We are LLC on cash basis
We were advised by our accountant that we could pay Bonuses to employees up to 15 days after the close of 2018 (by 1/15/2019)
Once the payroll was ran in Jan. we would need for quick books to adjust the bonus checks & payroll tax back to Dec 31 2018. so that the W2's & payroll tax would reflect the bonus in 2018.
If we actually run the pay checks in quick books for 1/15/19 pay date, how does that work for paying the payroll tax to the IRS for the bonuses? It would be 100K or greater tax liability so we would need to be paid by 1/16/19. If the bonuses show on the 2018 payroll tax reports, won't they be penalizing for late payroll tax payment? Thanks
There is a rule for accrued bonus but as far as I can tell, it is 2.5 months and only available to companies on accrual basis. Even then the employee is taxed on the bonus not yet received so it has to be included in 2018 W-2 with a flat 22% FWT taken out (and paid). Your accountant is thinking because W-2's are not due until 1/31 that this 1/15 rule (that cannot be found in a general search) meets the time factor.
Before you include the bonus in the W2 but pay it next year have your accountant produce the IRS white paper regarding the subject and post us a copy
This part makes no sense: "Once the payroll was ran in Jan. we would need for quick books to adjust the bonus checks & payroll tax back to Dec 31 2018."
You never Backdate. As noted, even if you Qualify for this, as an Accrual entity, you accrue the amount owed, and then Paid out on 2019 paychecks are part of 2019 Banking, never Backdated afterwards. You never Change Payroll dates as you seem to be proposing.
In the US payroll taxes are owed because the Money happened, and that is based on "Constructive Receipt" which is the Pay Date, and that never gets edited, later.
I would find a different CPA or accountant, because you are not getting good guidance from this person.