Withholding/reporting group-term life for an absent employee
Q: We withhold FICA taxes on employees’ excess group-term life insurance benefits every month. An employee is on unpaid leave for the rest of the year, so there are no wages from which we can withhold. She currently owes $35 in taxes. Can we treat this as a de minimis benefit? If not, what do we report on her W-2?
A: It’s not a de minimis benefit, because the benefit isn’t administratively difficult to account for—you know the exact amount. The employee can write a check to the company for her share of FICA, which you process as a manual entry (i.e., $0 gross, $0 net and only tax withholding amounts). Theshould have accounted for the employer’s portion of FICA, since that’s a separate liability. Alternatively, you can just gross up the taxes.
When to pay when payday is a holiday
Q: We pay biweekly on Fridays. It just sank in that Jan. 1, 2016, is a holiday and also a payday. What can we do?
A: Most state wage payment laws require you to pay employees on the day before a holiday. So you should move the payday into 2015. As a result, you’ll have 27 pay periods for 2015. Since you’ll have an unexpected extra pay period this year, you’ll have to decide whether to continue to make voluntary deductions from employees’ pay.
Benchmark: Most employers suppress voluntary deductions from the 27th check.