65-2 #12 February 14, 2006

Special 2005 Tax Year Issue

  • 1. Verifying Line-of-Duty Injury (LODI) Tax Deduction
  • 2. Annual Salary Versus Amount Actually Received
  • 3. Payroll Check Stubs
  • 4. "Year-to-date" Check Stubs Versus W-2 Amounts
  • 5. Multi-Agency W-2 Forms
  • 6. Date of Service Versus Date of Check
  • 7. Social Security/Medicare-Federal Tax Transfer
  • 8. Tax Deferred Annuity (TDA) Plan (Also called 457)
  • 9. Pension Contributions 414H
  • 10. Uniform Maintenance Allowance
  • 11. Dependent Care & Flexible Spending Accounts (IRC 125)
  • 12. Auto Usage/Parking Fringe Benefit
  • 13. Domestic Partners Benefit
  • 14. Transit Benefit Program IRC132
  • 15. Errors on W-2 Statement & LODI Deductions
  • 16. IRS & NYS Tax Info Phone #s

    Understanding Your W-2 Form & More

    The following information (provided by the Payroll Unit & Suppl. #5 to DO#6 ) is to help members better understand their W-2 forms and deductions(Annual Statement of Salary and Wages):

    1. Verifying Line-of-Duty Injury (LODI) Tax Deduction

    IRS regulations provide favorable tax treatment of your wages during the approved period of injury. Wages will be treated on a pre-tax basis. The Dept computes your LOD medical leave days automatically and deducts the dollar amount from your taxable income. The LODI days are not calculated by TPR codes. It is not based upon a pure calendar year, but rather by the closest available payroll period. This year's W-2 reflects LODI dates between December 25, 2004 and December 24, 2005, and reduces Gross wages for all calendar days an employee was out on LODI medical leave (not light duty).

    SS/Medicare wages will be reduced after six full months of continuous absence following the month LODI began. Tax Deferred Annuity (TDA) contributions will also be affected by LODI wages. Since TDA contributions are based on taxable wages, a comparison will be made between the total TDA contributions already made in 2005 and 25% of your taxable wages after the LODI reduction. If you contributed more than 25% of your taxable wages after the LODI reductions, the Office of Labor Relations will forward a refund check to you for the excess. Interest earned on your TDA contributions during 2005 will not be affected.

    The dollar amount of the LODI to be excluded from your 2005 taxable income will be indicated in the Miscellaneous Box of the W-2 form. The LODI amount was based on each individual LODI period from start date to end date. The number of LODI days in each two week regular gross period covered by each paycheck was then multiplied by a daily rate based on Annual Salary, Longevity, Night Shift and Holiday Pay. If you believe an error exists, see item #15.

    The above figures were verified by FDNY Payroll. It includes annual base, longevity, night shift & holiday pay, divided by 365 days, which is the Dept's standard formula used to determine your per Deim deduction for LODI medical leave. It is based on calendar days, not the days you missed tours. Utilize the above table to estimate if the proper deductions were taken by Payroll on your W-2 statement. If you believe an error exists, see item #15.

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    2. Annual Salary Versus Amount Actually Received

    Wages and other compensation, as shown on the W-2, reflect monies actually paid to an employee during the calendar year, NOT ANNUAL SALARY. The amount reported on the W-2 form may include one or more of the following: supplemental checks, retroactive payments, longevity payments, severance payments, etc.

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    3. Payroll Check Stubs

    Each pay period employees receive stubs containing the details of their pay: gross earnings, withheld taxes, health, Tax Deferred Annuity, union dues, pension deductions, etc. and year-to-date totals. Check stubs are valuable documents and should be retained. Check stubs are also a means of verifying the W-2 Wage and Tax Statement.

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    4. "Year-to-date" Check Stubs Versus W-2 Amounts

    Check stubs include information on year-to-date earnings. These amounts are limited to earnings from one agency. They do not include earnings from other payrolls or agencies.

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    5. Multi-Agency W-2 Forms

    The City of New York combines all earnings for one social security number onto one W-2 form (i.e. DoE, CUNY, Parks are combined). A Housing Authority employee will receive a separate W-2.

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    6. Date of Service Versus Date of Check

    The W-2 form includes all checks dated calendar year 2005. Any checks for arrears payments received in 2005 for service performed during a prior period will be included in the 2005 W-2 form.

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    7. Social Security/Medicare-Federal Tax Transfer

    An employee's federal withholding tax may be affected by FICA (Social Security/Medicare) adjustments. Social Security/Medicare regulations stipulate that 2005 FICA deductions be made at the rate of (SS) 6.2% of $90,000 and (Medicare) 1.45% of all earnings. This yields a maximum SS deduction of $5,580.00. Medicare does not have any maximum. If, in error, more than $5,580.00 was deducted during the year, a REFUND CHECK will be issued by the NYC Office of Payroll Administration on or about April 2006. If less than the required $5,580.00 was deducted, the amount not deducted is transferred from the employee's Federal withholding taxes to the employee's SS/Medicare withholding.

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    8. Tax Deferred Annuity (TDA) Plan (457 & 401k)

    The Deferred Compensation Plan will provide you with a statement of your contributions. The W-2 form provides for TDA contributions to appear as a separate item in Box 12 labeled as 'D", "E" or "G". Box 1 "Wages,..." on the W-2 form will be reduced by this amount. Please call the Deferred Compensation Plan (212) 306-7760 for information.

