The Internal Revenue Service (IRS) requires employers to distribute W-2 forms annually by January 31. Failure to do so may result in monetary penalties. Here’s what to know about W-2 forms, their significance, and the penalties associated with missing the distribution guidelines. This guide also discusses ways to avoid penalties and what to do as an employee if you don’t receive the W-2 form from your employer.
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What are W-2 Forms?
Formally known by the IRS as the Wage and Tax Statement, Form W-2 is a type of federal tax document. On it, you’ll find the sum of federal and state income tax withheld from the employee’s paycheck for the applicable year.
Below is a closer look at what it includes:
- Box a: Employee’s social security number
- Box b: Employer identification number (EIN)
- Box c: Employer’s name, address and zip code
- Box d: Control number
- Box e: Employee’s full name
- Box f: Employee’s address and zip code
- Line 1: Wages, tips and other compensation
- Line 2: Federal income tax withheld
- Line 3: Social security wages
- Line 4: Social security tax withheld
- Line 5: Medicare wages and tips
- Line 6: Medicare tax withheld
- Line 7: Social security tips
- Line 8: Allocated tips
- Line 9: Not used
- Line 10: Dependent care benefits
- Line 11: Nonqualified plans
- Line 12: Other forms of compensation or items that reduce your taxable income
- Line 13: Checkbox for statutory employee, retirement plan or third-party sick pay
- Line 14: Other
- Line 15: State and Employer’s state ID number
- Line 16: State wages, tips, etc.
- Line 17: State income tax
- Line 18: Local wages, tips, etc.
- Line 19: Local income tax
- Line 20: Locality name
The Importance of W-2s and the Employer’s Obligation
It’s challenging for employees to file federal and state tax returns (if applicable) without W-2s. So, it’s vital that employers provide these documents in a timely manner to avoid filing delays or other tax issues. The forms should also be accurate and adequately reflect the wages, withholdings and personal details of employees.
Legal Requirements for Sending W-2 Forms
Employers must adhere to federal and state filing guidelines regarding W-2s.
IRS Regulations Concerning W-2s
As previously stated, the distribution deadline for W-2s from the prior tax year is January 31st. If this date is on a weekend or federal holiday, it automatically moves to the following business day.
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State-specific Regulations for W-2 Forms
It depends on your state of residence. Check with the Department of Revenue to confirm.
Penalty for Employer Not Sending W-2 Forms
As an employer, you must adhere to the guidelines or face penalties.
Late W-2 Form Submission
If you, as an employer, file W-2 forms after the January 31 deadline but within 30 days, a penalty of $60 per W-2 form is imposed, up to a maximum of $630,500 for large businesses or $220,500 for small businesses.
Should your submission be postmarked after 30 days but before August 1, the penalty rises to $120 per form, with a maximum of $1,891,500 for large businesses and $630,500 for small businesses.
Submissions made after August 1 or not at all incur a $310 per-form penalty, up to $3,783,00 for large businesses or $1,261,000 for small businesses.
Non-Issuance of W-2 Form
If you fail to furnish W-2 forms to your employees, the IRS can impose a penalty for each form not sent. The cost accumulates as more time passes without issuing the necessary documentation. This can lead to severe financial repercussions for your business operations.
Considerations of Willful Neglect or Fraudulence
In cases where your failure to provide W-2 forms is found to be intentional, much stiffer penalties can apply. These fines go beyond the fixed per-form penalties and can include additional fines or even criminal charges depending on the extent of the fraudulence or willful neglect. It is imperative to understand that such violations are taken very seriously by the IRS and can have substantial legal implications.
How Employers Can Avoid Penalties for Not Sending W-2s
There are ways your company can avoid these costly penalties.
Minding the Specific Deadlines
Plan ahead and mark your calendars so you’re reminded of the deadline. If possible, file W-2 forms early to avoid any potential processing delays or penalties.
Ensuring Accurate Completion of W-2 Forms
Each W-2 form must be filled out accurately, as errors can lead to penalties similar to those for late filing. Double-check Social Security numbers, wages and all other reported information.
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Utilizing Electronic Distribution Options
If possible, opt for the electronic distribution of W-2 forms. This method is often more efficient and can help streamline the process, reducing the risk of missing the deadline.
The IRS and Social Security Administration encourage this approach, and instructions for electronic filing can be found on their respective websites. Small businesses may especially benefit from this approach, as it often requires less handling and can be more cost-effective.
File an extension
Submit Form 8809 (Application for Extension of Time to File Information Returns) by mail to the IRS if you need more time. It’s also due on January 31 and could buy you up to 30 days to send out W-2 forms to your employees. Details on where to send your request can be found on the form.
What to Do If You Don’t Receive a W-2 From Your Employer?
If you’re on the receiving end, you understand how important it is to receive your W-2 forms on time. Here’s what to do if it doesn’t arrive.
Immediate Steps to Take
- Contact Your Employer: Your first action should be to reach out to your employer and ask for the missing W-2 forms. Ensure they have your correct mailing address.
- Set a Deadline: Request that the W-2 be sent by a specific date, typically no later than the end of February, as the IRS expects you to have it by then.
Communicating with the IRS
If you do not receive your W-2 shortly after reaching out to your employer, or if it’s past the end of February, contact the IRS. You can call the IRS at 1-800-829-1040. When speaking with the IRS, you need to provide:
- Your name, address, Social Security number, and phone number.
- Your employer’s name, address, and phone number.
- An estimate of wage earnings and federal income tax withheld (use a final pay stub if available).
The IRS will then contact your employer to request the W-2 forms on your behalf.
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Filing Taxes Without a W-2
If efforts to obtain your W-2 from your employer and the IRS are unsuccessful, you may file your tax return using Form 4852, Substitute for Form W-2. Here are the steps for using Form 4852:
- Estimate figures: Use your last pay stub to estimate your earnings and withholding.
- Complete Form 4852: Fill out Form 4852 with the estimated amounts and attach it to your tax return.
Remember, filing your tax return without a W-2 may result in processing delays and require an amended tax return if your estimates differ from the information reported by your employer to the IRS.
Conclusion: The Importance of W-2 Compliance
Adhering to W-2 compliance is a critical duty of your role as an employer. When you distribute W-2 forms promptly and accurately, you ensure compliance with the Internal Revenue Service (IRS) regulations, avoiding potential penalties and fostering trust with your employees.
FAQs on Penalties to an Employer for Not Sending W-2s
Yes, employers are fined for not providing W-2s by the deadline. Fines can range from $60 to $310 per W-2, depending on how late the forms are issued. If the forms are not sent within 30 days of the due date, penalties increase and can be substantial if the failure to file is intentional.
Absolutely. Not only can your business incur monetary fines, but continual or egregious disregard for issuing W-2 forms can lead to intervention by the IRS. Potential legal penalties may apply as well, and there are maximum penalty thresholds that depend on your company’s gross receipts and the time period the forms are overdue.
As an employee, you will not be penalized for your employer’s failure to file W-2 forms. However, it is your responsibility to notify the IRS if you have not received your W-2. After contacting your employer, you can report the issue to the IRS, who may then pursue action against your employer. Remember to file your tax return on time, possibly using Form 4852 as a substitute for the W-2 if necessary.
Pay Only What You Legally Owe on Terms that Work for You. Get a Free Consultation with a Licensed Tax Relief Professional.
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Owe The IRS? Avoid IRS Collections. Remove Tax Levies & Liens and more. Licensed Professionals. A+ BBB Rating. Get A Free Consultation.
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