December 2022: The Small Business Owner’s HR, Benefits, Payroll, and Tax Compliance Deadlines￼
Congratulations, you’ve made it to the end of another year! But before you clock out for the holidays and begin your celebrations, there are still a few benefit- and tax-related tasks to take care of. Use this December compliance calendar to plan for any end-of-year requirements so you can start the new year off on the right foot.
December 26, 2022: Christmas Day (observed)
Christmas Day may fall on a Sunday this year, but banks will be closed on December 26, 2022 as well. This is because when a federal holiday falls on a Sunday, the following Monday is treated as a holiday for most federal employees.
December 31, 2022: New Year’s Eve
Happy New Year! Take in all that you’ve accomplished this year, and get excited about all the possibilities that await you and your business in 2023.
Tax and payroll compliance deadlines
Federal payroll tax deposits (for semi-weekly depositors)
If your company has employees, you’re required to pay federal payroll taxes on behalf of your organization and its workers on a regular basis. The schedule you follow when making these payments to the IRS, however, depends on your federal income and FICA (Medicare and Social Security) tax liability during this year’s lookback period—which runs from July 1, 2021 to June 30, 2022.
If your tax liability during the lookback period exceeded $50,000, you’re considered a semi-weekly depositor. You’d then follow the deposit schedule outline below:
|If payday for your employees is on…||Deposit employment taxes by…|
|Wednesday||The following Wednesday|
|Thursday||The following Wednesday|
|Friday||The following Wednesday|
|Saturday||The following Friday|
|Sunday||The following Friday|
|Monday||The following Friday|
|Tuesday||The following Friday|
On the other hand, if your tax liability didn’t exceed the $50,000 threshold, you’d follow the monthly deposit schedule below instead.
No matter how often you make your payroll deposits, you’ll submit them the same way—through the IRS Electronic Federal Tax Payment System (EFTPS). Before sending in your payroll taxes, take a moment to double check that you’re submitting the right amount and on the right day, as penalties for mistakes and late submissions can be as high as 15%.
For more information on payroll taxes and deposit schedules, read IRS Publication 15.
Don’t forget that some states and municipalities also collect their own payroll taxes, so check with your local tax agencies to confirm that you’re meeting their guidelines as well.
December 1, 2022
Plan for end-of-the-year tax moves
In many instances, the end of the calendar year is the last day to make any final adjustments to your taxable income for 2022. So if you haven’t already, now is a good time to create your end-of-the-year tax strategy with your accountant or tax professional.
Your tasks will ultimately depend on the kind of business you have, but some actions to consider include:
- Documenting your charitable donations and business expenses
- Deferring business income until January
- Purchasing business equipment and supplies
December 12, 2022
Form 4070 due to employers
Employees use Form 4070 to report their tip income to employers. If your employees received more than $20 in tip income in November, they must submit this form to you by December 12, 2022. Note that this deadline typically falls on the 10th of each month, but because December 10 falls on a Saturday this year, the deadline is moved to the following Monday.
Do I Need Payroll Software for My Small Business?Finances and Taxes
December 15, 2022
Federal payroll tax deposits (for monthly depositors)
If your business falls into one of the following categories, you’re considered a monthly depositor:
- Businesses that withheld $50,000 or less in payroll taxes during the lookback period
- Businesses that didn’t hire employees during the lookback period (and had no tax liability as a result)
- Businesses that were established this year
Monthly depositors submit payroll taxes once a month, on the 15th. If you’re a monthly payroll depositor, your payroll taxes for November must be submitted to the IRS via the EFTPS by December 15, 2022.
December 31, 2022
Final day to make last minute tax moves for 2022
As we touched on earlier, December 31, 2022 is the last day for most businesses to reduce their taxable income for the year. If you’re self-employed and plan on opening a solo 401(k) this year, this day is also the last day you can do so.
End of Q4
Because it’s the last day of the year, December 31, 2022 also marks the end of the fourth business quarter (Q4).
HR compliance deadlines
December 1, 2022
Deadline for sending annual notices for plan participants
If you offer retirement benefits to your employees, you’re required by law to furnish certain notices to plan participants every year. Depending on your plan(s), you may have many deadlines near the end of the calendar year.
Annual participant notices, for instance, must be sent to plan participants no later than December 1, 2022. These notices may include:
- 401k safe harbor notice
- Automatic contribution arrangement (ACA) safe harbor notice
- Automatic enrollment notice
- Participant fee disclosure
- Qualified default investment alternative (QDIA) notice
Note that if you’re required to send multiple notices to participants, you can combine them to make distribution easier.
December 15, 2022
Extended deadline for distributing Summary Annual Report to plan participants
A Summary Annual Report, or SAR for short, summarizes the value of your company’s retirement plan and other plan details reported in your Form 5500. This information must also be provided to employees through the SAR.
If you received an extension for distributing SARs to your employees, whether by filing Form 5558 or Form 7704, your new deadline for furnishing SARs to plan participants is December 15, 2022.
December 31, 2022
Last day to conduct nondiscrimination testing for benefit plans
Employers that offer 401(k) plans, 125 Premium Only Plans (POPs), and flexible spending accounts (FSAs) are required to conduct nondiscrimination testing by December 31, 2022 if they are on calendar year plans. This helps ensure that benefits are equally available at the same terms to all eligible employees at your company.
Deadline for ADP/ACP corrections and adoption of discretionary amendments
If you need to make corrections to your retirement plans as a result of any Actual Deferral Percentage (ADP) or Actual Contribution Percentage (ACP) testing failures, December 31, 2022 is the last day to do so if you want to keep your qualified status.
These changes include:
- Correcting a failed ADP/ACP test
- Processing corrective distributions for failed ADP/ACP testing (note that a 10% excise tax may apply)
- Amending plan documents for any discretionary changes implemented during the 2022 plan year
Keep in mind that December 31 falls on a Saturday this year, so you should strongly consider making all corrections by December 30, 2022 to ensure you meet the deadline.
Deadline to change safe harbor status for retirement plans
Any safe harbor status changes that your company wants to make to your retirement plans must also be made by December 31, 2022.
- Changing a traditional 401(k) plan to a safe harbor plan for the prior calendar year (if your company agrees to at least a 4% nonelective contribution)
- Removing a plan’s safe harbor status for the 2023 plan year
Deadline for Required Minimum Distributions due under IRC Section 401(a)(9)
Plan participants who are 73 or older at the end of 2022 must receive their Required Minimum Distributions (RMDs)—the minimum amount an eligible account holder must withdraw each year—by December 31, 2022.
Because the end of the year is often a busy time for plan administrators, they may require 1-2 weeks advance notice if you want to make sure beneficiaries receive their payments on time. If you’re not sure whether this applies to you, check with your plan administrator.