W2 Deadline: Late Filing Penalties Employers Can Avoid
As an employer, you have multiple tax deadlines. You pay sales tax, federal income tax, and payroll tax. With so many dates swirling around in your head, it's a wonder you can keep up at all. One of those deadlines is the employer w2 deadline - the date by which you must send your W-2s to the IRS.
Your deadline for handing out the form to employees is January 31st, and that for filing with the IRS is March 31st. If you fail to hit submit by midnight, penalties await. Furthermore, if you are a large business with hundreds of employees, the damaged can reach millions of dollars. Whether you have ten employees or 10,000, Here's what you need to know about the W-2 system to avoid one tax season headache.
When is the Employer W2 Deadline?
The good news is that the employer W-2 deadline for submitting the forms to employees remains the same every year. It's always January 31st. If January 31st falls on a Saturday or Sunday, then it is due on the next business day (either February 1st or 2nd). Remember that the W-2 form doesn't need to be in your employees' hands-on January 31st, but it does need to be postmarked by that date. If you are running behind for some reason, communicate this to your employees.
Although it is your obligation to get them their forms on time, it is better to let them know when you are behind that. Staying in the dark increases the chance that they might submit an inquiry with the IRS. More and more employers now provide their W-2s electronically, but employees can request a paper copy.
It's their right to do so if they choose. Be sure you have the facilities to supply them with it.
When Do You Need To File W-2s With The IRS?
In addition to handing out a form to each employee from the previous tax year, you must also file a copy of the forms with the IRS. The IRS date is the more significant deadline because it's more time consuming and comes with late fees. In the past, if you used a paper return, your deadline was February 28th or 29th (or the next business day).
Depending on the tax year, employers using the electronic filing route had to submit the form before a certain day of the first week of April. For all years after 2016, including 2020, the new deadline is January 31 regardless of how you file your W-2s.
Note: if you file 250 or more W-2 forms, then the electronic filing is mandatory.
Do You Need To File A W-2 With The State?
Yes, in some cases. Each state has unique requirements based on whether it collects income tax and what forms it uses to do so. You need to send a copy of each Form W-2 to the state unless you employ people who live in:
- New Hampshire
- New York
- South Dakota
The states either use a specific non-W-2 form or don't collect income tax. All other states use W-2s, but their deadlines vary between January 31 and March 31.
What is the Penalty for Employers Not Sending a W2 on Time?
Failing to submit your W-2s to the IRS comes with a steep fine. The IRS can assess a penalty of $50 per W-2 form that misses the deadline. The $50 penalty lasts for 30 days. If you fail to file between 30 days after the due date and August 1st, it grows to $100 per W-2. Missing the August 1st deadline means you'll pay $260 per missed form. The maximum fines are as follows:
- 30 days - $536,000 per year; $187,500 for small businesses
- 30 days - August 1st - $1,609,000 or $536,000 for small businesses
- After August 1st: $3,218,500 or $1,072,500 for small businesses
A small business is any business that brings in $5 million or less (gross) for the previous three tax years. These are just the late filing forms. If you file forms incorrectly or send incomplete forms, there are further penalties. Additionally, if you submit a paper version when the IRS requires you to use a digital form, there's a penalty for that, too.
Employees Can Also Sue for Damages
Inaccuracies don't only cause headaches with the IRS; but also, with your employees. For example, if the W-2 you filed says you paid an employee $45,000 per year, but you only paid them $35,000, then they can sue you. There is a penalty of $530 per form, and the IRS doesn't impose a maximum.
Filing a false document can also mean you may face criminal charges and could even pay $5,000 in damages.
Tips for Filing Your W-2 (and W-3) Online
Filing your Employer W-2s online is fast and easy. To get started, you need to register your business with the Social Security Administration's (SSA) Business Services Online. Enrolling allows you to verify your employee's Social Security Number (SSN), which keeps both of you compliant.
The tool allows you to:
- Report wages to the SSA
- View name and SSN errors
- Check report statuses
- Request an extension for resubmission (one-time only)
Once you have an account, all you need to do is choose the Create/Resume Forms W-2/W-3 Online link. When you finish, submit your W/2-W-3 Online report and print the Confirmation Receipt for your own records. You do have the option to correct forms using the tool, but the IRS says it "does not relieve employers of the obligation to provide corrected annual wage statements to employees and state/local jurisdictions."
Creating W-2s is Easy
As a business owner, you have a long list of tax deadlines to meet. Missing your W2 deadline comes with a long list of fines that grow as time passes. Fortunately, you don't need an expensive accountant to manage your W-2s. Our W2 form generator calculates the taxes paid and makes them simple to send via email.
Create your W-2 with our online generator and save you time and money this tax season.