2016 W2 Forms must be filed with the Social Security Administration (SSA) by January 31, a month earlier than in past years. The deadline to mail W2s to employees remains January 31. The date was accelerated as an attempt to reduce fraud.

Follow these tips to avoid errors:

• Allow time to review W2s. Even if you use a third-party payroll service, you are responsible for confirming that W2s are accurate and complete. The new timing eliminates the opportunity for employers to easily correct any errors noticed by employees before filing with the SSA. Employers can regain this benefit by sending W2s to employees as soon after January 1 as possible.

• Calculate value of taxable benefits in advance. Third-party payroll services will typically require employers to provide this data. Taxable benefits include:
  • Value of personal use of company cars. Your accountant can help you determine this taxable amount based on information including make and year of the car, mileage and amount of personal use.
  • Value of life insurance benefits. The value is determined by consulting IRS charts. Age and exemptions impact the amount taxable to the employee.
  • Medical insurance benefits for S-Corp owners who own more than 2% of the company.

• Be aware of ownership tax filing requirements. Owners of S-Corps should receive W2s while owners of partnerships and limited liability companies should receive K1 forms, not W2s.

Meeting the new deadline can be stress-free if you take the time to prepare in advance. Throughout the next year, create a set process for collecting taxable benefit data. For example, require any employees who use a company car to maintain and submit an auto log and collect the log on a monthly or annual basis.

We are happy to help calculate the value of your employees’ taxable benefits for your W2s. For help or to learn more about W2 preparation and filing, contact us today.