Before You Prepare and Send 2019 W-2 Forms
Each year, employers are required to send a report to employees showing their total wages and deductions, so the employees can include the information on their income tax returns. The reports must also be filed with the Social Security Administration. This report is a W-2 form.
Before you prepare and send 2019 W-2 forms to employees and the Social Security Administration, follow these steps to make sure everything goes smoothly.
UPDATE: New Tax Law Changes for Form W-4
The 2017 Tax Cuts and Jobs Act has reduced more income tax rates, beginning with the 2018 tax year. This means that some employees may be having too much withheld from paychecks. They may need to adjust their W-4 forms to account for this difference.
The IRS has changed the W-4 form for 2020, to account for the lower tax rates and possible under-withholding. Use the new W-4 form for new employees and also for current employees who want to make changes to their W-4 forms after January 1, 2020. You don't have to require other current employees to have a new W-4 form.
Make Sure You Have Correctly Classified Workers as Employees
It's sometimes difficult to tell if a worker is an employee or independent contractor, but the IRS requires that workers are classified correctly and the service can impose fines and penalties on companies who fail to classify workers correctly, especially if the worker that you pay as an independent contractor should be an employee.
An employee is a worker who performs work at the direction of an employer. In general, anyone who performs services for an organization is an employee if the organization can control what will be done and how it will be done.
On the other hand, an independent contractor is an individual or business that provides services to the general public The independent contractor is a separate business entity and is not considered an employee. Some examples of independent contractors are consultants, agents, or brokers. Typically someone is an independent contractor if the payer has the right to control or direct only the result of the work, not what will be done and how it will be done. The work of independent contractors is often incidental or not essential to the business; for example, a cleaning service, payroll processor, or IT service.
Read more about classifying workers as employees or independent contractors, and consult an employment attorney for assistance.
Check Distribution and Filing Deadline for The Current Year
Two steps are involved in the W-2 process. The first step is distributing the W-2 forms to employees. The second step is to file these forms with the Social Security Administration. (SSA)
The deadline for both distributions to employees and filing with the SSA is January 31 of the year after the tax year. For example, if you are preparing W-2 forms for 2019, the deadline is January 31, 2020. The specific deadline date may change if the date is a weekend or holiday. See this article about W-2 and 1099 deadlines for the current year.
It's a good idea to give employees their forms early in January, so they have time to review them and you can fix errors before you file with the SSA.
Check Employee W-4 Forms
Making sure employees have accurate and current information on Form W-4 will help you prepare and distribute W-2 forms.
Employers are required to have a W-4 form on file for all employees at all times. Form W-4 includes information necessary for determining the amount of an employee's federal income tax withholding, using marital status, number of dependents, and any additional amounts to be withheld.
If an employee asks for help with completing a W-4 form, the IRS suggests you give the employee the IRS withhholding calculator that they can use to figure out their withholding amount.
Form W-4 must be completed at hire and at any time the employee wishes to make a change. The employee should change the W-4 form if the employee's personal information (including marital status and number of dependents) changes or if the employee's address changes. The employee may also change the W-4 form at any time to alter the amount of withholding.
Each year before the end of the year, you should ask all employees to review their W-4 form to make sure the personal information is accurate.
Review Your W-2 Process and Get Forms
If your company is new to payroll processing, or if your payroll situation has changed recently, it's a good idea to review the process of finding, completing, and distributing end-of-year reports to employees. You can get W-2 forms from an office supply store, your CPA, from tax or accounting software, or from the IRS.
Note: You cannot download W-2 forms from the IRS or elsewhere on the Internet. Copy A of the W-2 form is in a specific color of red ink and cannot be duplicated. You must file the specific IRS form of Copy A with the Social Security Administration (this is the copy you keep and file with Social Security at the end of January).
Here are some options for preparing W-2 forms:
- Using accounting software. If you have only a few employees and you use accounting software, you may be able to purchase an add-on to prepare W-2 forms using this software.
- Using tax preparation software. If you use one of the common tax preparation software programs, either online or in a desktop version, and you have purchased the business version of this software, check to see if W-2 processing is included.
- Using purchased W-2 forms. The major office supply companies have pre-printed W-2 forms for use with software on a CD which allows you to input the information for these forms manually and print them out on your printer.
Whichever method you use for completing and printing W-2 forms should also have W-3 transmission forms.
You May Also Need W-3 Transmission Forms
Form W-3 is a transmission form that employers must when they submit W-2 forms to the Social Security Administration. The W-3 form compiles all the information from each box of the W-2 form for all employees. Follow the instructions for Form W-3 to complete this form.
The W-3 form is only used when you are sending paper copies of the W-2 form to the Social Security Administration. If you decide to file employee W-2 forms with the Social Security Administration online, you don't have to submit a W-3 transmittal form.
Don't forget to sign your W-3 form!
If you are sending W-2 and W-3 forms by mail, you must sign the W-3 form. The signer must be authorized as an agent of your company or the person can rite "For (name of payer)" on the signature line, next to the signature.
If you are sending W-2 forms online, your PIN number is used as a signature.
Gather Payroll Information for W-2 Forms
First, you will need some basic information about your company for all W-2 forms:
- Your company's employer ID number
- The name, address, and zip code of the business
- And your company's state tax identification number
Then, you will need to gather information about each employee for the tax year, both personal information and payroll information:
- Employee name and address and social security number or other tax ID number from the employee's W-4 form.
