Form W2, also known as the Wage and Tax Statement, is a multi-part standard tax form that an employer must send to employees as well as the Internal Revenue Service (IRS) at year-end. The form includes the employee’s annual wages, Social Security earnings, Medicare earnings, and federal and state taxes withheld from the employee’s paycheck. Employers are required to provide employees with the W-2 form on or before January 31, 2024.
Employers should also submit W-3 forms to the SSA along with W-2 forms, summarizing all the information provided in the W-2 forms of all employees. Both forms should contain the same and accurate information regarding total earnings, Social Security wages, Medicare wages, and withholdings for all employees for the previous year.
As an employer, it’s important to prepare six copies of each W-2 form for each employee, with all six copies being equally significant. The following table indicates the specific departments to which the W-2 forms should be sent:
Employers should prepare W-2 forms and send them to their employees on or before January 31, 2024.
W-2 Deadlines for 2023
How to Submit W-2 Forms?
- Employers are responsible for preparing W-2 forms and delivering them to their employees.
- Submit both the W-2 and W-3 forms to the Social Security Administration (SSA).
- If you are filing on paper, ensure you include all copies of W-2 forms along with the W-3 form, particularly if you are filing fewer than the minimum threshold of 10 forms.
- Dispatch all the required forms to the following SSA address:
|U. S. Postal Service
Social Security Administration
|Private Delivery Service (FedEx, UPS, etc.)
Social Security Administration
* For Certified Mail, use ZIP code 18769-0002
- If you are filing 10 or more tax forms, you must electronically file W-2 and W-3 forms directly to the Social Security Administration. It’s worth noting that when e-filing W-2 forms, you may not be required to submit W-3 forms, as the SSA automatically calculates the total from the submitted W-2 forms.
Before filing the forms, ensure all the company and employee information including Taxpayer Identification Numbers (TINs), names, and amounts, match precisely on both the forms. The total number of W-2 forms must be accurately reflected in the W-3 forms. It’s essential to submit the original red-colored Copy A form to the SSA, as photocopies will not be accepted.
SSA Penalties for Late Submission
Employers bear the responsibility of ensuring that Forms W-2 are provided to employees and that Forms W-2 and W-3 are accurately and promptly filed with the SSA, regardless of whether the employer has contracted with a third party to carry out these tasks.
If you submit Form W-2 late, late filing penalties will apply. Typically, the penalty is determined by the extent of the delay in filing and the size of your business. However, intentionally delaying the filing will result in a minimum penalty of $310 per form. If you file the returns correctly within 30 days of the due date, the minimum penalty amount is reduced to $60.
The penalty amounts outlined below are for small businesses and apply to filings due after December 31, 2023.
If any failure to file a correct Form W-2 on time due to intentionally disregarding the filing or correct information requirements, the penalty is a minimum of $630 per Form W-2, with no maximum limit on the penalty.
Request an Extension of Time for Filing Form W2 with the SSA:
Extensions of time to file Form W-2 with the SSA are not granted automatically. To secure an extension, you must request it before the due date. You can request a single 30-day extension for filing Form W-2 with the SSA by submitting a complete application on Form 8809 (Application for Extension of Time to File Information Returns). No further extensions will be permitted.
Ensure that you meet one of the criteria outlined on the form and its instructions to qualify for an extension. The application must be signed under penalties of perjury, and it should be sent to the address indicated on Form 8809. The IRS will only grant an extension in exceptional circumstances or in the case of catastrophes. It’s important to note that this does not impact extensions of time to provide Forms W-2 to employees.
How to Correct an Error on Your W-2
If you discover an error in the forms, you have a one-month window before filing with the SSA during which you can correct and rectify the mistake. If you only notice the error after submission to the SSA, you must resubmit the corrected forms before the due date.
