November 1, 2023

Making End of Year Payroll Seamless with Electronic W-2 Statements

The end of the year is a crucial time for both employees and employers, as it marks the issuance of W-2 forms. These forms are essential for tax purposes, as they detail an employee’s compensation and tax withholding for the previous calendar year. To streamline this process, consider adopting electronic W-2 statements.

The Transition to Electronic W-2 Statements:

In 2004, the Internal Revenue Service (IRS) approved the use of electronic W-2 statements, marking a significant shift from traditional paper copies. Electronic W-2 statements brings numerous advantages:

Earlier Access:

When electronic delivery is chosen, W-2 statements are received sooner, allowing recipients to get a head start on tax preparations.

Enhanced Security:

With electronic delivery, there’s significantly less risk of W-2 statements being lost or stolen in the mail. It’s securely stored online for convenience.

Access Anywhere:

Whether at home, at work, or traveling, W-2 statements can be accessed electronically. No need to worry about being away from your usual location when tax season comes around.

Easy Integration:

The information on the W-2 statement can be easily downloaded into many tax preparation software programs, simplifying the filing process.

IRS Compliance and Employee Consent:

To ensure that everything runs smoothly, there are specific IRS regulations that employers must adhere to when offering electronic W-2 statements. Additionally, employees are required to provide their consent to receive an electronic statement instead of a paper copy.

What You Need to Know:

An employee’s consent must be provided by January 3rd. If consent is not provided by this date, a paper copy of the W-2 statement will be received. Per IRS requirements, consent must be electronic and should reasonably demonstrate the employee’s ability to access the W-2 in the electronic format provided. Consent can also be provided via email or through a paper authorization, if it’s confirmed electronically to demonstrate the ability to access the electronic statement. Unfortunately, not all payroll systems can provide electronic W-2. Contact us if you’d like to upgrade your payroll system to take advantage of this plus many other features of a modern payroll system.

Disclaimer: This blog post is for informational purposes only and does not constitute legal or tax advice. Please consult with your tax advisor or the IRS for any specific questions or concerns regarding your W-2 statements.

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