We have a client that wants us to handle their S&A payments. In the contract, we pay their employee, withhold and remit the taxes, supply W-2 etc under our FEIN.
We have a client that wants us to handle their third party sick pay
Answers
We use a TPA for our disability payments and they pay the employee portion of taxes and we are responsible for the employer portion to the appropriate agencies. They file the W2 on their end, using their own FEIN and we have to report the income on our the 941, the taxes we paid for the employer portion and then show a deduction in the Third Party section. This sounds like the way they want to handle it.
Do you know if them being reported on the TPA W2 make them their 'employees' for benefit considerations or reporting purposes? In the process you described, would form 8922 be the reconciling piece at the end of the year?
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