A Complete Guide To File Form W-2c for the Tax Year 2020
To err is human; to correct is divine. This is a fitting description of the tax return filing season. If you are a business owner who rushed to file IRS
Form W-2, Wages, and Tax Statements, before the deadline and ended up filing returns with errors. — Don’t panic.
The mistakes you have made can be anything, ranging from incorrect employer/employee details to incorrect amount details. You can correct everything by filing Form W-2c with TaxBandits, an IRS authorized e-file service provider.
In this article, let me take you to a corrective action plan for resolving all your W-2 filing errors.
IRS Form W-2c — Explained
Every business owner must file Form W-2, the Wages, and Tax Statement, if (s)he has one or more employees to whom payment has been made for the service rendered as an employee for the particular tax year.
Most often, employers with multiple employees are more prone to make filing mistakes in one or more forms. In such cases, the employer should file IRS Form W-2c, Corrected Wages, and Tax Statement, as soon as possible after you discover the errors.
By doing so, you may not walk-away penalty-free, but surely you can minimize the possible penalties.
Errors that can be corrected using form W-2c
- Incorrect employer details and Employer Identification Number (EIN)
- Incorrect tax year
- Incorrect employee name and Social Security Number (SSN)
- Incorrect employee wages, tips, and compensation
- Social security wages, tips, and withheld
- Medicare wages and tips
- Federal income tax withheld
- Allocated tips and dependant care benefits
- Incorrect state information (only if applicable)
Other than filing for corrections, you can use Form W-2c to void the original return that shouldn’t have been filed in the first place.
If you have filed two W-2s for an employee from the same EIN and one was incorrect, you’ll need to file Form W-2c to void the incorrect form.
Filing Form W-2c with the IRS
Once you have figured out what type of mistakes you need to correct, the next step is to get the form from the IRS or e-file with an authorized service provider like TaxBandits.
Form W-2c, is quite similar to Form W-2 to a certain extent, for things like employer name, EIN, employee name and SSN, federal, state, and local information.
Form W-2c has two separate columns to enter federal, local, and state information regarding amount correction — Previously Reported payment information and Corrected Information.
Irrespective of whether you filed the original W-2 with TaxBandits or another service provider, we will support you in filing corrections through us.
NOTE: A business owner can file the corrected tax return only after the SSA accepts it.
Let’s explore the different types of Form W-2 corrections from here.
Correcting Employer’s EIN and Incorrect tax year
For correcting an incorrect tax year and EIN on a previously submitted W-2, you must prepare two Forms W-2c for each affected employee.
- To file a void return, prepare one Form W-2c to nullify the originally filed W-2 with the incorrect tax year in box c and incorrect EIN in box b.
In the Previously Reported boxes, enter the amount that was initially reported in Form W-2 and enter zeros in the Corrected information boxes.
- With another W-2c, enter a corrected tax year and EIN in box c and box b, respectively. In the Previously Reported, enter zeros, and in the Corrected Information, enter the correct amount values.
Correcting an employee’s name and/or SSN
To correct an employee’s name or SSN, you can file a Form W-2c with the corrected employer and employee information and mention the employee’s previously reported name and/or SSN.
Check the box (e) and enter the employee’s previously reported incorrect SSN and name in the respective box.
Complete the boxes from (a) to (i). Do not complete the boxes 1 to 20 (the amount section).
Correcting Employee’s Name and SSN if it’s reported as blank
To correct an employee’s name and SSN that was reported blank or zeros, you shouldn’t use Form W-2c to report corrections. Instead, you must contact the SSA at 800–772–6270 for instructions.
Correcting Incorrect Amount Details in Form W-2c
To report corrections on the amount reported as payment made to the employee, you need to fill in the correct employer and employee details.
In the Previously Filed section, furnish the amount details mentioned in the original filed Form W-2 and report the correct amount values in the Correct Information section.
If you’re filing multiple Form W-2 for an employee under the same EIN,
- Consider all the Forms W-2 when determining the amounts to enter on a single Form W-2c. (OR)
- File a single Form W-2c to correct only the incorrect W-2.
All the above-mentioned W-2 errors can be corrected by filing Form W-2C and the following video will guide you to file the W-2 correction form with the IRS through TaxBandits.
Possible penalties for filing an incorrect W-2
The employer is responsible for ensuring that correct information has been filed with the SSA before the due date. If an employer fails to do so or cannot show a reasonable cause then the employer may be subjected to a
penalty for filing incorrect W-2.
The penalty applies if you:
- Fail to file on-time
- Fail to include all information required to be shown on Form W-2
- Include incorrect information of Form W-2
- Reporting an incorrect TIN
- Paper filing when you are required to e-file
- Failure to file machine-readable forms.
The penalty amount differs based on when you furnish the correct information in Form W-2.
For a small business, the maximum penalty amount varies.
Now that you have come to the end of this article, we believe you have a detailed understanding of W-2 correction and its impact on federal, state, and local tax returns. Always double-check the information you provide in Form W-2c before you file with the SSA.
Want to file corrections for multiple employees? Use TaxBandits’ W-2c Bulk Correction feature to complete the filing in one go without filing individually. It will help you to save a lot of time. You can also distribute employee copies via postal mail and our Online Retrieval service.
