Form W-2 Filing Requirements


Emptech's founder, Jeff Aleixo


Jeffrey Aleixo

Form W-2 Filing, Payroll Tax Compliance

All states that require income tax withholding also require employers to provide employees with Form W-2, Wage and Tax Statement, regardless of whether employers withheld federal and state income taxes from the employees’ pay.

As 2021 is coming to an end, employers should prepare for the end-of-year accounting and Form W-2 filing. However, due to frequent changes and shifting deadlines, reaching Form W-2 compliance is more complicated than ever.

Understanding Form W-2 

At the beginning of each year, employers have to send Copy A of Form W-2 to the Social Security Administration (SSA) to report the wages paid and taxes collected for employees during the previous calendar year. Employers also have to send a copy of the W-2 to the employee.

Thus, Form W-2 ensures that both employee and employer taxes have been recorded and filed properly. The form lists an employee’s wages for the year, including their wages, tips, and any other compensation like bonuses or commissions for both salaried and hourly workers. 

It also shows the amounts withheld from an employee’s pay for federal income taxes based on how they filled out their Form W-4 and state income tax, if applicable. The worker’s share of Social Security and Medicare taxes that was withheld from their pay is also reported.

The fields on each Form W-2 are the same. However, employers fill out the forms differently, depending on factors like which state they operate their business in and whether there are tax-exempt benefits.

The main challenge to Form W-2 filling is to avoid errors when entering names and numbers in the fields. Therefore, it is advisable that employers always double-check the boxes to avoid entering the wrong figures or misspelling any employee names or addresses.

Form W-2 Filing Instructions

Employers need to complete Form W-2 for each employee and file a copy with the SSA by January 31 each year. However, in years when January 31 falls on a weekend, the deadline is the next business day. To submit forms to the SSA, employers use the transmittal Form W-3 and have the option to submit forms W-2 and W-3 by mail or electronically using an authorized IRS e-file provider.

Also, If employers hire independent contractors, they need to send form 1099-NEC to any contractors paid over $600 in the 2021 tax year. They have to send Copy A of the 1099-NEC form to the IRS and send a copy to the payee as well.

In response to the coronavirus pandemic, the Treasury and IRS provided employers with the option to defer the employee portion of Social Security tax from September 1, 2020, through December 31, 2020. This deferral applied to employees who earned less than $4,000 per bi-weekly pay period or the equivalent threshold amount with respect to other pay periods. If employers deferred payroll tax for employees in 2020 and collected this tax in 2021, then they need to send in Form W-2c to correct the Tax Year 2020 Social Security taxes.

Use this comprehensive guide to understand collecting, filing, and remitting payroll taxes and ensure compliance with federal and state regulations.

Form W-2 Filing Changes for This Year

If employers are required to file 250 or more Forms W-2 or W-2c for 2021, they have to e-file. Consequently, SSA has been focused on IT modernization, including wage reporting features offered through Business Services Online (BSO). To encourage electronic Form W-2 filing, starting in December 2021, the new file upload utility will be available to all users, and uploading Forms W-2 and W-3 will be more user-friendly and self-explanatory for this tax year.

The SSA’s BSO allows employers to file Forms W-2 W-2c online and verify employees’ legal names and social security numbers against the SSA’s records. The SSA’s BSO website gives two options for Form W-2 filing:

  • If employers need to file 50 or fewer Forms W-2 at a time, they can use BSO to create them online. BSO guides them through the process of creating Forms W-2 or W-2c. They can save and print them to send to employees and submit them to the SSA electronically. Such an option is excellent for small to medium-sized businesses.
  • If employers need to file more than 50 Forms W-2 or more than 25 Forms W-2c, they can use the file upload feature in BSO instead to mass upload completed W-2 forms.

Staying Compliant With W-2 Requirements

Different tax changes in 2021 have created new challenges for employers. Additional and extended COVID-19 relief measures such as the COBRA Premium Subsidy, Employee Retention Credit, and Families First Coronavirus Response Act require special preparation and year-end reporting. Therefore, it is critical that employers get up-to-date and start planning to ensure an error-free process. 

To avoid potential penalties, it is important to meet all the demands, such as Form W-2 filing requirements. To prevent submitting the forms late, failing to include all required information, or including incorrect information, employers may want to consider outsourcing payroll tax management and using an online Form W-2 filing service. As a result, they can meet all employer responsibilities for these forms, ensure no-hassle compliance, and prevent the risk of costly fines for late, incomplete, or inaccurate Forms W-2. 

Outsource payroll tax management to avoid potential pitfalls and make sure you are compliant with different tax rules and regulations.
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