Employers fill out Form W2, Wage and Tax Statement 2021 to report income paid to employees and taxes withheld. It is mandatory for all employers to report these to their employees.
Your employees rely on you to receive your Form W2 and it must be sent to them by January 31st. If you don’t furnish your employees with their W2 by this deadline, you will be subject to late-filing penalties. That’s of course assuming you will furnish the employees at one point.
The penalty for late-filing Form W2 can range between $50 to $270. The penalties were between $50 to $260. The IRS adjusted the penalties for 2021. For Forms W2 filed within 30 days after the due date, the penalty is $50. After the 30 days up to August 1st, the penalty increases to $110. Forms W2 filed after August 1st, the penalty is $270. The penalties apply both to failure to file and failure to make corrections.
There is also the case with employers who are willfully neglecting filing Form W2. In these cases, the IRS takes the matter to its own hands and it can lead to legal procedures. Avoid these by filling out Form W2 before January 31, 2021.
Form W2 Electronic Filing
Form W2 can be filed electronically in multiple ways. The most convenient way of filing Form W2 is through an IRS-approved e-file provider. All tax software allows employers to file Forms W2 electronically. Another option you have is filing Forms W2 on Social Security’s Business Services Online.
We recommend filing Forms W2 electronically through SSA Business Services Online if you’re going to file a paper tax return but want to file W2 electronically. It is completely free to use Business Services Online. Here is how to file Forms W2 on Business Services Online for the 2021 tax season.
To register to BSO, you will need to provide your personal and contact information. It is as simple as that. Once you complete the phone registration to verify identity, you’re good to go. The best part about filing Forms W2 on Business Services Online in 2021 is verifying the employees’ Social Security Numbers.
After you’re done filing Forms W2, you can go ahead and furnish your employees with their copy of their Wage and Tax Statement.
As for filing Form W2 with an IRS-approved e-file provider, it is pretty much the same. Everything is done electronically on your computer, tablet, or even smartphone. One thing you need to do in extra is providing a copy of the W2 you’re filing to the e-file provider. This is to make sure everything entered on Form W2 is correct so you won’t make corrections afterward.
Form W2 Filing on Paper
File Forms W2 on paper only if you have a small number of employees. After a certain number—let’s say 5—filing Forms W2 on paper takes an unnecessary amount of time.
Besides, filing any tax form on paper is more prone to errors so you may miss something you may not realize. This is what e-file providers are there for—let you know if there is anything wrong with what you entered. Keep in mind that filing electronically is a must if you have more than 250 Forms W2 you need to file. If the number of Forms W2 is less than 250, you can always file on paper.
Get Form W2 for the 2021 tax season below.
Employees Missing Their W2
Your employer has until January 31st, 2021 to file your Form W2. If you haven’t received yours by this deadline, the first action you should take is contacting your employer. If the situation looks like you won’t be receiving your W2 for a while, you always have the option to file Form 4852–the substitute form for the W2 and file your federal income tax return.
However, you can only file Form 4852 if you haven’t received your W2 by February 14th, 2021. We only recommend filing Form 4852 to file your return if you’re in urgent need of filing. Learn more about Form 4852 from here.
Note: If you file Form 4852, you must file a paper tax return. Since Form 4852 cannot be filed electronically, a paper tax return must be mailed to the IRS.