W-2C

Why do you need to file a W-2C?

Form W-2C, “Corrected Wage and Tax Statement,” is necessary when there are errors in a previously issued W-2 form. Filing a W-2C ensures accurate tax reporting for both the employer and the employee. Here’s why filing a W-2C is important:

Correcting Errors

• Mistakes can occur in the preparation of W-2 forms. Whether it’s due to miscalculation, administrative oversight, or other issues, these errors can affect the employee’s tax liability and the employer’s tax records.

Employee’s Tax Return

• The information on the W-2 form is crucial for an employee’s personal tax return. If there are inaccuracies on the original W-2, it could lead to the employee either owing more taxes or not getting a refund they’re entitled to. By providing a corrected form, the employee can ensure their tax return is accurate.

Social Security and Medicare Earnings

• W-2 forms report wages subject to Social Security and Medicare taxes. Accurate reporting ensures that employees receive proper credit for their earnings, which can affect future Social Security benefits.

Employer’s Tax Obligations

• Errors on a W-2 can also impact an employer’s tax obligations and records. For example, if the employer over-reports wages, they might end up overpaying employment taxes. Conversely, under-reporting could lead to potential penalties.

Avoiding Penalties

• The IRS may impose penalties on employers for filing incorrect W-2 forms. By filing a W-2C promptly when errors are discovered, employers can potentially avoid or reduce these penalties.

Legal Requirement

• The employer has a legal obligation to provide accurate wage and tax information to both the employee and the IRS. If discrepancies are identified, correcting them with a W-2C is part of fulfilling this obligation.

Potential Refunds

• In some cases, the corrections made on a W-2C might mean that the employer overpaid certain taxes and is eligible for a refund. Conversely, the employee might need to file an amended tax return if the corrections impact their tax liability.

Given the importance of accurate tax reporting, employers should strive to avoid errors in the initial preparation of W-2 forms. However, if mistakes occur, the W-2C provides a mechanism for correction, ensuring that both the employer and employee have accurate and compliant tax records.

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Who needs to file a W-2C?

Form W-2C, “Corrected Wage and Tax Statement,” needs to be filed by employers who have previously issued a W-2 form with errors. Here’s a detailed breakdown:

Employers with Errors on W-2

• Any employer who discovers inaccuracies or errors on a previously issued W-2 form must file a W-2C to correct those errors. This applies regardless of the size of the employer or the number of employees.

Errors of Various Types

• Employers should file a W-2C for a variety of errors on the original W-2, including:
• Incorrect income amounts (wages, tips, or other compensation).
• Incorrect withholdings for federal income tax, Social Security tax, or Medicare tax.
• Wrong employee name or Social Security number.
• Incorrect codes or amounts for benefits or other deductions.

Both Current and Former Employees

• Even if an error is discovered after an employee has left the company, the employer is still responsible for correcting the W-2 information using Form W-2C.

Multiple Errors

• If an employer discovers errors on multiple employees’ W-2 forms or multiple errors for a single employee, they will need to file a separate W-2C for each instance.

Errors Discovered by Employees

• Sometimes, an employee might spot an error on their W-2. In such cases, the employer is obligated to review the claim, and if an error is confirmed, file a W-2C.

After Filing with the Social Security Administration (SSA)

• The need for a W-2C can arise even after the original W-2 forms have been filed with the SSA. The correction ensures that both the SSA and the IRS have accurate wage and tax information.

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What is the deadline for filing a W-2C?

The deadlines for Form W-2C, “Corrected Wage and Tax Statement,” are determined based on when you discover the need for corrections and when you originally submitted the forms. Here are the relevant deadlines:

To the SSA (Social Security Administration)

• There isn’t a strict deadline for filing W-2C with the SSA like there is for the original W-2 forms. Instead, you should file Form W-2C as soon as you discover an error on a previously filed W-2. The corrections should be made promptly to ensure accurate tax reporting and to minimize potential penalties.

To the Employee

• Just like with the SSA, you should provide the corrected W-2C form to the affected employee as soon as possible after discovering the error. Remember, the employee might need this corrected information to amend their personal tax return or for other financial matters.

While there isn’t a strict deadline for W-2C like the January 31st deadline for the original W-2 forms, prompt action is essential. Delays in correcting errors can lead to issues for both employees and the employer, and can also result in penalties if corrections indicate that additional taxes were owed. Therefore, always aim to address and correct errors as soon as they’re identified.

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What is required to file a W-2C?

To file a Form W-2, you will need certain information about both the employer (payer) and the employee (the person or business receiving the payment). Here’s what is required to file a W-2:

Information about the Employer (Your Information)

• Employer’s Name and Address
  • Provide your legal business name and mailing address.
• Employer’s Taxpayer Identification Number (TIN)
  • This could be your Employer Identification Number (EIN) or your Social Security Number (SSN), depending on your business structure. If you’re a sole proprietor, you might use your SSN; if you’re a business entity, you’d use your EIN.
• Employer’s Phone Number
  • Include a phone number where the payer can be reached.

