We're Here to Help You Navigate
As you enter the busy holiday season, we're here to guide you to end 2023 strong and step into 2024 with a great start.
What is Year-End?
Year-end payroll is the process of reviewing and summarizing all the taxable benefits you’ve given your employees throughout the calendar year. That's where we come in! We make the tedious process easier for busy employers like yourself. We will take care of the details, and alert you of key dates and deadlines you should be aware of during this busy season.
✨Your 2023 Year-End Checklist✨
Every business has unique year-end reporting needs, and you may need to provide ProService with additional information that affects W-2 Forms. Use this checklist to help you determine what you need to do this year-end season.
📌Take 5 minutes to review the scenarios that apply to your business. Then, get all the answers you need on the drop downs below – including key action items and deadlines.
If you'd like to give your employees a special year-end bonus, complete and submit this Bonus Request Form to your Service Team by Friday, December 8. You can give your employee a year-end bonus as part of their regular payroll, or as a separate payment from their regular paychecks. We can also help you with gross-up calculations. If you want to deliver bonus checks in a fun and memorable way, read this article for tips and more.
Another way to celebrate your employees' hard work is to contribute extra employer contributions to their retirement plans. If you’d like to do this, please let your Service Team know by Friday, December 8. If you are the owner of your business, and you’d like to maximize your contribution to your own retirement plan for 2023, please also let your Service Team know by the date above.
In general, the IRS has specific tax treatments for certain employee benefits that we need to apply and report accordingly on employee W-2 Forms. Additionally, we must adjust employee compensation based on any payroll adjustments you notify us about to ensure W-2s are prepared accurately.
If any of the following items apply to your business, please report them to your Service Team and provide appropriate documentation by Friday, December 15. If you are unsure, please consult your CPA or tax advisor and see if any of the items below apply to your company and should be shared with us.
- Use of a Company Vehicle
- Moving Expenses
- Group Term Life Coverage (exceeding $50,000)
- Long-Term Disability Payments
- Any Schooling/Course paid by your company that’s unrelated to the employee’s job
- Non-Accountable Business Expense Reimbursements or Allowances
- Non-Cash Payments (e.g. gift cards)
- Other Compensation (Any compensation paid outside of ProService)
- To Healthcare Premiums (not administered by ProService)
- To Retirement Plans (not provided by ProService/TransAmerica)
- Health Insurance Premiums by an S-Corp to 2% Shareholder/Employees (not administered by ProService)
- Checks paid through your A/P (that were not reported to ProService)
- Checks for overpayments or bonuses that should not be paid/voided
Has your company’s legal name, ownership status, mailing address, or taxpayer ID numbers changed in 2023? As a best practice, please ensure this information is correctly reported in your HR platform. If any, please share updated information with your Service Team by Friday, December 15. This information is necessary for us to prepare employee W-2 Forms and file corresponding forms with the IRS, SSA, and state/local tax agencies on your behalf.
Have your employees changed their legal name, mailing address, or social security number? If so, please remind employees to update their information by Friday, December 15.
As a best practice, we recommend all employees double-check that their correct information is reported in their HR platform. For assistance on how to log in to their HR platform to make updates, employees can call the ProService Employee Service Center at 808-394-4162 from Monday – Friday, 8 am – 5 pm, for assistance.
📣 Help us stay on track! Outdated employee information could result in delays in preparing employee W-2 Forms or Form W-2 C, which is a corrected wage and tax statement that will be issued in February. Additionally, since W-2 Forms contain sensitive information, mailing this tax form to an employee’s old address is a situation we’d like to avoid but we need your support to remind employees.
If you have third-party sick or Temporary Disability Insurance (TDI) payments to report, please send your 2023 Disability Income Report(s) from your third-party administrator to your Service Team by Tuesday, December 26. Third-party sick/TDI pay will be reported on employees’ W-2s.
Starting in December, you will receive notifications from state agencies about your 2024 State Unemployment Insurance (SUI) rates in that state. Please share these state UI rate notifications with your Service Team by Friday, December 29, 2023. This information will be used to prepare your first payroll of the year. Note: Each state has a different way of delivering rate notifications to businesses. You may receive a letter in the mail or be able to retrieve this information online if the state agency notifies you that SUI rates are only available electronically. If you have employees in Washington State, notifications aren’t distributed until January 1, 2024.
Learn about new laws that may impact you and your employees in the FAQ section.
Starting January 1, 2024, the minimum wage in Hawaii will rise from $12 to $14 per hour. For employers utilizing Hawaii's Tip Credit Law, the 2024 increase to minimum wage increases the adjusted minimum wage for tipped employees to $12.75 per hour. ProService will update our payroll systems on January 1 so that the wage rate for hourly employees below the new minimum wage of $14/hour will be automatically adjusted to receive the new minimum wage. If you use tip credits, we will also make the adjustments in our payroll system for you.
