Avoid penalties and keep tax season smooth with well-prepared W-2s

Within the complex landscape of tax documentation, organizations and individuals must understand the importance of Form W-2 and its preparation. 

On this blog, we’ll unravel the layers of complexity embedded in the W-2, understanding its significance and why accuracy is not just a matter of compliance but also financial stability. 

Continue reading to see how W-2 accuracy prevents penalties and delays, and how an experienced PEO company can simplify the process.

What is a W-2 form? 

The IRS mandates that employers disclose employee wage and salary information on Form W-2. This form provides information on federal, state, and other tax deductions from your income, as well as details on employer-provided fringe benefits. 

These benefits include health insurance, dependent care assistance, health savings account contributions, and other relevant elements. As an employee, the information on your W-2 is extremely important when preparing your tax return. [1]

Any employer involved in a trade or business must file a Form W-2 for each employee, including non-cash payments of $600 or more annually (or any amount with income, social security, or Medicare tax withheld), regardless of the employee’s relationship to the employer, such as being a relative. The conditions for mandatory filing involve the following situations:

• Income, Social Security, or Medicare tax was withheld.
• Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee’s Withholding Allowance Certificate. [2]

How W-2 affects individuals and businesses

For individuals, the W-2 is more than a routine tax document; it’s a critical report of accurate tax filing. The details provided in this form, including income, taxes withheld, and fringe benefits, are essential for individuals to file their taxes accurately. Inaccuracies can lead to financial setbacks, penalties, and unnecessary stress during tax season.

On the business front, the correct and timely distribution of W-2 forms is not just a procedural obligation but a cornerstone of maintaining a positive relationship with employees. Inaccuracies in W-2s can lead to disgruntled staff and may result in legal complications for the business. Therefore, companies must prioritize accuracy in these financial documents to avoid potential lapses and frustration.

Learn more:

The role of PEOs in crisis management and business continuity

How W-2 accuracy benefits everyone 

Accurate W-2 information is not just a matter of compliance; it’s an investment in the financial well-being of both individuals and businesses. When you provide accurate information, employers contribute to a smooth tax season for their employees and foster a positive work environment. 

Importance of correct W-2 information   

Accurate W-2s protect everyone.

• For employees: correct wages and withholding help you file on time, avoid IRS notices, and prevent refund delays.

• For employers: accuracy helps avoid penalties for late, missing, or incorrect information returns and payee statements. [3]   

If your W-2 is wrong: how to fix it

1. Notify your employer about the error.
2. Your employer issues Form W-2c (Corrected Wage and Tax Statement) and files it with SSA, then provides you with a copy. If your tax return has already been filed and the correction changes your tax, you may need to file an amended return. [2]

What Floridians should know

• No state personal income tax: Florida does not impose a personal income tax, so state boxes on a Florida-only W-2 are often blank.

• Reemployment (unemployment) tax: Florida’s reemployment tax is paid by employers only and is not deducted from employee pay or shown on the employee’s W-2. Generally, only the first $7,000 of wages per employee per year are taxable for this employer-paid tax. [5]

W-2 vs. 1099: key differences

• • Who receives a W-2: Employees. Taxes are typically withheld and reported on Form W-2.

• Who receives a 1099-NEC: Independent contractors. Generally, no tax is withheld; payers report nonemployee compensation on Form 1099-NEC.

• Why classification matters: The IRS uses behavioral, financial, and relationship factors to determine whether an individual is an employee or a contractor. When uncertain, either party can request a determination using Form SS-8.[6]

W-2 deadline (2026 update)

For tax year 2025 Forms W-2, employers must furnish copies to employees and file with the Social Security Administration by Monday, February 2, 2026. January 31, 2026, falls on a Saturday, so the due date moves to the next business day. [7]

How PER can help! 

As a PEO in Orlando, we offer our comprehensive HR solutions to small and mid-sized businesses with a minimum of five employees on their payroll. At PER, we’re committed to streamlining W-2 management for our clients. Active and former employees can access the HR portal provided by PER to conveniently update their information and ensure the seamless receipt of their W-2 forms. Reports are available 24 hours a day, 7 days a week. This user-friendly portal ensures accessibility and empowers individuals to take control of their tax documentation.

Learn more:

Top eight reasons to partner with a PEO for payroll services

Correctly handling W-2 information is a shared responsibility between employers and employees, with PER serving as a valuable ally on this journey. By understanding the importance of accuracy and fulfilling their necessary responsibilities, individuals and businesses can confidently navigate tax seasons, ensuring financial stability and avoiding unnecessary complications.

Looking for a PEO in the Orlando area?

PER provides outsourced HR services to businesses in various industries, including medical, legal, hospitality, entertainment, real estate, professional services, health and wellness, non-profits, and more. For over 25 years, we have been committed to building lasting relationships with clients who value our services. Our comprehensive services encompass payroll management, human resources, benefits administration, workers’ compensation, and additional support.

 Ready to get started? 

Contact us today to learn more!

Sources:

1: Turbo Tax | What is a W-2 Form? 

2: IRS | About Form W-2, Wage and Tax Statement

3: IRS | Filing Forms W-2 and W-3

4: Tax Foundation | Taxes In Florida

5: Florida Department of Revenue | Florida Reemployment Tax

6: IRS | Forms, instructions & publications

7: IRS | General Instructions for Forms W-2 and W-3 (2025)