Information about the Employee

• Employee’s Name and Address
  • Provide the legal name and mailing address of the individual or business receiving the payment.
• Employee’s Taxpayer Identification Number (TIN)
  • This must be the recipient’s Social Security Number (SSN) if an individual or as business entity cannot receive a W-2.

Form specific information

• No form specific data is required, however some information should be added to justify the submission of the W-2 form. The fields with amounts will vary based on the situation.

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What are the penalties for W-2C?

The IRS imposes penalties on employers who fail to file Form W-2 on time, fail to furnish W-2 statements to employees, or make mistakes on these forms. The amount of the penalty depends on the lateness or nature of the violation. Here are the main penalties related to Form W-2 as of my last training data up to 2022:

Late Filing or Failure to File

• If you file the correct W-2 within 30 days of the due date, the penalty is $50 per W-2 (with a maximum annual penalty of $197,500 for small businesses).
  • Note: For the purposes of these penalties, a “small business” is one with average annual gross receipts of $5 million or less for the three most recent tax years.
• If you file the correct W-2 more than 30 days after the due date but by August 1, the penalty is $110 per W-2 (with a maximum annual penalty of $565,000 for small businesses).
  • Note: For the purposes of these penalties, a “small business” is one with average annual gross receipts of $5 million or less for the three most recent tax years.
• If you file the W-2 after August 1 or do not file required W-2s, the penalty is $280 per W-2 (with a maximum annual penalty of $1,130,500 for small businesses)
  • Note: For the purposes of these penalties, a “small business” is one with average annual gross receipts of $5 million or less for the three most recent tax years.

Failure to Furnish Correct W-2 to Employees

• The penalties are the same as the failure to file correct W-2s with the SSA. That is, $50, $110, or $280 per form, depending on the delay, with the respective maximum limits as above.

Intentional Disregard of Filing or Providing Correct W-2

• If the IRS determines that an employer intentionally disregarded the requirements, the penalty is at least $560 per W-2 with no maximum limit.

Errors on W-2 Forms

• Penalties can be assessed for various errors, such as incorrect amounts, incorrect names or SSNs, or filing on the wrong type of form. The amounts depend on the nature of the error and the timeliness of the correction.

Failure to File Electronically

• Employers who are required to file electronically (because they have 10 or more W-2 forms) but do not may be subject to a penalty unless they have an approved waiver.
  • Note this was 250 forms previously and updated for 2023 filing.

Failure to Report Taxpayer Identification Number (TIN)

• If the employer fails to report the TIN (usually the SSN for employees), they may be subject to a penalty unless they can show reasonable cause.

To avoid these penalties:

• Be sure to file on time.
• Double-check your forms for accuracy.
• Provide copies to recipients by the due date.
• Secure TINs from payees as needed.

Learn more about Penalties

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Do you need to e-file a W-2C?

Corrections to a W-2 must be submitted the same as the original form. So if the W-2 was e-filed, the W-2C will need to be e-filed as well. If the W-2 was paper filed, the W-2C will need to be e-filed as well.

Learn more about e-Filing

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Is state filing required for the W-2C?

Form W-2C state filing refers to the requirement to report payments to state tax authorities in addition to filing the federal Form W-2C with the IRS. Some states have their own filing requirements for certain types of payments. These state requirements may involve submitting a copy of the Form W-2C or a similar form to the state’s tax agency.

The specific state filing requirements can vary widely from state to state, and they might include different thresholds for reporting, deadlines, and submission methods. Some states require reporting only if the payments exceed a certain threshold, while others may require reporting for all payments, regardless of the amount.

Here are a few points to consider about state filing for Form W-2C:

State Identification Numbers:

• Some states require businesses to obtain a state identification number to use when reporting state tax information. This number is typically entered in Box 15 of the W-2C.

State Deadlines

• State filing deadlines might differ from the federal deadline. Some states may have the same deadline as the federal government, while others might have different due dates.

State-Specific Forms

• Some states have their own versions of forms for reporting state-specific income information. These forms might have different box layouts or requirements than the federal Form W-2C.

Electronic Filing

• Some states require electronic filing of W-2C information, while others might accept paper filings.

States without Income Tax

• There are several states that do not have a personal income tax and, therefore, typically do not require employers to file W-2C forms with the state. As of the last update in 2022, these states are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Additionally, New Hampshire and Tennessee only tax

Local Taxes

• If you have local or municipal income taxes (for cities, counties, or other local jurisdictions), you might also need to file W-2C information with those local tax agencies.

State Unemployment Tax Act (SUTA) Reporting

• While related to, but distinct from, W-2C reporting, employers often have to report wages for State Unemployment Tax Act (SUTA) purposes. This might be on a separate form from the W-2C and might have different reporting requirements.

Learn more about State Filing

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What elements make up a W-2C form?

The W-2C form, Corrected Wage and Tax Statement, is a comprehensive document detailing an employee’s compensation and tax withholding for the year.

On Boxes 1 through 20, for the items you are changing, enter under “Previously reported” the amount reported on the original Form W-2 or the amount reported on a previously filed Form W-2c. Enter the correct amount under “Correct information.”

Here are the primary elements or boxes that make up the W-2C:

Box a – Employer’s name, address, and ZIP code

Show the correct employer information.

