It is W-2 season, which means it’s time for updates on wage and tax filing requirements. Employers must have issued W-2 forms to their employees by February 1, 2016 so that employees can submit their returns by April 18, 2016. Employers must issue W-2 forms to all employees that receive wages, which is a task your PEO handles for you each year. Employers that utilize contract labor (non-employee), should issue a 1099 to those individuals who receive $600 or more during the calendar year. The good news is that if you’re one of our clients, you can relax knowing that we’ve got you covered.
Important Due Dates to Be Aware Of
If you already work with us, these dates are just to keep you in the loop. We handle issuing to your employees and we also file on your behalf. The following due dates apply for 2015 tax year W-2s:
Sample W-2 Form
- Copies B, C and D must be issued to employees by February 1.
- Copy A must be submitted by February 29 if you file by paper.
- Copy A must be submitted by March 31 if you e-file. You must e-file if you have 250 or more employees.
Noteworthy for 2015 W-2s
Flexible Spending Accounts (FSAs) and Health Savings Account (HSAs)
We handle reporting FSA and HSA amounts for our clients so they do not have to worry about it. For anyone who is not our client, we want to help you avoid costly penalties, so keep this information in mind this tax season.
The deduction limit for flexible spending accounts (FSA) for 2015 is $2,550. FSAs funded solely by salary-reduction amounts do not need to be reported, but FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits do need to be reported.
The employee’s 2015 contributions to a health savings account (HSA) is capped at $3,350 for individuals or $6,650 for families. The employer contribution to a health savings account (HSA) should be noted in Section 12 with code W.
Affordable Care Act (ACA)
We also handle ACA reporting for our clients, but if you are not a client, remember that you must report the cost of employer-sponsored health coverage on W-2s. It is not taxable, but the information must nevertheless be reported in Box 12 on Form W-2, with Code DD to identify the amount.
Virtual currency is less common, but we handle this aspect of reporting for our clients, as well. Again, if you are not a client of ours, keep in mind that if you have paid wages via virtual currency (such as Bitcoin), the fair market value is subject to federal income tax withholding, FICA, and FUTA taxes, and must be reported on Form W-2. (If this applies to you, see Notice 2014-21 for more information).
Errors to Avoid and Other Information
Common Errors to Avoid
If you are one of our valued clients, rest assured we’re avoiding these errors on your behalf. The following is a list of the most common errors and how employers can avoid them:
- Omitting the decimal point and cents. Pay extra attention to where your decimal points should be.
- Using ink that is too light. We recommend that you use black ink only.
- Making entries too small or too large. Try to use 12-point Courier font, if possible.
- Adding dollar signs. Dollar signs are not required, so don’t use them.
- Checking the “Retirement plan” checkbox inappropriately on Box 13. Make sure you check the box when necessary.
- Formatting the employee's name in Box E incorrectly. Enter first name and middle initial in the first box, surname in the second box, and suffix (such as “Jr.”) in the third box (optional).
- Cutting, folding, or stapling Copy A paper forms mailed to SSA. Do not cut, fold, or staple paper forms.
- Using downloaded Copy A of Forms W-2, W-2AS, W-2GU, W-2VI, W-3SS, or Form W-3 from IRS.gov. Only use copies from the SSA site or forms supplied by the IRS
Business Services Online (BSO)
The Social Security Administration’s BSO makes it easy to create, save, and submit W-2 forms electronically. You can do up to fifty W-2s at a time. The created W-2 automatically generates a W-3, and you can print copies to submit to state and local governments.
Specific information is available in a booklet titled 2015 General Instructions for Forms W-2 and W-3. You can order those instructions and additional forms by calling 1-800-TAX-FORM (1-800-829-3676). As always, call us for any additional help.