Filing incorrect W-2 or W-3 forms can result in penalties if left uncorrected. Fortunately, the IRS knows that mistakes happen and has a system for amending and correcting these errant forms. Below, we’ll guide you through the steps and documents necessary to make your corrections before penalties are assigned!
Forms W-2c and W3-c are used to submit corrections after you file your original W-2’s and W-3’s. You need to file corrections as soon as errors are discovered - the earlier you file corrections, the better your chances are of avoiding penalties. As a reminder, you must file electronically if you are filing 250 or more Forms W-2c. If you are filing fewer than 250 Forms W-2c, you may bundle multiple paper filings before the August 3, 2015 deadline.
The SSA has made it simple to e-file your Forms W-2c with SSA’s web-based W-2c Online application. You can create, save, print and submit up to 25 Forms W-2c per submission, with a limit of 50 saved/unsubmitted reports. You can visit the SSA website for more information on this application. Also note, that you must deliver Form W2-c to employees as soon as possible by mail or by hand.
To add to the process, there are two W-2 Box errors that are not correctable.
- If Box 2, Federal Income Tax Withheld, shows the employee’s taxes were overwithheld, don’t correct – the employee will get a refund. If Box 2 shows the employee’s taxes were underwithheld, don’t correct - the employee will owe more tax.
- If Box 6, Medicare Tax Withheld, shows an incorrect amount related to the 0.9% additional Medicare tax, don’t correct – again, the employee will either get a refund or owe taxes when he/she files.
Of course, there is one exception to this rule – if the errors in Box 2 or Box 6 were Administrative (typo, etc), do file a W2-c in that case.
The Dos and Don’ts of W2-c
Follow the below steps when filing W2-c to ensure the correction is done properly.
- Do enter $0.00 in the appropriate box if that is the result of your correction.
- Do file Form 941X by April 30 to report FICA underwithholding and overwithholding errors you found on your W2 forms.
- Do confirm that your EIN is correct.
- Do not add zeros in boxes you are not correcting – just leave them blank.
- Do not file a W2-c to correct a name/SSN if the original W2 SSN has blanks or zeros and the name has blanks. Contact SSA in this case.
- Do not file a W2-c to correct State/Local information.
- Do not file a W2-c only to correct an employee’s address; simply give the employee a new W2 with the word REISSUED printed on the form.
From the last “do not” bullet point, let’s transition to the topic of reissued W-2s. You are always going to have employees that need reissued or reprints of their W-2 and you can make your life easier by following these standard reissuing guidelines every year.
- If requests come via email, the subject line must read “W2 Request.”
- If requests come via phone, set up a dedicated voicemail box extension for these messages.
- Have employees personally verify these requests so you prevent identity theft or unauthorized parties from gaining access to W2 information.
- Release Reissued W2s to employees personally upon receipt of a signature with photo ID. If that’s not possible, overnight forms at the employee’s expense.
- Release these forms one day a week, when it’s convenient for you.
- You actually charge for this service. But be mindful of goodwill towards your customers/employees.
- Do not file copy A of a Reissed form with SSA.
- Make Form 4868, Application for Automatic Extension of Time to File US Individual Income Tax Return, available for employees who ask you for a Reissued form on/after April 15.
If you do have to send Forms W-2c or W-3c this year, make sure to follow the above advice to adhere to the SSA regulations. Contact Optimum Solutions to find out more about our W-2 process and how our payroll software can allow you to easily file correct W-2 and W-3 Forms.