Employers must file W-2s every year showing how much tax was withheld from each employee's paycheck. Businesses who do not file W-2s correctly or on time face stiff penalties. If you own a business, it's important to understand how to file W-2s properly before the filing deadline.
Employers must file W-2 forms for the majority of their employees. The IRS W-2 instructions for 2010 indicate that employers must file a W-2 for any employee who had payroll taxes withheld and any employee who would have had payroll taxes withheld had he not claimed exemption from withholding on his W-4 certificate. Employers must file W-2s for all employees regardless of personal relationship, e.g., children who work in a family business are not exempt from W-2 requirements.
Due Dates, Extensions, and Penalties
The deadline for filing W-2 forms for the 2010 tax year is February 28, 2011. Employers who file W-2s electronically do not need to file them until March 31, 2011. Employers who know they are not going to be able to file W-2s on time may ask for an extension of 30 days using Form 8809. This form must be filed before the date the W-2s are due.
Employers who file late must pay a penalty of $15 per late form if filed within 30 days of the due date; $30 per late form if filed more than 30 days late but before August 1, 2011; and $50 per late form if it's filed later than August 1, 2011.
Electronic Filing Requirement
Businesses employing more than 250 people must file W-2s electronically. Businesses that fail to follow this rule must re-file correctly and are subject to the same penalties as businesses that do not file their W-2s on time. For example, a business that files paper W-2s when electronic W-2s are required pays $30 per late form if the error is corrected within 30 days of the due date.
Employers must keep copies of undeliverable W-2s for four years after their due date. Undeliverable W-2s are W-2s that cannot be given to employees because the employees have not updated their address records and no longer live at the address on record.
When is the Form Due to Employees?
IRS regulations require that employers give employees copies B and C of their W-2s by January 31, 2011. If an employee terminates her employment before the end of 2010, her employer may furnish her with a W-2 at any time as long as it's before the January deadline.
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