Box b – b Employer identification number (EIN)

Show the correct 9-digit EIN assigned to you by the IRS

Box c – Correct Tax Year

If you are correcting Form W-2, enter all 4 digits of the year of the form you are correcting.

Box d – Employee’s correct SSN

You must enter the employee’s correct SSN even if it was correct on the original Form W-2. If you are correcting an employee’s SSN, you must also complete boxes e through i.

Box e – Corrected SSN and/or name

Check this box only if you are correcting the employee’s SSN, name, or both SSN and name. You must also complete boxes d and f through i.

Box f – Employee’s previously reported SSN

Complete this box if you are correcting an employee’s previously reported incorrect SSN and/or name. If the previous SSN was reported as blanks or not available, then box f should be all zeros.

Box g – Employee’s previously reported name

Complete this box if you are correcting an employee’s previously reported incorrect SSN and/or name. You must enter the employee’s previously reported full name in box g exactly as it was previously reported. If the previous reported name was reported as blanks or not available, then box g should be all blanks.

Box h – Employee’s name

Always enter the employee’s correct name.

Box i – Employee’s address and zip code

Always enter the employee’s correct address. 

Box 1 – Wages, tips, other compensation

Show the total taxable wages, tips, and other compensation that you paid to your employee during the year.

Box 2 – Federal income tax withheld

Show the total federal income tax withheld from the employee’s wages for the year. Include the 20% excise tax withheld on excess parachute payments.

Box 3 – Social Security wages

Show the total wages paid (before payroll deductions) subject to employee social security tax but not including social security tips and allocated tips. If reporting these amounts in a subsequent year (due to lapse of risk of forfeiture), the amount must be adjusted by any gain or loss.

Box 4 – Social Security tax withheld

Show the total employee social security tax (not your share) withheld, including social security tax on tips. For 2023, the amount should not exceed $9,932.40 ($160,200 × 6.2%). Include only taxes withheld (or paid by you for the employee) for 2023 wages and tips.

Box 5 – Medicare wages and tips

The wages and tips subject to Medicare tax are the same as those subject to social security tax (boxes 3 and 7) except that there is no wage base limit for Medicare tax. Enter the total Medicare wages and tips in box 5. Be sure to enter tips that the employee reported even if you did not have enough employee funds to collect the Medicare tax for those tips.

Box 6 – Medicare tax withheld

Enter the total employee Medicare tax withheld. Do not include your share. Include only tax withheld for 2023 wages and tips

Box 7 – Social Security tips

Show the tips that the employee reported to you even if you did not have enough employee funds to collect the social security tax for the tips.

Box 8 – Allocated tips

If you operate a large food or beverage establishment, show the tips allocated to the employee. 

Box 9 – No longer used

This box is no longer used

Box 10 – Dependent care benefits

Show the total dependent care benefits under a dependent care assistance program (section 129) paid or incurred by you for your employee. Include the fair market value (FMV) of care in a daycare facility provided or sponsored by you for your employee and amounts paid or incurred for dependent care assistance in a section 125 (cafeteria) plan. 

Box 11 – Nonqualified plans

The purpose of box 11 is for the SSA to determine if any part of the amount reported in box 1 or boxes 3 and/or 5 was earned in a prior year. The SSA uses this information to verify that they have properly applied the social security earnings test and paid the correct amount of benefits. 

Box 12 – Various coded items

Complete and code this box for all items described below. Note that the codes do not relate to where they should be entered in boxes 12a through 12d on Form W-2. For example, if you are only required to report code D in box 12, you can enter code D and the amount in box 12a of Form W-2. Report in box 12 any items that are listed as codes A through HH. Do not report in box 12 section 414(h)(2) contributions (relating to certain state or local government plans). Instead, use box 14 for these items and any other information that you wish to give to your employee. For example, union dues and uniform payments may be reported in box 14.

Box 13

Statutory employee
A worker who earns wages subject to Social Security and Medicare tax but not federal income tax

Retirement plan
Indicates the employee participated in the employer’s retirement plan

Third-party sick pay
Indicates sick pay was paid by a third party, like an insurance company

Box 14 – Other

Employers can report any additional tax information here

Box 15 – State/Payer’s state no

This box indicates the state for which the income and tax details are being reported. It will also include the payer’s state identification number, which is an identifier assigned by the state’s revenue or taxation department.

Box 16 – State wages, tips, etc.

This box reports the total amount of taxable wages you earned in that state.

Box 17 – State income tax withheld

This box reports the total amount of state income taxes withheld from your paychecks for the wages reported in Box 16.

Box 18 – Local wages, tips, etc.

This box reports the total amount of wages subject to local, city or other state income taxes.

Box 19 – Local income tax withheld

This box reports the total amount of taxes withheld from your paychecks for local, city, or other state income taxes.

Box 20 – Locality name

This box defines the local, city or other state tax being paid.

Remember, not all boxes will be filled out on every W-2 form. Only the relevant boxes for the specific payments made will have amounts or indicators.

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Can you correct a W-2C?

Yes, you can correct a W-2C, however 1099-Prep does not currently support this functionality.

Learn more about corrections and negations

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