Planning for W-2 Year-End Payroll Filings

With the end of the year approaching, your business should have a plan in place for a crucial step: W-2 filing. W-2 filing directly affects your employees—timeliness and accuracy are vital.

What is a W-2?

Also referred to as the Wage and Tax Statement, this form reports an employee’s annual wages and taxes withheld during a calendar year to the tax agencies. Employers must prepare a W-2 for every employee who receives compensation. Accuracy is crucial as errors can lead to penalties for the employer and tax issues for the employee.

Employers must distribute W-2 forms to employees by January 31 of the following year. You must also file with the Social Security Administration by January 31.

Here is a list to help streamline this process and avoid errors:

1. Collect up-to-date employee information. This includes addresses and social security numbers. Communicate with your employees and remind them to verify you have received all the correct information.
2. Review your payroll records or work with your payroll provider to ensure they have taken the necessary actions to ensure payroll is correct.
3. Utilize payroll software. There are multiple programs that automate W-2’s to reduce the risk of human error. Consider payroll software that provides e-filing and integrates with your accounting systems.
4. Check for errors. Common mistakes are incorrect employee details, miscalculated wages, and failure to report wages.
5. Determine if you will be filing electronically or by paper. Per the IRS, if you file ten or more returns, you must file electronically, unless granted a waiver. You can visit their website ahead of time for more details. (https://www.ssa.gov/employer/returnfilers.html)

Retain these records for future reference and potential audits. Also be prepared to answer inquiries from employees regarding their W-2’s.

By preparing early and communicating with your employees and payroll providers you can ensure accuracy and meet the filing deadlines. If you have questions or are unsure about this process, contact your R&A advisor for guidance.