- Gross pay: the amount paid to that employee: total wages, tips, and other compensation
- Amount of federal income tax withheld
- Social security wages (up to the Social Security maximum amount for the year)
An employee's wages for Social Security and Medicare may be different from their gross wages.
- Medicare wages and tips and Medicare tax withheld, including the additional Medicare tax for high-income employees.
- Allocated employee tips paid
- Dependent care benefits paid, and other benefits taxable to the employee
- For each state where the employee worked, the state wages and tips paid and the state income tax withheld
- Local wages and tips paid and local income tax withheld.
Prepare W-2 Forms
Form W-2 has several copies:
- Copy A (special red print ) is for the Social Security Administration.
- Copy 1 is for the state, city, or local tax department.
- Copy B is for the employee to use when filing their federal tax return.
- Copy C is for the employee's records.
If you are preparing W-2 forms yourself (without the aid of a software program, tax professional, or payroll service), take your time with each form to be sure you have entered the information in the correct box and that the information is correct for that employee.
You can't complete Copy A by hand. Use black ink in 12-point Courier font. Copy A is read by machine and must be typed clearly with no corrections, staying within the box.
To make sure you don't miss anything, follow the IRS Specific Instructions for W-2 Forms.
Check for Errors Before You Send W-2 Forms to Employees
To minimize issues and having to re-send W-2 forms, check the W-2 forms for errors, using this checklist. Common W-2 errors include using the wrong year's form, failing to include information, putting information in the wrong box, and failing to stop Social Security withholding at the maximum for the year.
Decide How to Distribute W-2 Forms to Employees
Send copies B, C, and 2 of Form W-2 to each employee.
Once you have created W-2 forms, your next decision is how to distribute them to employees. Remember that the deadline for the distribution of W-2 forms to employees is January 31 of the year following the tax year. For example, employers who were required to distribute 2019 tax year W-2s have until January 31, 2020, to distribute them.
You have two options for distributing W-2 forms (Copies B, C, and 2) to employees: either mail them or distribute them to employees in person. If an employee picks up their W-2 form in person, you may want to have the employee sign that the form was picked up, to avoid questions about whether this was done.
Filing W-2 and W-3 Forms with the Social Security Administration
After you have decided how to prepare W-2 forms and have distributed these forms to employees (by January 31 of the year following the tax year), your next decision is to determine how to file these forms with the Social Security Administration (SSA).
All W-2 forms must be filed with the Social Security Administration, along with a transmittal form W-3. Two options for submitting these forms:
- You can file online at the Business Services Online section of the Social Security website. You will have to register first, then complete the appropriate forms online. If you file online with the BSO, you don't need to include W-3 forms.
- You may also mail completed W-2 forms (Copy A) along with Form W-3 to the Social Security Administration. The mailing address is:
Social Security Administration Direct Operations Center Wilkes-Barre, PA 18769-0001
Handling employee requests for duplicate W-2 Forms
Employees often misplace or lose W-2 forms and they may come to your payroll department requesting a duplicate copy of their W-2 Form. Before you distribute W-2 forms, consider how you will deal with these requests.
If an employee loses a Form W-2, write "REISSUED STATEMENT" on the new copy and give it to the employee. You don't need to add "REISSUED STATEMENT" to the copy you send to the SSA.
- If you have printed out the forms internally, you can simply reprint the W-2 form and give it or mail it to the employee.
- If the form was prepared by an outside payroll service, they may charge you for the cost of reprinting and mailing the form. You may want to charge employees for a first duplicate form, or the second duplicate in a year (it happens!). The IRS says you are "not prohibited" from charging a fee for a duplicate W-2 form.
Whatever you decide, it's a good idea to communicate your policy regarding duplicate forms to employees. Having a charge for duplicate forms may seem extreme, but it might cut down on the number of lost forms that you have to deal with.
Check State Regulations for W-2 Forms
In addition to filing the W-2 form with the Social Security Administration, you must also send Copy 1 of the form to your state, city, or local tax department.
When you complete a W-2 form for an employee, one portion of that form (Copy 1) is designated to be submitted to the state where the employee works. If the employee works in more than one state, you will have to submit a copy Copy 1 of the W-2 form to each state.
Many states are conforming to the new earlier January 31 deadline for filing W-2s with the SSA. Each state has different requirements for submission of W-2 forms and any transmittal forms. Check with your state's taxing authority or state revenue department to learn that state's requirements.
Read more about state payroll taxes.
What if You Need an Extension of Time for W-2 Forms?
If you need a 30-day extension of time to file W-2 forms with the Social Security Administration, you can file an application on Form 8809. The application must be filed no later than the due date of the form. The IRS grants extensions "only in limited cases," like a catastrophe that destroyed records.
If you need an extension to furnish W-2 forms to employees, you must send a letter to:
- Internal Revenue Service: Atten Extension of Time Coordinator
- 240 Murall Drive, Mail Stop 4360 Kearneysville, WV 25430
Include all the details about your company (company name, address, and Employer ID Number) along with a statement that you are requesting an extension to furnish "Forms W-2" to employees, the reason for the delay, and your signature. If your request is approved, you can only one extension.
A Final Suggestion: Even if you have only a few W-2 forms to complete, it's a good idea to file online using the Social Security Administration's Business Services Online procedure. This process improves accuracy, and you will be familiar with the process when the online filing process is required for 10 forms or more beginning in 2022.