W-2s are filed with the Social Security Administration (SSA) in winter. Corrections, which are made on Form W-2c, begin immediately thereafter. The earlier you fix errors on your W-2s, the less likely it is you’ll be penalized by the IRS. E-filers have until the end of March to file their original W-2s But even those few extra weeks will not be enough to get off the W-2c hook, if errors are discovered after filing.
Forms W-2c/W-3c. 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. Forms should be filed as soon as errors are detected, but to avoid multiple filings you may bundle corrections and file by Aug. 1, 2014.
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.
E-filing. 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 W-2c forms 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).
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).
Delivering forms to employees. 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, and 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-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.
CORRECTING ADDITIONAL MEDICARE TAX WITHHOLDING: 2013 was the first year you had to withhold the 0.9% additional Medicare tax. Withholding errors are treated like income tax withholding errors. Upshot: Only administrative errors may be corrected.
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.
Χ Don’t zero-fill W-2c boxes you’re not correcting; leave them blank.
√ Do file Form 941-X by April 30, 2014, to report FICA underwithholding and overwithholding errors discovered on 2013 W-2s.
Χ 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 W-2c/W-3c forms for each affected employee.
Χ 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.
Χ 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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