Numerous tax rules apply to completing, distributing, and filing these forms. It can help to understand the requirements and deadlines before you begin preparing them.

Correctly Classify Your Workers

The IRS requires that you classify your workers correctly: employee or independent contractor. It can impose fines and penalties if the worker you pay as an independent contractor should be paid as an employee. 

An Employee

Anyone who performs services for an organization is generally an employee if the organization can control the work they do and how and when it will be done.

An Independent Contractor

An independent contractor is, by the IRS’ definition, someone who offers services to the general public and has control over how they do their work and what work they’ll do.

Check the Distribution and Filing Deadline

Two steps are involved in the W-2 process. The first step is distributing the W-2 forms to employees. The second step is filing these forms with the SSA. The deadline for sending W-2 forms to employees and filing the forms with the SSA is usually January 31 of the year after the tax year.

Check Employee W-4 Forms

You’re required to have a W-4 form on file for all employees at all times. Make sure your employees have entered accurate and up-to-date information on the Forms W-4 they filled out for you. The form includes information necessary for:

Determining the amount of an employee’s federal income tax withholdingUsing marital statusKnowing the employee’s number of dependentsAny additional amounts to be withheld

Form W-4 must be completed at hire and at any time the employee needs to make a change to their tax status. The employee should change the W-4 form if their personal information changes, such as their marital status and number of dependents, or if their address changes. The employee may also change the W-4 form at any time simply to alter the amount of withholding. You should ask all employees to review their W-4 form before the end of each year to make sure the personal information is accurate. 

Gather Payroll Information

You’ll need some basic information about your company for all W-2 forms:

Your company’s employer ID number The name, address, and zip code of the business Your company’s state tax identification number (if applicable)

You’ll also have to gather personal and payroll information about each employee for the tax year:

Gross pay: the amount paid to that employee: total wages, tips, and other compensation Amount of federal income tax withheld Social security wages (up to the Social Security maximum amount for the year) Medicare wages and tips and Medicare tax withheld, including the additional Medicare tax for high income employees Allocated employee tips paid Dependent care benefits paid, and other benefits taxable to the employee State wages and tips paid for each state where the employee worked, as well as the state income tax withheld Local wages and tips paid, and local income tax withheld if applicable 

Preparing the W-2 Forms

Form W-2 has several copies:

Copy A (special red print ) is for the Social Security AdministrationCopy 1 is for you to file with the state, city, or local tax departmentCopy B is for the employee to use when filing their federal tax returnCopy C is for the employee’s recordsCopy 2 is for the employee’s state, city, or local tax departmentCopy D is for your records

Take your time with each form if you’re preparing the W-2 forms yourself. Be sure you’ve entered all information accurately and in the correct boxes. Follow the IRS instructions for W-2 forms to make sure that you don’t miss anything. Check the forms for errors to minimize the possibility that you’ll have to resend them. Make sure you use the form from the correct year, include all necessary information, put the information in the correct box, and double-check your calculations for Social Security withholding. 

Distribute W-2 Forms to Your Employees

Your next decision is how to distribute the forms to your employees. You have two options for distributing Copies B, and C. You can either mail them or give them to your employees in person. You may want to have the employee certify that the form was picked up to avoid questions about whether this was done if they decide they want to pick up their form in person.

Filing W-2 and W-3 Forms With the SSA

You must use the W-3 transmission forms when you submit W-2 forms by mail to the Social Security Administration. The W-3 form compiles all the information from each box of the W-2 form for all employees. You don’t have to submit a W-3 transmittal form if you decide to file your W-2 forms with the SSA online. You must sign the W-3 form if you’re submitting your forms by mail. The signer must be authorized as an agent of your company, or the person can write “For (name of payer)” on the signature line next to the signature. If you are sending W-2 forms online, your PIN number serves as your signature.

Filing Online or by Mail

You have two options for submitting these forms. You can file online at the Business Services Online section of the Social Security website. You’ll have to register first, then complete the appropriate forms online. You can also mail in Copy A of your completed W-2 forms along with Form W-3 to the Social Security Administration. The mailing address for forms sent via USPS is Social Security Administration; Direct Operations Center; Wilkes-Barre, PA 18769-0001.

Employee Requests for Duplicate Forms

Employees often misplace or lose their W-2 forms, so they may request a duplicate copy of their W-2 Form. Write “REISSUED STATEMENT” on the new copy, and give it to the employee. You don’t have to add “REISSUED STATEMENT” if you send an electronic form to the employee. You may want to charge employees for a first duplicate form, or the second duplicate in a year. The IRS says you are “not prohibited” from charging a fee for a duplicate W-2 form, but it’s a good idea to communicate your policy regarding duplicate forms to employees.

Check State Regulations

When you complete a W-2 form for an employee, you’ll send Copy 1 to each state where the employee works. Each state has different requirements for W-2 submissions and any transmittal forms, but many states are conforming to the January 31 deadline for filing W-2s with the SSA. Check with your state’s taxing authority or state revenue department to learn the requirements.

Extension of Time To File

You can file an application on Form 8809 if you need a 30-day extension of time to file your W-2 forms with the SSA. The application must be filed no later than the due date of the form. The IRS grants extensions “only in limited cases,” like a catastrophe that destroyed your records. You must fax the IRS if you need an extension to furnish W-2 forms to employees. The letter must be addressed to Internal Revenue SErvice Technical Services Operation, Attn: Extension of Time Coordinator. The fax number is 877-477-0752. Your letter must include your name, address, EIN, a statement about why you’re requesting an extension that includes the reason for the request, and your signature.