Strategic Consulting Solutions, Inc.

The Year End Memo: What You Need to Know

Near the end of each year, the IRS notifies employers to remind their employees to submit a new Form W-4 by February 15th, if necessary. An employee must submit a new form if their withholding allowances have or will change for the next year, or if they have claimed exempt for the current year on their Form W-4. Around this time, employees can have many questions regarding this process. Recently, The Payroll Advisor published a new white paper on the importance of sending out a year end memo to employees to address the IRS requirements as well as answer potential questions that they may ask. In addition, sending out a reminder or “memo” is a great way to ensure your employees have ample time to submit the new form by the deadline.

Memos should be clear and concise (no more than two pages). The paragraphs should be short, to-the-point, and easily understandable to your employees. As for what should be included in the memo, it is up to you to decide which pieces of information need to be passed on to your employees. For reference, The Payroll Advisor has provided a list of items to consider when writing the memo:

  1. Social security wage base and rate for the next year.
  2. Reminder that the taxes resume again if limits were reached in the current year.
  3. Medicare wage base and rate for the upcoming year.
  4. State taxes that affect the employee directly.
  5. The date the Form W-2 will be mailed.
  6. The date by which employees can expect to request a duplicate Form W-2.
  7. When including the date to request the duplicate Form W-2, you should also include the procedures. If you don’t have procedures, this would be an excellent time to create them.
  8. Social security card number and name match — now is the time to remind your employees to ensure that their name and number match.
  9. Address verification.
  10. Reminders that the employee needs to submit a new Form W-4 if their withholding allowances will change in the new year, and that the Form W-4 expires if the employee claims exempt and the requirements for submitting a new form. (This is especially true for those claiming Military Spouse Exemption).
  11. Important dates, such as payroll holidays, timecard/timesheet submission dates, payroll contact numbers, websites, etc.

Developing and distributing a year end memo can be beneficial to employees and employers, because it helps answer common questions and provides pertinent information in one concise document. It is recommended to send out the year end memo by December 1st to give your employees plenty of time to gather their information. The memo can be distributed in several ways, such as hard copy, email, as a payroll stuffer, or in the company newsletter. For more detailed information on year end memo specifics, you can access The Payroll Advisor’s full report here.

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