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Takeaway
The Form W-2 is a tax document sent by businesses to their employees to outline tax and compensation info. But just because you understand what the W-2 does, that doesn’t mean complying with it is easy. Read what you need to know about the current IRS deadlines, what each section of the W-2 means and how to protect your company from noncompliance.
The Form W-2 might be one of the most common tax documents, but understanding and regularly revisiting it is crucial to compliance.
Even without substantial updates, employers should be ready to answer questions about W-2s around:
- definitions
- tables
- deadlines and distribution
- unusual tax situations
Whether you’re a seasoned HR pro or new to the field, we’ll help you navigate the W-2 — and your employees’ concerns about it — with confidence.
What is the Form W-2?
The Form W-2 is an IRS tax form sent by employers to their employees at the end of each year. The document outlines compensation data for each worker, including:
- wages
- benefits
- taxes withheld
- other relevant info from the year
The IRS uses W-2s to calculate tax obligations, while employees rely on them to file their taxes. You may hear workers themselves referred to as “W-2s.” Don’t get confused — this just means that their organizations have been withholding and paying taxes from those employees’ paychecks.
What are employers required to do with Form W-2s?
The IRS requires businesses to distribute W-2s to any employee who received taxable monetary or nonmonetary compensation (i.e., a paycheck and health insurance). W-2s must also be sent by mail, unless the recipient consents to receive the tax form electronically. Consider using payroll tax management software to simplify and streamline this requirement.
For employees who have no income tax withheld, organizations must still notify them about their ability to claim an income tax refund based on the Earned Income Tax Credit (EITC). The EITC notice appears on the back of Copy B of the W-2, but an employee can elect to receive a substitute statement with the same wording. A worker might request a substitute statement because the employee:
- has an alternate Form W-2 that doesn’t have the EITC notice
- wasn’t entitled to receive a W-2
- didn’t receive the W-2 from their employer on time
Read the General Instructions for Forms W-2 and W-3 for more context.
What are the deadlines associated with W-2s?
Businesses must deliver W-2 copies B, C and 2 to their employees by Jan. 31. If a company mails these copies on or before Jan. 31, however, the IRS still considers it compliant, provided the worker’s mailing address is accurate and the W-2s are delivered within two weeks of their send date. The same remains true for employees terminated before Dec. 31 of the current tax year; while employers may send these W-2s early, they must do so before Jan. 31 of the following year.
Additionally, employers must mail or electronically file Copy A — and a complete Form W-3 — by Jan. 31, too.
What is a Form W-3?
In addition to filing W-2s with the IRS, businesses must also file a Form W-3 with the Social Security Administration (SSA). This gives the SSA access to Copy A of the W-2, which provides information about an employee’s combined income and tax withholdings.
What factors affect Form W-2 distribution?
Two primary variables influence how and when an employer can send a W-2. In most cases, Jan. 31 of the following year will still be an employer’s deadline to distribute the form. However, knowing when you can send it early — or potentially late — will help your administrators be proactive with compliance.
Changes in employment status
Companies have the option to send W-2s early for employees terminated in the last tax year. Regardless of whether the form is sent early or by Jan. 31 of the following year, the affected individual must notify their previous employer of an address change (if any). This allows both the former worker and their prior employer to remain compliant, given both have a responsibility to file their taxes.
Special circumstances
Certain situations give businesses a chance to file an extension of 30 days. In the event of a catastrophe — like a fire or a natural disaster — employers may submit a Form 8809. If granted, this gives employers more time, but it can also interrupt an employee’s filing and the receipt of a potential return. That’s why the 8809 is generally used for extreme circumstances.
How do employers file the Form W-2?
Businesses with less than 250 employees may file W-2s electronically or by mail. All others must file electronically. While using the right payroll tax management software is the simplest approach, let’s explore both methods to better understand the entire filing process.
Filing by mail
Even though an employer completes the W-2 by hand, the IRS ultimately reviews it digitally. This means it’s crucial for businesses to ensure the mailed form is clear and legible to avoid errors or delays. To alleviate this slightly, the IRS allows companies to download the Form W-2 and fill it in electronically. Though time-consuming, this makes it easier for employers to correct mistakes (and keep the IRS from interpreting questionable handwriting).
