Everyone makes mistakes. But some mistakes are more costly than others. On Aug. 3, penalties leap from $30 to $100 per form, up to $1.5 million, for these W-2 errors: failing to file 2014 W-2s in the first place or filing incorrect 2014 W-2s that you haven’t yet corrected.
Corrections to 2014 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.
The Social Security Administration (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).
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).
The two most common W-2 errors are mistakes in boxes requiring monetary entries and employee name/Social Security number (SSN) mismatches. With two exceptions, you must file a W-2c form to correct all errors.
The exceptions: Most errors in Box 2, federal income tax withheld, and errors in Box 6 related to the 0.9% additional Medicare tax, aren’t correctable.
Exception-to-exception: Correct Box 2 or Box 6 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.
Don’t file a W-2c if you’re correcting an employee’s name/SSN combination, if the SSN was reported as blanks or zeros and the employee’s name was reported as blanks. Contact the SSA at 1-800-772-6270 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.