2021 Changes to the Year-End Guide

These changes from 2021 may impact your year-end process.

Accounts Payable

Save space and money with the new 1099-NEC form

The IRS has updated Form 1099-NEC to include three 1099s on a single page. None of the form's boxes have changed, but you will need to realign them to make sure they fit.

Visit our online store to purchase these and other forms for year-end.

Contributions

New fields on the Contributions Proof List and Gift Detail Listing

We've added the Vanco batch number to the Gift Detail Listing and Transaction Proof List reports. This lets you reconcile transactions in ACS to the Vanco Deposit Detail Reports.

Payroll

Updated Form 941

We've released an updated Form 941.

Before working on this form, we recommend completing Worksheet 1: Credit for Sick and Family Leave Wages and the Employee Retention Credit on the 941 Tab.

COVID-19 Sick and Expanded Family Leave

We've updated how payroll checks that include COVID-19 sick and expanded family leave are taxed.

Form 941, the 941 Worksheet, and the COVID-19 Sick and Family Leave Report all reflect these changes.

Background

The Families First Coronavirus Response Act (FFCRA) created sick and expanded family leave. At the time, the money was not taxed by employer social security. Employers received a tax credit for employer Medicare amount and the amount of the wages on Form 941. For employers of a certain size, participation was mandatory.

In December 2020, the Consolidated Appropriations Act (CAA) extended the FFCRA's sick and expanded family leave until March 2021. This act made participation optional and did not tax employer social security.

In March 2021, the American Rescue Plan Act (ARPA) extended these COVID-19 related tax credits until September. However, sick and expanded family leave are now taxed by employer social security.

What this means for you

Your tax credit amount is the same, and based on the federal act effective on the check's date (CAA or ARPA), Payroll determines how to tax the check.

  • Checks issued prior to March 2021 are not taxable for employer social security. On Form 941, employers receive a tax credit for the Medicare amount and wages.

  • Checks issued after March 2021 are taxable for employer social security. On Form 941, employers receive a tax credit for the Social Security amount, Medicare amount, and wages.

If any employees took COVID-19 related sick or expanded family leave during this quarter, be sure you did not underpay the monthly or semi-weekly deposits. Otherwise, you may be subject to IRS penalties.

New Sick Leave Categories

We've added three new sick leave categories: Getting vaccinated, Recovering from vaccination, and Seeking or awaiting results.

You can select these options when issuing payroll checks. The new reasons also display in Inquiry, the Families First Coronavirus Response Act Pay report, and Forms W-2 and 941.

Employee Tax Deferral Changes

If you opted to defer employee Social Security taxes, the IRS has extended the repayment period.

Now, you have until December 31, 2021 to collect the repayment from your employees. Employers must pay interest and penalties on amounts not collected by that date.