Many of us associate January with writing New Year’s resolutions and joining gyms. The first month of the year is also important for accounting, in part because that’s when many annual tax forms, including Form W-2s, are due.
form w-2 details an employee’s earnings and tax withholdings during the previous calendar year. your business must distribute form w-2 to employees by the federal deadline: Jan. 31, or the next business day if it falls on a holiday or weekend, as is the case in 2021.
Employees use Form W-2 when they file their individual income taxes. It also won’t hurt to have the forms by your side to substantiate payroll costs when doing your business taxes.
the 3 ways to send w-2 forms to your employees:
- in person
- electronically
- via mail
Your employees aren’t the only ones expecting copies of Form W-2s. The Social Security Administration (SSA) and most states require that you file Form W-2 by the same date. Check with the tax authorities in the states where you have employees for more information on deadlines and other filing requirements.
There is no shortage of providers to help you generate the w-2 form. There are payroll software, tax software, accounting firms, and other online tools to help you produce, file, and share w-2 forms.
You will receive six marked w-2 forms for each employee. you should send copies b, c, and 2 to employees, while the remaining three go to ssa, your state or local government, and your file cabinet.
Employees receive copies B, C, and 2 of their Form W-2. Image source: Author
do not create w-2 forms for independent contractors. instead, issue a 1099-nec form for each contractor you pay $600 or more in a year.
here are more details on how to send employees their w-2 forms.
1. in person
If all of your employees work at a central office, it may be more convenient to share w-2 forms by turning them in at work.
Your w-2 provider, whether it’s a tax software, an accounting firm, or yourself, can generate and submit the forms to your office. Printing employee W-2 forms on your office printer is also an option. The employee’s copy of the w-2 does not need to be printed on special paper or ink like the irs version.
From there, place each form in its own envelope and distribute to each employee. use privacy envelopes to protect sensitive data from prying eyes.
make sure all your employees know when w-2 forms are ready. As a business owner, you are responsible for making sure all employees receive their W-2 forms by the IRS deadline.
2. electronically
Companies with remote staff can submit their W-2 forms electronically.
You’ll need each employee’s consent to receive your W-2 forms digitally, but you’re unlikely to have too much trouble. We live in an era where 90% of taxpayers electronically file their taxes, according to the IRS, and having a digital copy makes the e-filing process much easier.
You have two options for sharing w-2 forms electronically: by email or through an employee self-service portal (ess).
Most saas payroll software companies set up portals for employees to view their pay stubs, change their federal and state withholding, and download tax forms. Although W-2s should automatically post to the ESS once they’re available, send employees a notice when they’re ready to download. The portal will also allow employees to consent to the electronic delivery of W-2s.
In the absence of an online portal, businesses can also email their W-2 forms to their employees. depending on the size of your staff, it could take anywhere from a few minutes to a few hours (and the risk of carpal tunnel) to send these emails.
Sending financial information by email creates security issues. encrypt w-2s with unique passwords so only legitimate recipients can open them. the password could incorporate the last digits of the employee’s social security number (ssn) and a zip code, for example.
3. in the mail
When electronic and in-person delivery options fail, mail your employee’s w-2 form.
again, you have two options for sending w-2 forms to employees: directly from the payroll provider or through you.
The service you used to generate the w-2 will likely deliver your w-2 forms directly to your door, which will exclude you from the process. While it may cost you some extra money, employees will likely get your forms faster and with fewer errors.
However, you can also print, package, and mail the w-2 forms yourself. be sure to use privacy envelopes to protect employees’ social security numbers and other personal information.
Note: Forms W-2 filed by mail with SSA must be accompanied by a Form W-3, which summarizes all of the employee’s Forms W-2. e-filers do not need to create a w-3 form.
don’t be late for this important date
(I played the white rabbit in my high school production of Alice in Wonderland. can you tell?)
generating, filing and issuing w-2 forms should be at the top of your payroll administration to-do list starting in January. 1. The IRS imposes severe penalties on small businesses that do not file and share W-2 forms on time.