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Common W-2 Form Mistakes That Can Hurt Your Business and How to Fix Them

As an employer, you are sure to be familiar with the W-2 form. It reports the taxable wages paid to an employee and the employment taxes withheld, covering one year. Every employer in the United States is legally required to use W-2 forms. But if you make mistakes on the form, it can end up hurting your business, as the IRS can impose penalties for each W-2 form with incorrect or missing information. So, here are the most common mistakes employers make when completing W-2 forms and how you can avoid them

Miscalculating Wages and Taxes

Providing any wrong information on W-2 forms can result in penalties, so it is essential every piece of information is entered correctly. For instance, total wages and other compensation of a specific employee must be entered on the form. If you miscalculate things like state and federal taxes, employees’ wages will be wrong. If an employee is underpaid or overpaid, the backpay or repayment is reflected on the W-2. And if a worker repays excess earnings for the prior year, employers have to correct the amount of Medicare, Social Security, and tax shown on the prior year’s W-2 form. So, simply ensure every calculation is correct.

Entering the Incorrect Employer Identification Number

The IRS and SSA maintain records via the Employer Identification Number. If W-2 forms do not contain the EIN or show an incorrect EIN, it could result in penalties. Make sure you enter the EIN on each W-2 form to avoid making this mistake.

Entering the Wrong Employee Name

If W-2 forms do not show the correct employee name, the SSA cannot credit earnings to employee records. And if wages are unable to be credited to an employee’s Social Security record, the employee could lose benefits. It is important you do not add any additional titles or use any abbreviations in the name field of the W-2 form too. Wrong titles and abbreviations could prevent the SSA from identifying the correct employee for whom the earnings are reported.

Failing to Tick the Retirement Plan Box

Something as simple as forgetting to tick a box can lead to penalties, so ensure you fill in every required part of the W-2. One commonly missed box is Box 13, the Retirement Plan field. When an employee is an active participant in a retirement plan or has a simplified pension-plan maintained by the employer, the employee can face income tax problems with the IRS if Box 13 is not ticked.

Using a Form from the Wrong Year

W-2 forms change every year. So, you need to ensure you do not make the common mistake of using a prior year’s form. Always use the latest form to avoid penalties and having to spend valuable time re-submitting forms.

Missing the Deadline

January 31st is the deadline to file both paper and online W-2 forms. If you miss the deadline or if you file incorrectly, you have to pay a $30 penalty for a form that is submitted no more than 30 days after the deadline. For W-2s submitted more than 30 days after the deadline and up to August 1st, the penalty increases to $60. After that date, the penalty increases to $100. And if it is determined that the deadline was missed due to intentional disregard of the law or willful neglect, you will end up paying a fine of $250 for each late W-2 form. So, it is not only essential that you complete every part of every W-2 form correctly. It is also important that you file the forms on time.


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