For employees of a corporation, receiving W-2s on time is vital to completing tax returns before the filing deadline. The most essential parts of the W-2 form are the boxes that report total employment earnings for the year and federal and state income taxes withheld. The IRS requires corporations to mail out W-2s by January 31 of each year. If they don’t, two separate penalties can cost corporations a substantial amount of money.
W-2 Late-Filing Fines
Corporations are subject to expensive IRS penalties for failing to provide their employees with W-2 forms on time. For each employee W-2 that’s late, the IRS charges the corporation $100 with the aggregate maximum being $1.5 million. However, if the corporation is no more than 30 days late, the penalty for each W-2 is reduced to $30 and the maximum is $250,000. Mistakes and oversights happen, but if a corporation consistently files W-2s late and delays its employees' ability to file their tax returns, it can be damaging to the corporation’s reputation and eventually reduce morale among its workers.
Additional Late Penalties
Corporate employers have a separate obligation to file all W-2s with the Social Security Administration by the last day of February each year or by April 1 if e-filing them. For each W-2 that’s filed within 30 days of the deadline, a $30 penalty applies with a maximum total penalty between $75,000 and $250,000, depending on whether the corporation is a small business or not. Similar to the penalties for not sending an employee a W-2, the penalties increase in relation to the number of days they remain unfiled. Although filing W-2s late with the SSA doesn’t affect a corporation’s ability to file its own tax return or automatically subject it to an audit, consistent problems getting W-2s filed on time certainly doesn’t help a company avoid audits.
IRS Employee Procedures
As an employee, you should understand that the IRS doesn’t excuse you from filing your tax return on time just because you didn’t receive a W-2 form. If after requesting your W-2 it still doesn’t arrive by February 14, the IRS suggests that you speak with a representative by calling 800-829-1040 to inform them of the issue. However, you do have the option of filing an extension, which gives you an additional six months beyond the original deadline to file. You will, however, be subject to interest charges if you owe tax for the year, which is always due on or around April 15.
Use Form 4852
The W-2 is one of the few types of information returns that you’ll need to attach to your return each year. If you decide to file your taxes before receiving a W-2, the IRS allows you to attach Form 4852 as a substitute for the original W-2. Form 4852 gives you the opportunity to estimate your employment income, deductions and tax withholding using other documents. For example, if you have a pay stub that reports cumulative amounts, you can probably come up with an estimate of your earnings and withholding.
Jeff Franco's professional writing career began in 2010. With expertise in federal taxation, law and accounting, he has published articles in various online publications. Franco holds a Master of Business Administration in accounting and a Master of Science in taxation from Fordham University. He also holds a Juris Doctor from Brooklyn Law School.