While everyone else is watching college basketball’s “March Madness,” paper W-2 filers will be at their desks sorting through those forms for errors and preparing to file W-2c forms.
W-2 e-filers have until April 1 to file their original W-2s with the Social Security Administration (SSA), but even this extra time won’t be enough to avoid the W-2c hook if errors are discovered after filing. Key: Penalties almost double for incorrect W-2s that aren’t corrected.
Corrections to W-2s are reported on Form W-2c; Form W-3c is the transmittal. W-2c forms may be filed on paper or electronically. E-filing is mandatory if you’re filing 250 or more W-2c forms. Count carefully: If you file 200 W-2c forms in March, and another 30 forms in May, you don’t have to e-file. Flip side: If you file an additional 100 W-2c forms in May, e-filing applies to those 100 forms. Forms should be filed as soon as errors are detected, but to avoid multiple filings you may bundle corrections and file by Aug. 1, 2013.
The SSA encourages all W-2c filers to e-file. Its web-based app—W-2c Online—allows you to create, save and print employees’ copies, and submit up to 25 Forms W-2c per submission, with a limit of 50 saved/unsubmitted reports. A Form W-3c is created for each W-2c Online report, even if the multiple submissions are for the same Employer Identification Number (EIN). Point your browser here for information on W-2c Online.
If you don’t use W-2c Online, W-2c forms must be formatted to the specs found in the SSA’s Specifications for Filing W-2C Electronically (EFW2C).
Employees must receive their copies of W-2c forms as soon as possible. Forms may be mailed, hand delivered or e-delivered to employees. If employees received W-2s electronically, they must receive W-2c forms electronically. The rules for e-delivery of W-2c forms are generally the same as the rules that apply to W-2s. You must notify employees within 30 days of posting W-2c e-forms. Keep those forms posted until the later of Oct. 15 or 90 days after posting.
Common W-2 errors
The two most common W-2 errors are mistakes in boxes requiring monetary entries and employee name/Social Security Number (SSN) mismatches. With one exception, you must file a W-2c form to correct all errors. The exception: Most errors in Box 2, federal income tax withheld, aren’t correctable. If, due to a Box 2 error, employees were overwithheld, they’ll get larger refunds; if they were underwithheld, they’ll owe more tax.
Exception to the exception: Correct Box 2 errors if the errors are administrative (e.g., transposed numbers). Important: Even if Box 2 isn’t corrected, correct related errors in Boxes 1, 3, 4, 5 and 6.
Heed these additional W-2c do’s and don’ts:
√ Do enter $0 in an appropriate box, if that’s the result of a dollar change.
× Don’t zero-fill W-2c boxes you’re not correcting; leave them blank.
√ Do file Form 941-X by April 30, 2013, to report FICA underwithholding and overwithholding errors discovered on 2012 W-2s.
× Don’t file a W-2c if you’re correcting an employee’s name/SSN, if the SSN was reported as blanks or zeros and the employee’s name was reported as blanks. Contact the SSA at (800) 772-6270 for instructions.
√ Do make sure that the EIN reported on your W-2c/W-3c forms matches the EIN on your 941/941-X forms. If your EIN was incorrect, file a W-3c to correct it.
× Don’t file a W-2c with the SSA if you’re correcting only state/local information; send the form to the state/local agency.
× Don’t file a W-2c with the SSA if the only error on an employee’s W-2 is an incorrect address. Instead, you may provide him or her with a W-2c form with the correct address, place the incorrect W-2 in an envelope with the correct address and mail it to the employee, or issue a new W-2 containing correct information (type REISSUED STATEMENT on the new form).
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