Tax season is swiftly approaching, which means it’s time to dust off your W-2 forms. It’s easy to be so busy focusing on the inner workings of your business that you don’t think to make doing your W-2s a priority. That would be a very costly mistake. W-2s are serious business and if you want your business to stay on the right track you’ll want to make you fill them out properly and send out on time.
Our accountants and bookkeepers at Hacker Accounting know just how important it is for businesses to stay on top of their W-2s. If you’re an employer wondering when you should send out your W-2s and what could happen if you don’t do it on time, read on for more information about the deadlines and penalties that surround these very important forms.
Do I Have To Send W-2s To My Employees?
YES. Employers are legally obligated to file a W-2 with the Social Security Administration for every employee who works for them who has been paid more than $600 per year. This includes cash and noncash payments, such as health benefits. Failure to do so can incur penalties and fines from the IRS, and these costs can be punitive.
You are also legally required to keep all your W-2 forms on file for at least four years. This includes W-2s for employees who no longer work for you. You also have to fill out an employment identification number form with the IRS for each employee you have. Completed EIN forms will supply you with the individual employer tax ID numbers you need in order to properly report employee wages and tax withholdings.
When Do I Need To Send Them Out?
In order to avoid late penalties, you can’t postmark your employees W-2s later than Jan. 31st. These late penalties are no joke: You’ll be looking at a fine of AT LEAST $50 for every late W-2 form. You can send them out in paper or digital form. You’ll also need to file a copy of your employee W-2s with the IRS.
These W-2 statements can be sent in either paper or digital form, and you must receive them from employees no later than January 31 of the following year. Employers must also file a copy of employee W-2s with the IRS. The deadline for that filing date is February 29th.
It’s always best to send them out early. Waiting until the last minute can get you into trouble in case some W-2s get lost. And if there are any inaccuracies or problems with the W-2, you’re better off discovering them BEFORE you submit them to the IRS. The IRS will hit you with additional penalties and fines for incorrectly filed W-2s, so it’s very important that you ensure your W-2s are accurate. What To Do If You’re Late Sometimes accidents can happen, and despite your best intentions you fall behind the eightball and your W-2s don’t go out on time. Don’t panic: You do have some options available to you. You can ask for an extension from the IRS for furnishing your W-2s. It’s important that you do this BEFORE the deadline hits. If you know you can’t make the 31st deadline, asking for an extension could make a big difference. If you don’t ask for an extension and the deadline, talk to your accountant to decide on the best course of action moving forward.
Communication Is Key
Communicating with your employees is also very important. If you’re going to be late with your W-2s, notify your employees so they don’t panic. They have their own returns to file, and if they don’t get their W-2s on time they may end up contacting the IRS themselves. Don’t keep them in the dark if there’s a problem with the W-2s. You could end up creating more trouble for yourself down the road .
Related: 4 Questions to ask your accountant during Tax Season
Got questions about your W2s? Give Hacker Accounting a call at 602-375-5251.