Employers should notify their affected employees in advance in writing or through a posted notice of their new pay rate. Read our article to learn more: What to Know About Hawaii’s Minimum Wage Increase on Jan 1.
Resources for employers:
Starting January 1, 2024, Hawaii's new pay transparency law goes into effect. This law applies to employers with 50 or more employees and mandates that hourly/salary ranges be included in all job listings. Hawaii's pay transparency law follows similar laws recently enacted in California, Colorado, and New York, intending to reduce pay inequality in the workplace. Not only does it benefit job applicants, but it also benefits current employees by giving them visibility into wage ranges of open positions, enabling them to seek higher compensation, thereby helping to reduce pay inequalities further. Read our article to learn more: Hawaii Adopts Pay Transparency Laws.
🗓️ Important Year-End Deadlines to Know
- Fri, 12/8 – Submit your Bonus Request Form if you plan to give a bonus
- Fri, 12/8 – Make an employer contribution to retirement plans
- Fri, 12/15 – Submit taxable employee benefits or payroll adjustments
- Fri, 12/15 – Update or change employee contact/mailing addresses
- Tues, 12/26 – Submit Third-party sick/TDI reports
- Fri, 12/29 – Submit any Out-of-state unemployment rate notices
📣 Help us stay on track! The deadlines listed in our 2023 Year-End Payroll Checklist are critical for helping us get accurate W-2 Forms into the hands of your employees by January 31, 2024. Missing a deadline could result in your employees receiving their W-2 after January 31. It may also result in Form W-2 C, corrected wage and tax statements, which will be prepared and sent to employees in February.
More Year-End Resources!
Get advice and information for businesses in Hawaii.
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Year End FAQs
More questions? Read our FAQ for employers and employees.
Here is the list of new caps and limits for 2024:
Wage Caps for Payroll Taxes
Wage caps refer to the maximum amount of an individual's income that is subject to a particular tax or benefit calculation.
- Social Security Increases from $160,200 to $168,600
- Medicare (no change) – $200,000
- Anything over $200,000, employees pay an additional 0.9%
- FUTA (no change) – $7,000.00
Retirement Plan Contribution Limits
Retirement plan contribution limits refer to the maximum amount of money an individual can contribute to a retirement savings account within a given tax year. They are designed to ensure that individuals do not disproportionately benefit from tax advantages for retirement savings. If contributions exceed these limits, there may be tax penalties or consequences.
- 401K, 403b, 457 plans – $23,000
- 401K, 403b, 457 catch-up plans – $7,500 (no change)
- Simple IRA/401K plans – $16,000
- Simple IRA/401K catch-up plans – $3,500 (no change)
- IRA after-tax – $7,000
- IRA after-tax catch-up – $1,000 (no change)
- Qualified Plans Compensation Limit – $345,000
- Defined Contribution Maximum Annual Addition – $69,000
Flexible Spending Account (FSA) Contributions Limits
FSAs are tax-advantaged financial accounts that allow employees to set aside a portion of their pre-tax earnings to cover eligible medical expenses. FSA contribution limits refer to the maximum amount an individual can elect to contribute to their FSA during a specific plan year.
- Health Care FSA – $3,200
- Dependent Care Account – $5,000.00 (no change)
- Parking/Transit Account – $315/month
Health Spending Account (HSA) Contributions Limits
HSAs are tax-advantaged financial accounts available to individuals enrolled in a high-deductible health plan (HDHP). It allows them to set aside money on a pre-tax basis to pay for qualified medical expenses. HSA contribution limits refer to the maximum amount an individual or family can contribute to their HSA in a tax year.
- Single Coverage – $4,150
- Family Coverage – $8,300
Starting January 1, 2024, the minimum wage in Hawaii will rise from $12 to $14 per hour. For employers utilizing Hawaii's Tip Credit Law, the 2024 increase to minimum wage increases the adjusted minimum wage for tipped employees to $12.75 per hour. ProService will update our payroll systems on January 1 so that the wage rate for hourly employees below the new minimum wage of $14/hour will be automatically adjusted to receive the new minimum wage. We will adjust our payroll system for you if you use tip credits. Employers should notify their affected employees in advance in writing or through a posted notice of their new pay rate. Read our article to learn more: What to Know About Hawaii’s Minimum Wage Increase on Jan 1.