Common Errors in Completing Form W2
Always thoroughly review and double-check all the information on W-2 and W-3 Forms before submission to the Social Security Administration to avoid unnecessary time wastage. However, the following are common errors related to W-2 and W-3 forms:
- Missing the SSA deadlines
- Submitting the form of the wrong year
- Using unapproved forms (Always use IRS-approved forms)
- Submitting W-2 forms without including W-3 Forms
- Submitting only W-3 Forms to SSA
- Discrepancies in the information on W-2 and W-3 Forms
The Following is a Sample of Filled W-2 Form:
Understanding Various Boxes found on Form W-2
W-2 Tax Form – First Part:
Box A: Employee’s Social Security Number: Please accurately enter the employee’s SSN (Social Security Number) in this box. If an employee reports an incorrect SSN, promptly correct it and issue a new Form W-2 to the employee.
Box B: Employer Identification Number (EIN): This box should be used for entering the employer’s unique tax identification number, which should match the number used on your federal employment tax returns. Do not abbreviate or truncate your EIN (Employer Identification Number), and refrain from using a previous owner’s EIN. In cases where you do not possess an EIN when filing Forms W-2, input “Applied For” in box b; do not use your SSN (Social Security Number).
Box C: Employer’s Information: Employer’s Information: The box is to fill the employer’s name, address, city, state, and zip code. The address should be of the company’s headquarters or actual workplace rather than the employer’s local or personal address. The U.S. Postal Service recommends that no commas or periods be used in return addresses.
Box D: Control Number: A control number is an internal number or code developed by the employer or company’s payroll department, which identifies this unique Form W2 document in their records. If the company didn’t assign any box number to the employee, then the box (d) should be left blank.
Box E: Employee’s Name: This box should be filled with employee’s complete name including first name, middle name, and last name. Additionally, it is important to note that the name should be the same as mentioned in the employee’s Social Security card. If the name does not fit in the space allowed on the form, you may show the first and middle name initials and the full last name. It is especially important to report the exact last name of the employee. If there is a mistake in the form, then the employee should report the matter to the concerned department so that they re-issue a new Form W-2 with the correct name. The employee should also provide photocopy of his or her Social Security card to the respective department so that they can update their records with the new name. Remember the SSA still prefers that you do not enter the suffix such as “Dr.,” “RN,” or “Esq.,” at the beginning or end of the employee’s name on Copy A.
Box F: Employee’s Address: In this box, please provide the employee’s address, including the city, state, and zip code. It’s important that this information is accurate to prevent the employee’s refund from being sent to the wrong address. The U.S. Postal Service advises against using commas or periods in delivery addresses. If the address is found to be incorrect, the employee should promptly inform the HR department so that their records can be updated with the employee’s current address.
W-2 Tax Form – Second Set
Box 1 – Wages, Tips, and Other Compensation: This box identifies total taxable wages or salary for federal income tax purposes, which includes wages, salary, tips, bonuses, prizes, commissions, severance or dismissal pay, vacation pay, and fringe benefits that you paid to your employee during the year. The employee should not include any payroll deductions or pre-tax benefits such as savings contributions to a 401(k) plan, 403(b) plan, medical or dependent care reimbursement plan, dental and health insurance.
Box 2 – Federal Income Tax Withheld: This box identifies the total amount of federal income tax withheld from the employee’s pay based on their W-4 filings.
Box 3 – Social Security Wages: SSW is the total amount of wages (before payroll deductions) subject to the Social Security tax but not including Social Security tips and allocated tips. The Social Security tax in 2023 is assessed on wages up to $160,200, which is called the Social Security wage base. If the amount is above the wage base, then the employees need to report to their employer to correct the W-2 forms.
Box 4 – Social Security Tax Withheld: This box shows the total amount of Social Security taxes withheld from employee’s pay including Social Security tax on tips. The Social Security tax is a flat tax rate of 6.2% on an employee’s wage income, up to a maximum wage base of $9,932.40 ($160,200 × 6.2%) for 2023. The maximum yearly Society Security tax withholding amount in 2023 is $9,932.40.
