Managing W-2 Forms: Compliance, Corrections, and Security Tips

Employers must file each employee's IRS Form W-2, Wage and Tax Statement, with the Social Security Administration and provide a copy to the employee. If filing by mail, employers must also submit Form W-3, Transmittal of Wage and Tax Statements, which transmits Copy A of Form W-2 to the SSA. However, employers that file electronically do not need to submit Form W-3, as the online system generates one automatically.

Missing forms

Employees who have not received their W-2 by Jan. 31 in a given year should first notify their employer; the payroll provider should be able to resolve the issue quickly by providing a copy of the original W-2. If the W-2 remains missing by the end of February, employees should contact the IRS, which will request the missing W-2 from the employer. If the form is not received in time to file taxes, employees will use Form 4852, Substitute for Form W-2, to estimate wages and taxes. If the W-2 received after filing differs from the estimates, employees will file Form 1040-X, Amended U.S. Individual Income Tax Return.

Errors

Ensuring accuracy on W-2 forms is crucial, as errors can affect employees' Social Security and Medicare benefits.

If a W-2 contains an error, the employer must submit Form W-2c, Corrected Wage and Tax Statement, to the SSA and, if filing by mail, include Form W-3c, Transmittal of Corrected Wage and Tax Statements. Employers filing electronically can use Business Services Online to submit corrections. Failing to provide correct forms leads to penalties that increase over time. Therefore, if an employer receives notice regarding incorrect W-2s, it is advisable to work with a payroll provider or human resources department to promptly resolve the issue.

If an employer fails to provide a corrected W-2 when required, an employee may request that the IRS initiate a W-2 complaint. In such cases, the IRS will send a letter to the employer requesting a corrected W-2 within 10 days, provide instructions for the employee on how to proceed using Form 4852, and issue a wage transcript if federal wage information is available.

Identity theft

Employers should distribute W-2s through secure systems or the U.S. Postal Service, as stolen W-2s, which contain personal information, including an employee's Social Security number, can lead to identity theft. Employers should remind employees to avoid engaging with identity thieves, report the theft to the IRS and visit IdentityTheft.gov for recovery steps.

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