As we approach the coming filing season, Nelco wanted to share some information regarding W-2 filing that may be changing. Please see the info below to ascertain how the information may affect your reporting for the coming year. Keep in mind that you need the Advanced Accounting add-on to Farmer Fit or Farmer Pro to file W-2s.
W-2 TIN/Name Mismatch:
SSA announced that they will begin sending notices to employers asking them to fix any name/SSN mismatches on W-2s. Here is the link to the information along with the sample notices: www.ssa.gov/employer/notices.html
SSA has already begun sending out notices to third-party providers informing them that some of their clients may be receiving a notice. Approximately, 800,000 notices to third-party preparers will be sent out over the next few weeks. Also, beginning in March, 2019, SSA will begin sending out notices to employers if they had at least one W-2 with a name/SSN mismatch based on the 2018 W-2 data.
This is primarily to help ensure earnings are properly credited to an employee’s record for Social Security benefits purposes. At this time, there does not appear to be any penalty associated with not fixing the mismatches and W-2c’s are not necessarily required. However, please be aware this may drive some employer demand to file a W-2c form.
Oregon has released some new requirements for reporting Statewide Transit Tax in Box 14 of the W-2. Oregon now wants both the wages and the tax to be reported for each employee. Here is the new information that should be entered in Box 14 for Oregon Statewide Transit Tax:
- Wages subject to Statewide Transit Tax: ORSTTW 12345.67 (“ORSTTW”, a space, and the dollar amount)
- Statewide Transit Tax Withheld: ORSTTT 123.45 (“ORSTTT”, a space, and the dollar amount)
Penalties increased—Higher penalties apply for:
- Failure to file correct information returns by the due date, and
- Failure to furnish information returns.
The higher penalty amounts apply to returns required to be filed after December 31, 2018 and are indexed for inflation. The new penalty amounts are listed below:
- $50 per information return if filed correctly within 30 days of the due date; the maximum penalty is $545,500 per year ($191,000 for small businesses)
- $100 per information return if filed correctly more than 30 days after the due date but by August 1; the maximum penalty is $1,637,500 per year ($545,500 for small businesses)
- $270 per information return if filed after August 1, did not file corrections, or did not file required information returns; the maximum penalty is $3,275,500 per year ($1,091,500 for small businesses)
Other W-2 Changes:
Leave-based donation programs to aid victims of Hurricanes and Tropical Storms Harvey, Irma, and Maria, and the 2017 California Wildfires—Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2019, to qualified tax-exempt organizations providing relief for the victims of Hurricanes and Tropical Storms Harvey, Irma, and Maria, and the California Wildfires that began on October 8, 2017. The donated leave need not be included in the income or wages of the employee. The employer may deduct the cash payments as business expenses or charitable contributions.
Suspension of exclusion for qualified moving expense reimbursements—The Tax Cuts and Jobs Act temporarily suspends the exclusion for qualified moving expense reimbursements. However, the exclusion still applies for a member of the US Armed Forces on active duty who moves under a military order to a permanent change of station. This change is effective for taxable years beginning after December 31, 2017, and before January 1, 2026.
Combat pay of members of the Armed Forces performing services in the Sinai Peninsula of Egypt—The Tax Cuts and Jobs Act temporarily makes the Sinai Peninsula of Egypt a qualified hazardous duty area. Treat this hazardous duty area as a combat zone for the exclusion from income of certain combat pay and exclusion from wages. For purposes of withholding, this change generally applies to remuneration paid during the period December 22, 2017 through December 31, 2017, and taxable years 2018 through 2025.
New qualified equity grants—The Tax Cuts and Jobs Act added a section for “qualified equity grants.” The law also added new Form W-2 reporting requirements for these grants. Employers with employees who have qualified equity grants must report the amount includible in gross income under this section for an event which occurs in the calendar year in box 12 using code GG. Also, employers must report the aggregate amount of income which employees elect to defer under this section as of the close of the calendar year in box 12, using code HH.