It’s W-2/W-3 tax reporting time again. Here are some of the most significant tax highlights to consider and be aware of for this year.
The Obama administration’s new Affordable Care Act now requires you to report the cost of health insurance coverage that you provide employees on each employee's annual Form W-2. However, according to Notice 2010-69, the IRS is deferring the reporting requirement for 2011, making it optional until 2012. For certain employers (including those filing fewer than 250 W-2 reports for 2011), and with respect to certain types of coverage, Notice 2011-28 states reporting the value of coverage will remain voluntary for the 2012 W-2s (the forms required for the calendar year 2012 that employers would provide employees in January 2013). �Compliance will be voluntary for future calendar years until the IRS publishes guidance giving at least six months of advance notice of any change to the rule.
If you are required or choose to voluntarily report coverage on W-2s, in order to help you effectively bring your record keeping for the new mandates in line and avoid wasting your time on unnecessary data compiling, we’ve compiled a list of which coverage types are not required to be reported on Form W-2.
In addition, employers should not include the following amounts in calculating an employee’s total cost of coverage.
Since the W-2 reporting is presumably just for the government to collect information on us for now, the amount reported doesn’t actually affect tax liability. As before, employer contributions to health coverage continues to be excludible from an employee's income and it is not taxable, so you aren’t required to include the reportable costs on the Form W-3.
In its endeavor to entice all employers to e-file their W-2/W-3 reports, the Business Services Online (BSO) Office of the Social Security Administration’s W-2 Online application added a new feature for its Tax Year 2011 release in December. In addition to filing your 2011 and 2010 tax year W-2 and W-3 reports, you can now file prior year W-2 and W-3 reports through W-2 Online as well. Also, W-2 Online has increased the number of W-2s you can file from 20 to 50. More information for filing with the Social Security Administration (SSA) can be found in Publication No. 42-007.
Looking for a simplified way to test your wage reports for accuracy and avoid headaches? The SSA provides AccuWage to employers, which is software to help you detect and fix any errors prior to submitting your report. If you do happen to find errors after filing, you can make corrections and submit W-2C or W-3C reports by downloading AccuW2C. To find the correct version of both of these free software downloads for your computer, visit the AccuWage Web page.
With so many deadlines, it can be hard to keep track. Here are a few important dates to remember.