Who Must File

• An employer who engages in a trade or business that requires him to pay employees for services rendered is required to file a W-2 for each employee from whom he withholds Social Security, Medicare and income taxes. Further, he needs to file if income tax withholding would have occurred if the employee had claimed at least one withholding allowance on her W-4 form or if she hadn't claimed exempt on the form. Employers who are required to file a W-2 must also file a W-3 -- a transmittal form showing earnings and tax withholding for all employees.
  
  

Filing Requirements

• If you are required to file W-2s, you are supposed to send each employee his form by Jan. 31 of each year. You file all W-2s and the W-3 with the Social Security Administration by the last day of February if you are filing by paper. You have until late March or early April if you are filing electronically. The SSA recommends that all employers use its e-file system to file W-2s because it's more accurate and less time consuming than paper filing. If you are filing 250 or more W-2s, you must file electronically. Follow your state revenue agency's guidelines for filing W-2 forms, if applicable.
  
  

Extension

• You can request an extension to file your W-2s by completing and submitting Form 8809 to the SSA. The extension gives you an additional 30 days in which to file, but you must request it before your W-2 filing deadline. Even if you request an extension to file your W-2s, you are still required to give employees their copy by the Jan. 31 deadline.
  
  If you need an extension of time to give your employees their W-2s, send a letter to the IRS Information Returns Branch and include your name and address, Employer Identification Number, a statement that says you are requesting an extension to furnish W-2s to employees, and the cause for the delay. If the extension request is for more than 10 employees, submit it electronically -- follow Publication 1220, Part D, Section 4's instructions.
  
  

W-2 Correction

• If an employee's W-2 form is incorrect, use Form W-2c to fix the error. Give the employee a copy of the correction and file it with the Social Security Administration, and if applicable, the state and local revenue agency. If you're only correcting the employee's address, you need to reissue the W-2 to the employee so it shows the correct address, but you do not have to file it with the SSA.
  
  

Warning

• The IRS can penalize you if you fail to furnish employees with correct W-2. For example, the penalty for intentionally failing to give employees a correct W-2 is at least $250 per form with no maximum penalty.