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IRS gives Form W-2 a nip and a tuck

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in Office Management,Payroll Management

The chaos of payroll administration hasn’t been reflected in W-2 forms—they haven’t really changed all that much in a long time. The 2017 W-2 incorporates changes that have been made over the last couple of tax seasons. Here’s the rundown.

New use for Box 9. For the 2015 and 2016 filing seasons, the IRS and several third-party payroll providers have been conducting a pilot project in which a 16-character alphanumeric verification code is placed in a separate, labeled box. The code is unique to each employee, thus thwarting stolen identity refund fraud. Employees who e-file their 1040s are requested to include the code on their forms.

The pilot has apparently done well enough so that the IRS is making its inclusion on the W-2 permanent. It’s renamed Box 9 Verification Code. (Box 9 has been shaded out for the last several years.)

New Box 12 code. Employers with fewer than 50 full-time employees, including full-time equivalent employees, that contribute into employees’ qualified small employer health reimbursement accounts (QSEHRAs), but offer no other major medical plan, must report those contributions in Box 12, with new Code FF.

TRANSITION RELIEF: Employers offering QSEHRAs must provide notice to employees. For 2017, this notice should have been provided by March 13. The IRS is extending transition relief under which notices must be provided to employees by the 90th day after it releases further guidance. (Notice 2017-20, IRB 2017-11)

Disaster relief. The instructions to the 2017 W-2 remind employers with leave-based donation programs that employees have until the end of this year to cash out the value of their unused vacation, sick or personal leave in exchange for your cash payments to tax-exempt organizations for the benefit of victims of Hurricane Matthew and the severe storms and flooding in Louisiana, which began Aug. 11, 2016. Employees who donate leave don’t have those amounts included in their income, but they also can’t take charitable deductions for their donations.


A step-by-step payroll compliance guide to each pay period, month and calendar quarter of the year is now available. Download it free here.

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