It’s a new year, and that means taxes are right around the corner. For businesses, that means completing W2s for their employees. Completing accurate W-2 forms on time, and without errors is a critical task for all businesses. These forms provide employees with the information they need to file their taxes and fulfill a company’s legal obligations to the IRS and Social Security Administration (SSA). Delays or mistakes can result in steep penalties, strained employee relations, and unnecessary stress for you and your team.
Here’s how you can streamline your W-2 filing process, avoiding common pitfalls and ensuring your business meets all filing requirements on time.
What are the W-2 Filing Requirements?
You are required to provide W-2 copies to your staff and send these forms to the SSA by January 31st. Any delays put you at risk for non-compliance, so it is best to get these forms out as early as possible.
Each W-2 must have accurate employee information, including legal name, Social Security numbers, and current mailing addresses. Pay reported should also match actual earnings which should include wages, tips, and any other taxable compensation. Tax withholding amounts at the federal, state, and local levels should also be reported on these forms.
What Are Common W-2 Filing Mistakes?
Small errors typically account for most mistakes on W-2 forms. Misspelling employee legal names or incorrect Social Security numbers can cause processing issues. It should be noted that nick names should never be used on a W-2 form. A correct match between the employee’s name and Social Security number helps keep the process on track. You should always confirm information against official identification documents before submission, reviewing records whenever employees are hired or when they report changes.
Misreporting wages and taxes withheld are also common W-2 errors. Incorrectly reported wages or withholding numbers can lead to tax complications. Even minor discrepancies can draw additional scrutiny from government revenue departments. That’s why it is crucial to reconcile payroll data often and compare each period’s numbers with internal ledgers. Consistent checks help prevent surprises at the end of the year.
Finally, missing or incorrect codes are another source for W-2 errors. Inaccurate codes in Box 12 may affect retirement benefits or other calculations. Using the wrong code can complicate tax returns for both employers and employees. You should keep up to date with the latest IRS instructions for each code and confirm that each benefit is reported correctly.
Best Practices for Streamlined W-2 Filing
Carefully maintaining records goes a long way to reducing W-2 errors. For example, you should make sure to update employee information and payroll data whenever something like address or tax withholding changes. Also, using payroll software can cut down on manual errors. It might require some initial setup and ongoing attention to detail, but you’ll benefit from features like automatic wage calculator, withholdings, and deductions.
Regular audits can help uncover inaccuracies early in the W-2 process. Be sure to inspect your employee data periodically, confirming correct state taxation, address updates, legal names vs nick name, and looking for payroll discrepancies that might otherwise go unnoticed. Staying informed on current tax laws is also important. Check the IRS website regularly to confirm that your methods comply with the latest requirements.
Steps to Take If Errors Are Discovered
If you find any errors in the W-2s you filed, you should issue corrected forms as soon as possible. Send revised copies to employees and the SSA. You also need to clearly communicate to the affected employees. Tell them you have made corrections and explain how these changes affect their records. You should also give instructions on what to do with the amended forms.
Timely and accurate W-2 filing is essential for maintaining compliance and building trust with your employees. By understanding filing requirements, avoiding common mistakes, and adopting best practices, you can simplify the process and avoid costly mistakes. Failing to act fast can cost anywhere from $50-$270 per Form W-2 for penalty fees.
Preparation is key. Start early, verify your data, and stay updated on tax regulations to keep your business on track. A proactive approach helps you meet deadlines and reduces the risk of penalties. With the right tools and methods, you can streamline W-2 filing.
Need help with your W-2s? Pinnacle can help! We’re here to take care of all your HR needs so you can focus on growing your business. Contact us for your HR Review and Needs Analysis today!