Box 5 – Medicare Wages and Tips: This box shows the total amount of wages and tips, which are subjected to Medicare taxes. Medicare wages include any deferred compensation, 401(k) contributions, or other fringe benefits that are excluded from the federal income tax. Remember, there is no maximum wage base for Medicare taxes.
If you are a federal, state, or local governmental agency with employees paying only Medicare tax, enter the Medicare wages in this box.
Box 6 – Medicare Tax Withheld: This box shows the amount of taxes withheld from employees’ pay for the Medicare tax, which is nothing but the flat tax rate of 1.45% on your total Medicare wage under $200,000. The Medicare wage percentile for self-employed is 2.9%. However, due to Obamacare policy, employees are subjected to withhold Additional Medicare Tax at a rate of 0.9%.
Box 7 – Social Security Tips: This box shows the total amount of tips an employee has reported to the employer and subjected to social security tax. Remember the total of boxes 3 and 7 should not be more than $160,200 (the maximum social security wage base for 2023).
Box 8 – Allocated Tips: Allocated tips are defined as the tips allocated by none other than the employer. This is not included in boxes 1,3,5 or 7.
Box 9 – Advance EIC Payments: This box is no longer in use as the reporting requirements, specifically related to the advance of the earned income credit, expired a few years ago. Although it has not been removed from the form, it is shaded to avoid any confusion for employees. Please leave this box empty.
Box 10 – Dependent Care Benefits: This box reports the amount, which is reimbursed for dependent care expenses through a flexible spending account or the dollar value of dependent care services provided by the employer. If the amount is under $5,000, then it is considered as non-taxable benefit. However, if the amount reported is well over $5,000, then it is considered and reported as taxable wages in Boxes 1, 3, and 5.
Box 11 – Nonqualified Plans: Nonqualified Plans: The purpose of box 11 is for the SSA to determine if any part of the amount reported in box 1 or boxes 3 and/or 5 was earned in a prior year.
This box reports either of the two amounts i.e.
- The amount is distributed to the employee from the employer’s non-qualified deferred compensation plan.
- The amount distributed to the employee from the employer’s non-government Section 457 pension plan.
However, this amount is already included as taxable wages in Box 1.
Box 12 – Deferred Compensation and Other Compensation: In this box, several types of compensation and benefits are reported. The box reports a single-letter or double-letter code followed by a dollar amount. The following table helps you understand the codes easily, as the definitions are directly fetched from the IRS website:
Box 13 – Check the Box: The three checkboxes should be checked by the employer if the employee:
- is a statutory employee
- have participated in some retirement plan
- have received the third-party sick pay
Box 14 – Other Tax Information: The employer needs to report any additional information that didn’t fit anywhere else in the form such as state disability insurance taxes withheld, union dues, after-tax contributions to a retirement plan, employer-paid tuition assistance, health insurance premiums deducted and non-taxable income.
Box 15: State and State Employer’s Identification: This box is pretty straightforward, as it reports the employer’s state and state tax identification number.
Box 16: State Wages: This box represents the total amount of employee’s taxable wages i.e. wages, tips, and compensation earned in that state. If the employee is subjected to the state income taxes, then the box 16 will represent the total amount of taxable wages for state tax purposes. If the employee lives and works in a state that doesn’t impose an income tax, then the employee should leave this box blank.
Box 17: State Income Tax Withheld: The box reports the total amount of state income taxes withheld from the employee’s paychecks for the wages reported in Box 16.
Box 18: Local wages: If the employee is subjected to local, city, or other state income taxes, then the total amount of taxes withheld from the employee’s paycheck for local income taxes should be reported in this box.
Box 19: Local income tax withheld: Local income tax withheld: If the employee has reported wages regarding local income tax in box 18, then the employee should report the withholding in box 19.
Box 20: Locality name: The box 20 represents the name of the particular local, city, or other state tax being reported at box 19.
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