HR Tip of the Week

Posted on  |  Hiring and onboarding

W-2 Forms: Answers to Frequently Asked Questions

Employers must complete, file with the Social Security Administration, and furnish to their employees a Form W-2 (Wage and Tax Statement) showing the wages paid and taxes withheld for the year for each employee. Here are answers to some of the most frequently asked questions about W-2s.

Q: By what date must W-2s be sent to employees?

A: Generally, employers must furnish the W-2 to employees by January 31 each year. If mailing the forms, employers will meet the “furnish” requirement if the form is properly addressed and mailed on or before the due date.

Q: What about employees who leave during the year?

A: If employment ends before December 31, 2021, employers may furnish copies to the employee at any time after employment ends, but no later than January 31, 2022. If an employee asks for their W-2, give them the completed copies within 30 days of the request or within 30 days of the final wage payment, whichever is later.

Q: Do I have to file and furnish a W-2 when an employee worked just one hour before quitting?

A: Employers must file and furnish a W-2 for each employee from whom:

  • Income, Social Security, or Medicare tax was withheld.
  • Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4 (Employee's Withholding Allowance Certificate).

Q: What should I do if an employee’s copy of the W-2 is returned as undeliverable?

A: You should make a reasonable effort to try to deliver the W-2 to the employee/former employee. For instance, confirm that the address to which it was sent is the same as the one you have on file. If the addresses match, contact the employee/former employee (if possible) to see if they changed addresses. If you are able to obtain an updated address, place the returned, unopened envelope into a new envelope and mail to the new address. You may also want to document that your first attempt was returned as undeliverable, such as by taking and retaining a photo of the front of the returned envelope.

Keep for four years any W-2 that you tried to but ultimately couldn’t deliver to an employee. However, if the undelivered W-2 can be produced electronically through April 15th of the fourth year after the year at issue, you don’t need to keep undeliverable employee copies.

Note: When an employee leaves, it is a best practice to verify that you have the correct mailing address and ask the employee to notify you if they have a change in address.

Q: Can employers furnish W-2s to employees electronically?

A: Employers may furnish W-2s electronically to employees, provided certain steps are taken. Each employee participating must consent (either electronically or by paper document) to receive their W-2 electronically, and you must notify the employee of all hardware and software requirements to receive the form. You may not send a W-2 electronically to any employee who doesn't consent or who has revoked consent previously provided.

To furnish Forms W-2 electronically, you must meet the following disclosure requirements and provide a clear and conspicuous statement of each requirement to your employees.

  • The employee must be informed that they will receive a paper W-2 if consent isn't given to receive it electronically.
  • The employee must be informed of the scope and duration of the consent.
  • The employee must be informed of any procedure for obtaining a paper copy of their W-2 and whether the request for a paper statement is treated as a withdrawal of their consent to receiving their W-2 electronically.
  • The employee must be notified about how to withdraw a consent and the effective date and manner by which the employer will confirm the withdrawn consent. The employee must also be notified that the withdrawn consent doesn't apply to the previously issued W-2.
  • The employee must be informed about any conditions under which an electronic W-2 will no longer be furnished (for example, termination of employment).
  • The employee must be informed of any procedures for updating their contact information that enables the employer to provide electronic W-2s.
  • The employer must notify the employee of any changes to the employer's contact information.

Employers must furnish electronic W-2s by the same due date as the paper W-2s.

Note: A paperless W-2 tax statement option is available in the RUN Powered by ADP®(RUN) platform. From the Home Page banner in the RUN platform, click the Leaf icon, then the Sign Me Up link.

Q: What about deceased employees?

A: If an employee dies during the year, you must report the accrued wages, vacation pay, and other compensation paid after the date of death. Also report wages that were available to the employee while they were alive, regardless of whether they were actually in the possession of the employee, as well as any other regular wage payment, even if you may have to reissue the payment in the name of the estate or beneficiary.

If you made the payment after the employee's death but in the same year the employee died, you must withhold Social Security and Medicare taxes on the payment and report the payment on the employee's W-2 only as Social Security and Medicare wages to ensure proper Social Security and Medicare credit is received. On the employee's W-2, show the payment as Social Security wages (box 3) and Medicare wages and tips (box 5) and the Social Security and Medicare taxes withheld in boxes 4 and 6. Don’t show the payment in box 1.

If you made the payment after the year of death, don’t report it on a Form W-2, and don’t withhold Social Security and Medicare taxes.

Whether the payment is made in the year of death or after the year of death, you must also report it in box 3 of Form 1099-MISC, Miscellaneous Information, for the payment to the estate or beneficiary. Use the name and taxpayer identification number (TIN) of the payment recipient on Form 1099-MISC. However, if the payment is a reissuance of wages that were constructively received by the deceased individual while they were still alive, don’t report it on Form 1099-MISC.

Conclusion:

Make sure you understand and are complying with your W-2 responsibilities. Information about the W-2 can be found on the IRS website here and in our Year-End Payroll Guide here.

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