Guidelines for Payroll W-2 Benefit Reporting

In March 2011, the IRS issued some guidance about Benefits on W-2 forms.

Reporting is Voluntary for All Employers for 2011 and Small Employers for 2012
The Internal Revenue Service today issued interim guidance to employers on informational reporting on each employee's annual Form W-2 of the cost of the health insurance coverage they sponsor for employees. The IRS is also requesting comments on this interim guidance. The IRS emphasized that this new reporting to employees is for their information only, to inform them of the cost of their health coverage, and does not cause excludable employer-provided health coverage to become taxable; employer-provided health coverage continues to be excludable from an employee's income, and is not taxable.

The Affordable Care Act provides that employers are required to report the cost of employer-provided health care coverage on the Form W-2. Notice 2010-69, issued last fall, made this requirement optional for all employers for the 2011 Forms W-2 (generally furnished to employees in January 2012). In today's guidance, the IRS provided further relief for smaller employers (those filing fewer than 250 W-2 forms) by making this requirement optional for them at least for 2012 (i.e., for 2012 Forms W-2 that generally would be furnished to employees in January 2013) and continuing this optional treatment for smaller employers until further guidance is issued.

Using a question-and-answer format, Notice 2011-28 also provides guidance for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012. The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage.
The 2011 Form W-2, prior IRS Notice 2010-69 deferring the reporting requirement for 2011, and Notice 2011-28 containing the new guidance are available on IRS.gov. http://www.irs.gov/newsroom/article/0,,id=237870,00.html

Confused what should be in Box 12-DD?
Refer to the below article for reference or ask your accountant for clarification
http://www.irs.gov/newsroom/article/0,,id=237894,00.html

If a customer would like, it is good practice to set up benefits in the payroll system for this insurance. The amounts of benefits for the employee will be tracked, then, like you do a deduction today, you can put a W-2 label on the benefits so they are reported to the specific amount. If the customer does not tack the benefit in the Microsoft Dynamics GP application,  it would be difficult for it to be on the W-2 at the end of the year.

If you have not, set up your benefits and assign them to employees. Below are basic steps to get the labels on the benefits.

1) Microsoft Dynamics GP | Tools | Setup | Payroll | Benefit
a. In the Benefit Code box, type in the Benefit or use the Lookup icon to select the Benefit you want to label.
b. Select the Save tab in the Menu Bar at the top of the window once you fill in the W-2 Box and W-2 Label.
c. It will ask: ‘Do you want to roll down these changes?’, if you select Yes it will apply this change to all employees that have this Benefit.

Or you can go in and assign the W-2 Box and the W-2 Label on a per employee basis.

2) Cards | Payroll | Benefit
a. In the Employee ID box, select the Employee(s) that have the Benefit that needs the W-2 Box and W-2 label
b. In the Benefit Code select, the Benefit that needs the information filled in.
c. Select the Save tab in the Menu Bar at the top of the window.
d. If you choose this method it will use this label instead of what is used in the Benefit Setup window and only apply this change to this employee.

At this time, there is nothing that needs to be released by Microsoft for this capability in the system.  It exists today, we need to start using it.

 Terry Heley | Escalation Engineer | Microsoft