5 Key Steps to Streamline Your W-2 Reporting for January 2025

January 2025 is closer than we think. Below are the top 5 things you can do to make your W-2 reporting process go smoothly. 

1. E-filing is required for most filers

Most taxpayers are now required to file their information reporting forms such as 1099s and W-2s electronically.  If your business files 10 or more of any type of information reporting form, this new rule applies to you.

There are three ways to file these forms electronically:

• Upload directly to the Social Security Administration with a file generated by the software used to produce your forms. The SSA also allows taxpayers to produce Forms W-2 directly in their portal.
• Use a third-party service built into your accounting software (such as Aatrix).
• Use a third-party service online such as tax1099.com. 

Take some time now to review your options for electronic filing and discuss with your software vendor if you are unsure of the features available in your system.  If you plan to use the SSA portal to upload or input forms, we recommend you start the registration process ahead of time, so that your account is set up by January.  See this link for more information:  https://www.ssa.gov/employer/

2. Mark your calendar

Forms W-2 and W-3 are due to the employees, the SSA, and most states by January 31.  In the past, the due date to file with the SSA was February or March depending on the filing method but that has changed to January 31 even if you are e-filing. Get started early in the month so you have some flexibility in case you run into any obstacles such as weather, technology issues or missing information.

3. Reconcile and confirm software settings

Confirm your settings for earnings and deductions to make sure that the tax treatment for each is set up correctly. If you find errors, it’s much easier to make corrections now, before you are facing the January 31 deadline.  While reviewing these, make sure that the Box 12 codes are set correctly and that employee settings such as the retirement plan checkbox are marked as needed.

Create a reconciliation spreadsheet and use it to record totals from Form 941 each quarter.  Compare these totals to your year-end payroll summary reports and to your Form W-3 to catch any possible errors that could result in a matching notice from the SSA.  Don’t submit any of your forms until you have reconciled everything.

4. Review taxable fringe benefits

Many companies are required to report fringe benefits at year-end. The most common fringe benefits that should be included on Form W-2 are personal use of a company auto, health insurance for greater than 2% S-corporation shareholders, and group term life insurance in excess of $50,000. This is not a complete list and there may be other fringe benefits applicable to your company.  The following link discusses taxable fringe benefits in more detail: https://www.irs.gov/publications/p15b

5.  Software updates

If you use your accounting software to either generate the W-2 file for upload or link to a third-party service, make sure that you are on a current version that will work for filing 2024 forms. Contact your software vendor now to confirm compatibility and schedule any necessary updates before year-end.  When you are talking with your software vendor about any needed updates, also ask about whether you will need pre-printed forms and if so, what format they should be. Mark your calendar with a note to order the forms in November or December as vendors tend to run low in January.

Feel free to contact us at any time for guidance or additional information on the above items. Some preparation work now will save you headaches in a few months.

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