for small business needs, we can make sure you have all your boxes checked off.