Resources for employers:
Starting January 1, 2024, Hawaii's new pay transparency law goes into effect. This law applies to employers with 50 or more employees and mandates that hourly/salary ranges be included in all job listings. Hawaii's pay transparency law follows similar laws recently enacted in California, Colorado, and New York, intending to reduce pay inequality in the workplace. Not only does it benefit job applicants, it also benefits current employees by giving them visibility into wage ranges of open positions, enabling them to seek higher compensation, thereby helping to further reduce pay inequalities. Read our article to learn more: Hawaii Adopts Pay Transparency Laws.
2023 W-2 forms will be mailed directly to employees and postmarked no later than Wednesday, January 31, 2024. Electronic copies will also be available to employees on their HR platform. Please remind your employees to ensure we have their current name, mailing address, and SSN on file by Friday, December 15. If they need assistance updating their information in their HR platform, employees can call the ProService Employee Service Center at 808-394-4162 from Monday – Friday, 8 am – 5 pm, for assistance.
Form 1095-C, a summary of health insurance offered to employees, will be mailed along with your employees’ W-2 to their mailing address on file. It will be postmarked no later than Wednesday, January 31, 2024. Note: Only employers defined as “Applicable Large Employers” by the IRS (usually organizations that employ 50 or more employees) must provide this report to employees.
Temporary Disability Insurance
Here are new employer and employee contributions for 2024. View the TDI chart here.
Family & Medical Paid Leave Insurance
Every year, more states add Family & Medical Paid Leave Insurance benefits. As of 2024, 12 states and Washington D.C. have (or will have) state-required paid leave for an employee's medical condition and/or paid family leave for bonding with a new child, caring for a seriously ill or injured family member, and certain other purposes. This includes California, Colorado, Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, Virginia, Washington, and Washington D.C. Despite some common elements, what is covered, who is eligible, and who contributes to the fund varies by state. Employee payroll deductions usually fund this benefit (except in Washington D.C. where employers fully fund it). In other states, Family & Medical Paid Leave Insurance is partially funded through employer payroll deductions based on employee headcount.
- Colorado – Starting January 1, 2024, the types of earnings on which premiums and benefits calculations will be based now include: Salary, Hourly wage, Overtime, Tips, Bonuses, Commissions, Piece rate, Employer-provided paid leave (PTO, sick, vacation, etc.), Disability benefits paid by the employer and not by a third-party, Parental leave paid by the employer and not by a third party, and the value of lodging or meals used as a credit toward the minimum wage. PFML resources for Colorado: Employer Page | Employer Tool Kit | FAQs
- Massachusetts –Effective January 1, 2024, Massachusetts is implementing changes to its premium rate, increasing it from 0.63% to 0.88% for the year 2024, up to the Social Security cap for 2024. The contribution is divided into a medical leave contribution, which is 0.7% for 2024, and a family leave contribution, which is 0.18% for 2024. All of the family leave contributions can be withheld from employees’ pay, while up to 40% of the medical leave contribution, or 0.28%, can be withheld. Employers must pay at least the other 60%, or 0.42%, of the medical leave contribution. Employers with fewer than 25 employees do not have to pay the required employer share of the medical leave contribution, so their contribution rate is 0.46% for 2024, up from 0.318% in 2023.
- Washington – Beginning January 1, 2024, Washington is introducing changes to its premium rate, decreasing it from 0.8% to 0.74% for the year 2024, up to the Social Security cap for 2024. For employers with at least 50 employees, the new arrangement mandates that they contribute 28.57% of the premium rate, with employees responsible for the remaining 71.43%, as outlined in the release. This marks a shift from the 2022 scenario where covered employers paid 27.24% of the premium, and employees covered the remaining 72.76%. In contrast, employers with fewer than 50 employees are relieved from the obligation of paying the employer portion of the premium. However, they are still required to withhold and remit the employee portion, as detailed in the release.
- Maryland – As of October 1, 2024, Maryland has been added to the list of states implementing a new PFML tax. This entails employers being obligated to pay taxes and withhold them from employee wages. Beginning on October 1, 2024, both employers and employees are required to contribute to a family-leave insurance fund based on wages up to the Federal Social Security cap for 2024, with a fixed rate of 0.9% during the period from October 1, 2024, to June 30, 2026. Note: It's important to note that employers with fewer than 14 employees are exempt from contributing to the program. However, they are still mandated to withhold and remit the employee portion of the contribution. Further details will be provided in the coming months as the state finalizes the regulations for the program.
- Delaware – Starting January 1, 2025,Delaware has been newly included in the list of states implementing a PFML tax requirement. This mandates employers to both pay taxes and withhold taxes from employee wages beginning in 2025. Employers that have fewer than 9 employees working in Delaware are exempt. Employers and employees pay a family-leave insurance contribution on wages up to the federal Social Security cap for 2025. Effective for 2025 and 2026, the medical leave tax rate is 0.8%. Employers can require employees to pay 50% of the contribution.
