The new deadline to file your employee W-2s with the Social Security Administration, whether paper or electronic, is Wednesday, January 31, 2018.
The January 31 filing deadline also applies to 1099-MISC forms used to report non-employee compensation such as payments to independent contractors that exceed $600 over the course of the year.
Why Did the Filing Deadline Change?
Previously, your W-2s had to be mailed to employees by January 31 but didn't need to be filed with the agencies until February 28 (paper) or March 31 (electronically). With the passage of the The Protecting Americans from Tax Hikes (PATH) Act last year, you have 1-2 months less to file these W-2s.
According to the IRS, "The accelerated deadline will help the IRS improve its efforts to spot errors on returns filed by taxpayers. Having these W-2s and 1099s earlier will make it easier for the IRS to verify the legitimacy of tax returns and properly issue refunds to taxpayers eligible to receive them. In many instances, this will enable the IRS to release tax refunds more quickly than in the past.."
We recommend that you submit these forms to employees and contractors in early or mid-January so there is time for errors to be discovered and corrected before filing them with the Social Security Administration.
If you fail to file a correct W-2 form by the due date and cannot show reasonable cause, you may be subject to one of the penalties indicated below. The penalty applies if any of the following occurs:
- Failure to file on time
- Failure to include all information required to be shown on Form W-2
- Including incorrect information on a W-2
- Filing paper forms when you are required to e-file
- Reporting an incorrect TIN
- Failure to report a TIN
- Failure to file paper Forms W-2 that are machine readable
The amount of the penalty is based on when you file the correct Form W-2:
- $50 per W-2 if you correctly file within 30 days of the due date; the maximum penalty is $536,000 per year ($187,500 for small businesses)
- $100 per W-2 if you correctly file more than 30 days after the due date but by August 1; the maximum penalty is $1,609,000 per year ($536,000 for small businesses)
- $260 per W-2 if you file after August 1, do not file corrections, or do not file required Forms W-2; the maximum penalty is $3,218,500 per year ($1,072,500 for small businesses)
You can request an extension, but only once to get an additional 30-days. This extension is not automatic; to request one, you must submit an Application for Extension of Time to File Information Returns (form 8809) by January 31.
How to Prepare
We are working to ensure the W-2s of our clients' clients are submitted correctly and in time for service bureaus, PEOs, ASOs, staffing firms, CPAs, benefits brokers, HR consultants, and other remarketers. If your payroll tax management provider hasn't discussed this change with you yet and what they're doing about it, contact us to learn more about how we can help you.