What to Do Before You Prepare Annual W-2 Forms

Make sure you're ready to file.

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Employers are required to send a report to each of their employees every year showing the employee’s total wages and deductions. Employees can then include this information on their income tax returns. The report is a W-2 form, and it must also be filed with the Social Security Administration (SSA).

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.

Key Takeaways

  • Form W-2 reports an employee’s total wages and deductions for the year, as well as taxes you withheld from their pay and submitted to the government on their behalf.
  • Information for the form is calculated using the information provided to you on Form W-4, which each of your employees should have submitted to you when they began working for you.
  • A Form W-2 must be distributed to each employee and filed with the Social Security Administration, usually by Jan. 31 of the year following the tax year.
  • The IRS provides detailed instructions for filling out Form W-2.

Correctly Classify Your Workers

It can be difficult to determine whether a worker is an employee or independent contractor, and the IRS requires that workers be classified correctly. It can impose fines and penalties if the worker you pay as an independent contractor should be paid as an employee. 

An Employee

An employee is a worker who performs work at the direction of an employer. 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 an individual or business that provides services to the general public. The contractor is a separate business entity and is not considered to be an employee. The work of independent contractors is often incidental or not essential to the business, such as a payroll processor or IT service.

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. If January 31st is a weekend or holiday, the deadline is changed to the next business day after January 31st.

Tip

It can be a good idea to give employees their forms early in January so they have time to review them and you can fix any errors before you file with the SSA.

Check Employee W-4 Forms

Make sure your employees have entered accurate and up-to-date information on the Forms W-4 they filled out for you when you hired them. Employers are required to have a W-4 form on file for all employees at all times.

The form includes information necessary for determining the amount of an employee's federal income tax withholding, using marital status, number of dependents, and any additional amounts to be withheld.

Tip

The IRS suggests you give the employee the IRS withholding calculator that they can use to figure out their withholding amount if they need help completing the form.

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:

Note

An employee's wages for Social Security and Medicare may be different from their gross wages.

Preparing the W-2 Forms

Form W-2 has several copies:

  • Copy A (special red print ) is for the Social Security Administration.
  • Copy 1 is for the state, city, or local tax department.
  • Copy B is for the employee to use when filing their federal tax return.
  • Copy C is for the employee's records.

Take your time with each form if you’re preparing the W-2 forms yourself without the aid of a software program, tax professional, or payroll service. Be sure you’ve entered all information in the correct boxes and that the information is correct for that employee.

Important

You can't complete Copy A by hand. The IRS requests that you use black ink in 12-point Courier font. Copy A is read by machine and must be typed clearly with no corrections, staying within the box.

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, C, and 2. 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 to the Social Security Administration. The W-3 form compiles all the information from each box of the W-2 form for all employees. It’s only used when you’re sending paper copies of the W-2 forms to the Social Security Administration. 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 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" to the copy you send to the SSA. 

Note

If you provide an employee with a duplicate copy of their W2 electronically, you do not have to add “REISSUED STATEMENT" to the duplicate copy.

You can simply reprint the W-2 form and give it or mail it to the employee if you’ve printed out the forms internally. If the form was prepared by an outside payroll service, they may charge you for the cost of reprinting and mailing the form.

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, one portion of that form (Copy 1) is designated to be submitted to the state where the employee works. You’ll have to submit Copy 1 of the W-2 form to each state if the employee works in more than one.

Each state has different requirements for submission of W-2 forms 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 that state's requirements. 

Note

An employee's wages for Social Security and Medicare may be different from their gross wages.

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 send a letter to the Internal Revenue Service if you need an extension to furnish W-2 forms to employees. You can send it to the Attention Extension of Time Coordinator, 240 Murall Drive, Mail Stop 4360 Kearneysville, WV 25430. Include all the details about your company (company name, address, and Employer ID Number) along with a statement that you are requesting an extension to furnish "Forms W-2" to employees, the reason for the delay, and your signature.

Warning

You can only file for one extension to file your W-2 forms with the Social Security Administration if your request is approved. You can’t ask a second time. 

Frequently Asked Questions

When do you need to send out W-2 forms?

The deadline for distribution of W-2 forms to employees and for filing with the SSA is Jan. 31 of the year following the tax year unless this date falls on a weekend or holiday. The date is bumped to the next business day when this happens.

Where can you get W-2 forms to send to your employees?

You can get W-2 forms from an office supply store, your CPA, tax or accounting software, or the IRS.

Updated by
Beverly Bird
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Beverly Bird has been a writer and editor for 30+ years, covering tax breaks, tax preparation, and tax law. She also worked as a paralegal in the areas of tax law, bankruptcy, and family law from 1996 to 2010. Beverly has written and edited hundreds of articles for finance and legal sites like GOBankingRates, PocketSense, LegalZoom, and more.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. IRS. “Topic No. 752 Filing Forms W-2 and W-3.” 

  2. IRS. “General Instructions for Forms W-2 and W-3.” Pages 15-22. 

  3. IRS. “General Instructions for Forms W-2 and W-3.” Pages 5-7. 

  4. IRS. “General Instructions for Forms W-2 and W-3.” Page 11. 

  5. IRS. “Topic No. 803 Waivers and Extensions.” 

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