If an employer goes this route, they must complete all mandatory boxes on the W-2 for each employee. They have the option to skip irrelevant fields, but at the very least, HR should understand what makes up the required spaces:
| Form W-2 Mandatory Boxes | ||
|---|---|---|
| Boxes | Description | |
| 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 name | |
| Box F | Employee’s address | |
| Box 1 | Wages, tips and other compensation (excluding elective deferrals like 401(k) or 403(b) plans) | |
| Box 2 | Total federal income tax withheld | |
| Box 3 | Social Security wages (earnings the Social Security tax is derived from) | |
| Box 4 | Social Security tax withheld | |
| Box 5 | Medicare wages and tips (this should be the same as Box 3) | |
| Box 6 | Medicare tax withheld | |
| Box 7 | Social Security tips (tips that the employee has reported) | |
| Box 8 | Allocated tips | |
| Box 10 | Dependent care benefits (the amount spent on dependents under an employee assistance program) | |
| Box 11 | Nonqualified plans | |
| Box 12 | Codes* | |
| Box 13 | Checkboxes (Check all that apply for statutory employees, retirement plans and third-party sick pay.) | |
| Box 14 | Other (This is for any additional info an employer wants to convey, like company vehicle lease value, uniform payments and nontaxable income.) | |
| Boxes 15-20 | State and local income tax | |
*Review page 30 of the IRS General Instructions for Forms W-2 and W-3 for a complete list of Box 12 codes.
Filing electronically
The IRS strongly recommends all employers file W-2s electronically to reduce errors and time sinks. A single software like Paycom simplifies this process. The tech gives employers an opportunity to easily review W-2s before the forms are automatically distributed.
And because payroll exists in the same software as Paycom’s tax management tools, it seamlessly populates the applicable boxes. This allows employers to avoid the pitfall of data reentry and connects companies to a dedicated tax support team for more complex W-2 needs.
Can employers file taxes without a W-2?
In most cases, employers must give their employees W-2s. However, this only applies to part- and full-time employees on payroll. If a business only has independent contractors, for example, they’ll use the Form 1099 instead of a W-2.
How can employers correct a W-2 after submission?
If an organization realizes a mistake after the IRS receives the erroneous W-2, they can still fix issues by filing Forms W-2 C and W-3 C. Since these documents alert the IRS and SSA about the problem, the forms should be sent as soon as possible to help ensure the quickest response.
Additionally, W-2 Cs and W-3 Cs shouldn’t be a regular part of a company’s tax process. If you consistently file them, they may speak to a larger issue in the organization’s tax strategy. Find the source of the errors and determine if it’s truly isolated with the relevant parties, like HR, tax specialists and affected employees.
What happens if an employer doesn’t file a W-2?
Failing to file taxes — like those calculated from a W-2 — keeps revenue and returns away from the government and individuals. The Department of Justice enforces the collection of all employment taxes. The agency administers penalties relative to the harm caused. In other words, punishments are generally higher based on the number of employees the violation affected.
What happens if an employer misses a W-2 deadline?
If an employer fails to distribute W-2s on time, employees can report it to the IRS. This can prompt the agency to take action, which could just involve a reminder or, in severe cases, penalties that result in:
- fines
- restitution
- criminal convictions
If an employee receives their W-2 by mid-February, they’ll have approximately two months to file their taxes by April 15. If a company delays their access, it prohibits the time people have to adequately prepare and file their taxes. Prolonging this process could deprive an employee of a potential refund and amplify financial stress.
Accordingly, IRS fines related to W-2 delays escalate based on the time lost. In 2024, employers that miss a deadline may receive fines for each W-2 of:
- $60 for being 30 days late
- $120 for being 31 days late through Aug. 1
- $310 after Aug. 1 or not filing outright
- $630 for intentionally disregarding a filing date
Again, companies should rely on comprehensive tax management software to reduce the chances of late or missed deadlines.
How does the right HR software simplify W-2 management?
Paycom’s payroll tax management tools make W-2 compliance easier by automatically:
- debiting payroll taxes
- depositing taxes on their due dates
- remitting relevant filings like W-2s and W-3s
The tech ensures each employee receives only one W-2 — even in more complex tax situations. That’s because with Paycom, payroll flows seamlessly across our single software, eliminating the chance of mistakes and unnecessary tasks.
Plus, difficult calculations and stressful deadlines take a backseat to peace of mind, as we automatically convert and balance year-to-date totals. Plus, Paycom distributes W-2s electronically by the required IRS deadline.
Explore Paycom to learn how our single HR software simplifies compliance, payroll and more.