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    9. Pension Contributions IRC414H

    Pension members' W-2's will show a gross wage reduced by the amount of their pension contributions. This contribution, shown in Box 14 and labeled as "IRC414H", is NOT subject to Federal income tax. However, it is subject to FICA (SS/Medicare) and State and City taxes. Please call your pension system for information. The IRS defines a NYC employee as belonging to a pension plan if the employee has a plan available to join regardless of whether the employee opts to join. Therefore, "retirement plan" in box 13 is checked.

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    10. Uniform Maintenance Allowance

    Uniform cleaning allowance for Marine Titles, FFs and UFOA members was a non-taxable payment, and was excluded from the W-2 form. The Wipers and Fire Marshal were taxed on uniform allowance, which was included on the W-2. UFA NOTE: The ‘2005 Uniform Cleaning Allowance Affidavit Income Qualifying as Working Condition Benefit' form must be prepared by eligible members in accordance with the November 18, 2005 ‘Possible Taxation of Uniform Cleaning Allowance' memo to all members from the Chief of Dept. See your officer for the form. A copy must be kept at each member's assigned unit. The Dept recommends each member keep a copy and also provide a copy to your tax return preparer. A special 'Labor -Management Committee” shall be established in accordance with the October 27, 2005 Collective Bargaining Agreement 'to explore whether the Uniform Allowance payment for Fire Marshals can be made non-taxable.”

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    11. Dependent Care & Flexible Spending Accounts (IRC 125)

    The Dependent Care Assistance Program (DECAP) is limited to a minimum of $500 and a maximum of $5,000. The Health Care Flexible Spending Account (HCFSA) is limited to a minimum of $260 and a maximum of $5,000. Health insurance plan deductions for basic and/or optional riders are deducted from one's payroll check. All of the previous contributions are treated on a pre-tax basis. The contributions will reduce Gross wages, TDA (your 457 & 401k), and SS/Medicare wages and taxes. However, it is subject to State and City taxes. The aggregate amount of the contributions is shown in box 14 labeled as "IRC125". Additionally, DECAP will be shown in box 10. For further information, call 212-306-7760.

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    12. Auto Usage/Parking Fringe Benefit

    Certain employees, who have a car assigned to them and drive to and from home for commuting purposes, will have an amount added to their Gross Wages and SS/Medicare Wages. This amount is shown in Box 12. In addition, the SS/Medicare tax owed on the fringe benefit will be transferred from Federal Withholding (Box 2) to SS/Medicare Withholding (Box 4 and Box 6). See Suppl. #5 to DO #6 of 2006 for more info.

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    13. Domestic Partners Benefit

    City employees and retirees covered by the City Health Benefits Program have been granted the right to add their Domestic Partners to their City Health plan coverage. A portion of the amount paid by an employer attributable to coverage of an employee's Domestic Partner is taxable. Therefore, Gross Wages and SS/Medicare wages on the W-2 will be increased. For further information, call 212-306-7605.

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    14. Transit Benefit Program IRC132

    Under IRC132, the City allows employees to purchase a Premium TransitChek MetroCard, establish a TSA debit card account or contribute to cover some public transportation costs through Access-A-Ride on a pre-tax basis through payroll deductions. These deductions, shown in Box 14 and labeled as "IRC132", are not subject to income taxes, SS and Medicare taxes.

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    15. Errors on W-2 Statement & LODI Deductions

    a. W-2 Error: If you believe an error exists on your W-2 forms, you should obtain a "W-2 Correction Request Form" from the Uniform Payroll Unit at (718) 999-2288 or at www.NYC.gov/payroll. When completed, this form should be faxed to 212 669-4928 or mailed to: OPA W-2 Adjustment Unit, 1 Centre Street, Room 200N, New York, N.Y. 10007. Amended W-2's (Form W-2c) are used for W-2 corrections. If after review, the W-2 has been determined to be incorrect, form W-2c will be mailed to the employee. Only corrected data will appear on the W-2c. Income tax agencies are notified of corrections. You must file income tax returns with W-2c forms plus original W-2.

    b. Duplicate W-2: Members who need to request a duplicate W-2 should contact the Uniform Payroll Unit at (718) 999-2288. However, if an employee has an incorrect or missing address on the W-2, the W-2 is still valid and should be filed.

    c. LODI $$ Deduction Error: Questions regarding Line-of-Duty Injuries should be forwarded by sending a LODI Reconciliation Form to Robin Hirschhorn, LODI Administrator, 9 MetroTech Center, 2nd Floor, Brooklyn, NY 11201, listing the dates you believe you were on LODI. Use the FDNY forms provided by your unit. Any request for review requires review of not only the dates in question, but the entire medical leave episode. The decision may not always be favorable and may actually affect your entire medical leave episode. After review, the Bureau of Health Services will notify you and the Bureau of Payroll if the original LODI dates were incorrect, therefore, entitling you to an adjustment. The Bureau of Payroll will then have a W-2C (corrected W-2 form) issued and mailed to your home. Please note that this procedure may result in your receiving a W-2C after April 15, 2005, the deadline for filing your tax return.

    The UFA Recommends that members consult with their own accountant or tax professional prior to making any tax related decisions. Each member's financial circumstances are unique and may warrant different treatment. Your tax professional, who is familiar with your particular tax and income issues, can help you to make decisions that are valid for your specific circumstances.

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    IRS and NYS Tax Info Numbers:

    IRS 1-800-829-1040, NYS: 1-800-CALL-TAX