Employers Should Expedite W-2's; Here's Why!

January is here and employees are turning their thoughts from the holiday season to tax season.  In order to properly file their taxes, people are waiting for W-2's, 1099's, 1098's and other tax forms that must be provided by the companies that they work with or pay throughout the year.  In most cases, these companies are required to provide them no later than January 31, however, they are not required to wait that long, and in most cases it just doesn't make sense to.

• Providing tax documents early is easy;

Just about every employer, mortgage company, student loan servicer, bank, brokerage firm, and other company that issues tax forms uses a computer to track the appropriate information.  Years ago, when everything was done by paper and pencil, it took the entire month to calculate everything, that is simply not the case anymore.  These things can be generally be complete on January 1 simply by pushing "print all."  Why wait until tomorrow to do what you can do today?

 

• Providing tax documents early may keep you out of trouble with the IRS;

If you fail to file W-2s on time, the IRS can assess a penalty of $30 per W-2 if you file the correct form within 30 days of the due date. If you file between 30 days of the due date and August 1, the fine increases to $60 per form, with a maximum fine of $500, or $200 if you operate a small business. Failure to file forms by August 1 results in a fine of $100 per W-2, or $500 a year for small businesses and $1,500 annually for others. Small businesses are those with gross receipts of $5 million or less for the three most recent tax years.

• Providing tax documents early makes your employees happy;

I know many business owners dread tax day because they owe taxes.  However, for many of your employees (especially those not being paid much), they get refunds (some quite large) and they rely on these to support themselves.  I have seen people get most of their income just from their income tax refund.  Consider this, some people will take their tax refund to prevent eviction from their home, repossession of their vehicle, shutoff of their utilities, and to pay off a high interest credit card.  In these cases, filing early is not just convenient for the employee, it is necessary.  Even the employees that will wait until the last minute won't mind you getting them the documents early.

• Providing documents early saves you money;

For those employers still utilizing paper paystubs and W-2s (I encourage using electronic delivery so your employees don't have to bother you when they need paycheck stubs and W-2s for their financial transactions.); you can send out the W-2s with the first paycheck stub of the New Year, saving postage and envelopes.  This may seem like a small expense, but if you have several employees, this may be hundreds of dollars per year.

• Providing documents early may reduce employee theft;

I wish I could tell you that every employee is honest and upstanding.  Statistics show that most theft in a business environment is caused by employee theft.  Even those who are honest may be tempted to steal if they are facing losing their home or car or getting utilities cut-off.  We all have an instinctive survival instinct for ourselves and our families.  You don't know the financial situation of those working for you.  Will an early tax refund save them some pain?  Maybe.  Is the chance of reducing the risk worth the small amount of extra effort to expedite your tax refund?  I think so.

 

 

 

Simplified Document Solutions provides professional tax preparation and support for individuals, as well as bankruptcy support, and educational representation and consulting.  We can be found online at www.249bankruptcy.com or www.simplifieddocumentsolutions.net. 

 

Our office is conveniently located just north of Atlanta's Hartsfield-Jackson International Airport at 100 Hartsfield Center Pkwy. Suite 500, Atlanta, GA 30354.  We can be reached by telephone at (678) 490-5841 or via email at 249bankruptcy@gmail.com.