How to Avoid Being Late for W-2 Distribution (And What Happens When You Are)

It’s that time of year where taxes and W-2s have been at the forefront of every HR professionals mind. It falls on them to distribute W-2s to their employees before the deadline, but with the craziness of year-end, this can be difficult to accomplish. Whether you’re new to the HR world or you’re a veteran, it’s easy for things to fall through the cracks this time of year and it’s important to be prepared for when that happens. Employers must distribute W-2s to their employees by January 31st. If this deadline is stressing you out, read on to see what you can do to alleviate some of that year-end anxiety.

W-2 Distribution

The most important thing you have to note when it comes to W-2 distribution is that you only have to have W-2s postmarked by the deadline in order to avoid penalties. Too often HR professionals panic at the start of the new year because they worry that W-2s need to physically be in their employees’ hands by the end of the month. If you plan on mailing these forms to your employees, all you have to do is make sure they’re on their way by this time and you can rest easy. This alone can often provide peace of mind for employers everywhere. Keep in mind, you can further simplify this process by encouraging your employees to consent to receive their W-2s online. Here at Dominion, our online HR software makes this process easy by allowing employees to log into their Employee Self Service Portal and simply check the consent box to receive W-2s electronically.  

Business Services Online

HR professionals are not without resources, and knowing where to locate these can be a huge asset this time of year. Social Security offers employees a Business Services Online tool that offers the option to file W-2s and verify employee names and Social Security numbers. Employers, CPAs, accountants, and individuals who process W-2s can all obtain fast, free, and secure online W-2 filing options that allow them to upload wage reports, complete up to 50 W-2 forms, and print copies for distribution without the use of any additional HR software. This is a great option for small businesses who do most of their processes in-house.

IRS Extension

When it comes to running a business, sometimes you simply cannot be prepared for everything that might come your way. If all else fails and you are certain that you will not be able to deliver your W-2s on time, there is always a chance that the IRS will give you an extension. You can request this by providing a written explanation to the IRS that covers why you were unable of meeting the deadline. If they find the reason valid enough, they may offer you an extended period for your W-2 distribution.

Absorb Penalties

If you’ve exhausted all your resources and were unable to receive an extension, you will ultimately receive penalties from the IRS. These penalties are broken down as follows:

  • If you file forms within 30 days following the due date, you will receive a penalty of $30 per W-2.
  • If you file within 30 days following the due date and August 1st, penalties increase to $60 per W-2 (with a maximum fine of $500, or $200 for small businesses).
  • If you do not file forms by August 1st, you will receive a penalty of $100 per W-2 OR $1,500 (or $500 for small businesses).

Keep in mind, a “small business” is considered any business with a gross receipt of $5 million or less for the most recent three tax years.

Additional Penalties

Even if you make that January 31st deadline, your business could still receive some penalties for incorrect or incomplete file forms or forms that are illegible. This is why it’s very important to double and triple check your work, as many of these fees can be avoided with a certain level of due diligence. Even if you have a third-party payroll provider like Dominion, employers are still responsible for checking W-2s and filing them without error and on time to employees. However, we do everything we can to make this easier for you.

All HR professionals know how important it is to stay organized and on top of things for year-end, but that doesn’t always mean it’s a smooth process. Dominion has a year-end resources page for free, helpful tips that are meant to make your life easier. Find these resources below!

About the Authir 2.png