W2s & Other Tax Forms

Do I purchase W2/1099 forms separately?

Yes. The W2 program does not print the actual W2 or 1099 forms. It gathers data from the Payroll (and/or Expenses & Ledger) modules and prints the information on pre-printed forms*. Find out where to Order W2 and 1099 Forms and what type of forms you’ll need.

Note: Lines and boxes must be pre-printed on the forms. Do NOT purchase blank forms.

Each school has a different tax ID # (TIN). How do I print W2s separately?

If each of your locations in Procare has a separate tax id number (TIN) you’ll need to move them to separate Regions in Procare (at least temporarily) in order to print separate W2s and the summary W3.

1. From the Procare Home screen go to Configuration > System > Locations & Users and dbl-click Regions & Schools.

2. At the Regions and Schools screen click Add Region (lower left).
   

3. Enter a new Region Name (such as the name of your second location or city in which it is located) and give it a Region Code, like R2, then click Save > Exit to leave the Create New Region screen.
   

4. Back at the Regions and Schools screen click the plus sign (+) next to the Region Code for your first region, like R1. This will expand the list so you can see the individual school locations within the region.
   

5. Click once on the name of the location you wish to move, just to select it, and then click Edit (bottom of screen).
   

6. At the Edit School Information screen, select the appropriate Region from the drop-down list and click Save > Exit.
   

7. When Using to the W2 Software, click the Data Source button to select the Region you wish to process first. Make sure the name and tax ID number are correct under the Company Info button. Complete the W2s and W3 for that region. Repeat for other regions.

8. Once you’re done with W2s, you’ll probably want to move each location back the original region, so they are all under one region again. Although you can choose to keep them in separate regions, you may have issues of needing to “expose” Procare Users, and various settings, like Charge/Credit Descriptions so they are available for use in the separate regions.

How do I report the cost of employer sponsored health coverage on the W2?

If you are required to (or choose to) report employer provided health coverage on the W2, you would manually type the amount for each person in Box 12 (using Code DD) on the *Form W-2 Edit *screen within the Procare W2 Software.

According to the IRS site:
“In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee”.

Although the amount withheld for the employee share of health care is recorded in Procare Payroll, the employer’s contribution is not, therefore the amount must be manually entered. As a starting point, you could Map the health care withholding to box 12. This would give you the employee’s share; then, manually add to it your employer contribution.

Notes:

• According to the IRS site, reporting is optional for “Employers required to file fewer than 250 W-2 forms for the preceding calendar year”.
• See: IRS – W2 Reporting of Employer Sponsored Health Coverage

Why is the W2 amount for Federal Social Security or Medicare different from check stubs?

A small difference between Federal Income Tax, Social Security or Medicare withheld on the W2 versus the employee’s last pay stub of the year would be normal if you selected the “Automatically corrected” option (explained above) while importing employee information. However, if the amount were large the reason for the difference is that you have either over or under withheld Social Security and/or Medicare during the course of the year. This can happen if you manually adjust withholdings after they were calculated on the Payroll Check Calculation screen or change the exemption status of a withholding in the Payroll Formula Editor after the check has been posted.

Why does this affect Federal Income Tax?
Since Social Security and Medicare are determined by an exact percentage those numbers are automatically adjusted to be precise. The amount of the correction comes from Federal Income Tax since this is only an estimate of what the employee should have had withheld from their checks. Any differences will be accounted for when the employee files their own personal income tax returns.

What are my options?
If you prefer to use the exact numbers as they are recorded on each check you may do so by selecting the “Exactly as Entered” option and importing the information again. Be aware this will report what was actually withheld as opposed to what should have been withheld and any manual adjustments you may have made will be lost when you re-import the information. [Editor’s note: In 2020, If you chose to defer social security payments (to not withhold SS from employee checks) due to Covid-related legislation please ask your tax advisor how to report this information. You may wish to choose “Exactly as Entered” in this situation. See also: How does the 2020 Payroll Tax Cut affect me?]

Why does the W3 not have the exact percentages for Social Security and Medicare

If you take the Social Security wages on the W3 and multiply by the rate for that year (say 6.2%) or the Medicare wages times 1.45%, you will typically end up with slightly different numbers than those reported on the W3. That is expected because the W3 is simply a total of all W2s added together. When you figure the amount per person (on the W2s) and add them together, the amount will be slightly different than if you add all the wages together first and then take the percentage. Typically the difference is in pennies, not dollars, but the more employees you have the greater the difference may be. There is nothing to be concerned about as both the W2s and W3 are correct.

Can I show a housing allowance on W2s?

Yes. You may wish the housing allowance to appear in a specific box on the W2, for example the box for “other”. If you are using Procare W2 / 1099 Software you can manually edit W2s for that person as needed. Contact your tax adviser or the IRS to determine how the information should be reported.

Can I print 1099s for vendors even though I don’t have the Expenses & Ledger module?

Yes. However, you must set up 1099 Vendor Tracking in Procare first. Then, using the W2 & 1099 Software follow the normal steps for 1099s, but since you don’t have any actual vendor information in Procare you’ll need to click the New Vendor button (on the Form 1099 Edit screen) to manually add the vendors and type information in the appropriate boxes on form 1099. The information you enter will not be saved in Procare; it is just for the purpose of printing 1099s.

What do 'Automatically Corrected' and 'Exactly as entered' mean for Social Security & Medicare?

When using the Procare W2 / 1099 Software there are two options for Social Security and Medicare as follows:

Automatically Corrected (recommended setting)
“Automatically corrected” means the exact amounts that should have been withheld will be used. This is determined by multiplying each employee’s taxable earnings, for the entire year, by the appropriate rates for Social Security and Medicare. The results are more precise than adding together withholdings from individual checks. Any differences are accounted for by adjusting the Federal Income Tax withholding. Therefore, don’t be concerned if the amounts withheld for Social Security, Medicare, and Federal Income Tax on the W2 vary slightly from the totals on the employee’s last pay stub of the year. Typically, the differences will be a matter of cents, not dollars.

Exactly as Entered
“Exactly as entered” means the amounts withheld on individual paychecks throughout the year will be added together and imported exactly the way they were recorded. This result is likely to be slightly over or under the correct amount for the full year.