FUTA Reduction Credit
FUTA stands for the Federal Unemployment Tax Act, a federal law that imposes a tax on employers to fund unemployment benefits. The standard FUTA tax rate is 6.0% on the first $7,000 of each employee's wages. However, if a state has no outstanding federal loans for unemployment benefits, the FUTA tax rate is effectively 0.6% due to the FUTA tax credit (6.0% – 5.4% credit). Currently, two states have not fully paid back their federal loan and will lose the full FUTA tax credit: California and New York. If you have employees in California or New York, you will be charged an additional 0.6% on employees’ wages, which comes to approximately $42.00/employee. Note: As a ProService client, you don't have to make any changes. We will reconcile the employees in each of those states. Billing for the extra $42.00/employee will appear on your invoice in mid-December. The extra amount will be reported and paid on your normal FUTA 940 return by January 31, 2024.
New State Tax Legislations
- Alabama Overtime Exemption – The state has passed a new bill, HB 217, which exempts certain overtime pay from state income tax from Jan. 1, 2024, to June 30, 2025. The exemption applies to overtime paid rather than earned. If an employee works overtime before June 30, 2025, but is not paid until after that date, the overtime pay is not exempt because it was not received within the exemption period. The exemption applies only to employees paid on an hourly basis.
- Vermont Child Care Tax – The state has passed a new bill, HB 217, creating a new payroll tax to fund its Child Care Financial Assistance Program effective July 1, 2024. The tax will provide funding for the Child Care Financial Assistance Program, subsidizing childcare costs for certain families. The payroll tax is 0.44% of an employee’s covered wages and may deduct 0.11% from employees’ wages. Employers must remit the tax to the state tax department using the same requirements as Vermont’s income tax, including the time and manner of payment. Wages subject to federal income tax withholding are subject to the tax. More to come when we approach the effective date.
You can update your contact information, mailing address, and SSN in your HR platform. For assistance logging in to your HR platform, please call the ProService Employee Service Center at 808-394-4162 from Monday – Friday, 8 am – 5 pm. Please update your information by Friday, December 15.
W-2 forms will be prepared using the information in our platform by mid-December. If your information is outdated or incorrect, it could impact the accuracy of your W-2 Form, and we may need to generate a Form W-2 C, a corrected wage and tax statement for you, which will be issued in February and affect when you can file your taxes. In addition, W-2 Forms contain sensitive information. We want to protect your privacy by not mailing your tax form to an old address. Please ensure your information is up-to-date in your HR platform by Friday, December 15, to ensure timely and accurate processing of your W-2. If you need assistance, please contact the ProService Employee Service Center at 808-394-4162 from Monday – Friday, 8 am – 5 pm.
To change how much federal income tax is withheld from your paycheck, you can update your W-4 form. Typically, it’s recommended that you review your federal tax withholding every year. Why? This is because personal circumstances and financial situations can change. Life events such as marriage, divorce, having children, changes in employment, or significant changes in income can all impact your tax liability. By reviewing and potentially adjusting your W-4 withholdings, you can ensure that the right amount of taxes is taken out of your paychecks throughout the year. Please note that ProService cannot advise what you should select and indicate on your W-4 form. Should you have any questions about completing the form, we recommend consulting a licensed tax professional or using the IRS's Tax Withholding Estimator.
If you claimed “exempt”’ for Federal income tax withholdings last year, you must provide a new, completed 2024 W-4 Form to ProService. If you submit a paper form, please provide your completed W-4 Form to ProService by January 31, 2024, so we can submit the form to the IRS by the February 15 deadline. If you do not submit a new W-4 Form by the deadline, ProService will automatically change your Federal tax withholding to “Single” and federal income taxes begin to be withheld from your paycheck.
If you received unemployment benefits in 2023, you will receive a 1099-G Form from the State Unemployment Office to file with your 2023 individual tax returns. The 1099-G will be mailed directly to you before January 31, 2024. The form can also be found on your online UI account under “Claim Inquiry” and selecting “1099-G”. As a reference, the Hawaii State UI Division tax withholding ID is 093-185-7408-01. This ID will appear on your Form 1099-G from the State Unemployment Office.
Have Questions? We're Here to Help!
If you're a ProService client, contact your Service Team. They are happy to assist you! If you're an employee of a ProService client, call our Employee Support Center at (808) 394-4162 from Monday – Friday, 8 am – 5 pm, for assistance.
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Launched in 1994, ProService Hawaii is the leading provider of bundled HR solutions that empower employers to succeed in Hawaii. Today we serve 2,500+ local businesses and 44,000 employees across the state, helping employers with HR strategy, payroll, benefits, risk and compliance management, and much more.
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