Frequently asked Questions
(GMPA is only relaying
information as an aid to payroll specialists and others;
information should
be researched for original and current sources of authority for validity of
information)
Q 1. We have company owned life insurance on a
select few employees. Similar to group term life insurance, the premium
is taxable to the employee. I'm able to enter the premium into our
payroll system for current employees and take care of the taxes & W-2 that
way, but what do I do for former employees (that have zero 2007 wages) that
have been deleted from the payroll system?
According to what I read, I think we have to
reinstate them and either gross it up so that we pay the taxes, collect the
taxes via a check from the former employee, or let it show as uncollected FICA
taxes (of course we'd still have to pay the employer portion). In all
cases, the former employee would receive a W-2.
Our auditing firm has said to issue a
1099-Misc, instead of the W-2.... which is much easier, but I don't believe
this is correct.
Does anyone else have experience with this, and if
so, what do you do for former employees?
A 1. Report the taxable cost of excess coverage
determined by the table in 15-B on form W-2 in boxes 1,3 &5,
also show the amount in box 12 with code C. Former employees must pay the
employee part of fica on the taxable cost over $50K on their return. You
are not required to collect those taxes. You must report them though with code
M for the SS # and code N for the medi #.