Nationwide Tax Forum W-2 Payroll Pointers Patricia A. Hayes Program Expert Social Security Administration

New W-2 Box 12 Codes: AA – designated Roth contributions under section 401(k) plan BB – designated Roth contributions under section 403(b) salary reduction agreement New suffix entry – Box e, employee name New suffix entry – Box e, employee name Employee instructions cont. on Copy 2 Employee instructions cont. on Copy 2 Form 944 checkbox – Form W-3, box b Form 944 checkbox – Form W-3, box b 2006 Form W-2/ W-3 Changes 2006 Form W-2/ W-3 Changes

2006 W-2 Reminders Soc. Sec. Wage Maximum = $94,200 Furnish EE copies by January 31, 2007 When to File with SSA: Electronic by April 2, or- Paper by February 28, 2007 Do not duplicate e-file with paper forms Do file on time Do not file 250+ on paper

Official Forms W-2/W-3 available each spring ( ) Official Forms W-2/W-3 available each spring ( ) Use IRS instructions for completing paper forms and electronic W-2s Use IRS instructions for completing paper forms and electronic W-2s SSA Electronic Filing Specifications SSA Electronic Filing Specifications MMREF -1 (W-2s) MMREF -1 (W-2s) MMREF - 2 (W-2Cs) MMREF - 2 (W-2Cs) W-2/ W-3 Instructions & Forms

W-2 Reporting Options Electronic Electronic Paper Copy A Paper Copy A Safe, fast and easy!

Diskette (3½”) Diskette (3½”) – Final year was tax year 2005 – Final year was tax year 2005 Magnetic tape (reel or cartridge) Magnetic tape (reel or cartridge) – Final year was tax year 2004 – Final year was tax year 2004 Magnetic Media Eliminated

Paper W-2 Filing Up to 249 W-2’s per EIN Up to 249 W-2’s per EIN Must be machine readable – Must be machine readable – Official IRS Copy A W-2/W-3forms Official IRS Copy A W-2/W-3forms-or- IRS Pub compatible (vendor Copy A forms or b/w software versions approved by SSA) IRS Pub compatible (vendor Copy A forms or b/w software versions approved by SSA) Send under cover of W-3 to SSA (See “Where To File” on W-3) Send under cover of W-3 to SSA (See “Where To File” on W-3)

Extended due date – March 31 st Fully electronic – no paperwork Fully electronic – no paperwork Immediate electronic receipt Immediate electronic receipt Faster processing Faster processing Fewer errors Fewer errors Tracking capabilities Tracking capabilities Saves $$ for employers and SSA Saves $$ for employers and SSA A dvantages

Electronic Filing 250+ W-2s – Must E-File using SSA’s Magnetic Media Reporting & Electronic Filing (MMREF) format 250+ W-2s – Must E-File using SSA’s Magnetic Media Reporting & Electronic Filing (MMREF) format Under 249 W-2s – E-File preferred Under 249 W-2s – E-File preferred Up to 20 W-2s– Up to 20 W-2s– W-2 Online (no software required), or W-2 Online (no software required), or MMREF-1 file upload MMREF-1 file upload

To connect to Business Services Online: Business Services Online: Point your browser to and click on and click on Business Services Online Business Services Online

Go to: Select “Business Services Online” Tutorial

See “Vendor List” at See “Vendor List” at MMREF Sources for File Upload Method Vendor payroll software package Vendor payroll software package Proprietary (in-house) program Proprietary (in-house) program Payroll/tax filing agent (outsource) Payroll/tax filing agent (outsource)

W-2 & W-2C Online No forms or software needed Key data into forms online 20 W-2s per W-3 5 W-2Cs per W-3C Built-in surface edits Ability to print all copies of forms Restricted to prior tax year, only

Common W-2 Reporting Errors Wrong tax year Wrong tax year Money fields out of balance Wrong data (e.g., partial/ prior year) Wrong data (e.g., partial/ prior year) Name/SSN mismatches Name/SSN mismatches Wrong EIN Wrong EIN Incorrect format Incorrect format

Filing Corrections (W-2C) 250 or more W-2Cs – must file electronically 250 or more W-2Cs – must file electronically Applies to immediate prior tax year Applies to immediate prior tax year File upload (MMREF-2 format), or File upload (MMREF-2 format), or W-2C Online W-2C Online Filing paper? Filing paper? Use January 2006 version from IRS, or Use January 2006 version from IRS, or IRS Pub compatible forms IRS Pub compatible forms

Name/ SSN Mismatch Notices Sent to all mismatched employees Sent to all mismatched employees Sent to employers who: Sent to employers who: report more than 10 mismatches, and report more than 10 mismatches, and number exceeds 0.5% of total W-2s in report number exceeds 0.5% of total W-2s in report File any W-2Cs within 60 days File any W-2Cs within 60 days Document efforts and keep 4 years Document efforts and keep 4 years Use SSNVS to avoid mismatches Use SSNVS to avoid mismatches

What is SSNVS? SSN Verification Service SSN Verification Service Web-based verification of employee name and SSN Web-based verification of employee name and SSN Cannot be used to screen potential hires – for employees, only Cannot be used to screen potential hires – for employees, only Users must register for PIN/ password and request access Users must register for PIN/ password and request access

Foreign Workers Verify with DHS for foreign workers before SSN issued Immediate verification Delayed verification How to file report without an SSN

No SSN by W-2 Time? Paper Filers Paper Filers Enter “Applied For” on all copies Enter “Applied For” on all copies Electronic Filers Electronic Filers “Applied For” on employee and employer copies “Applied For” on employee and employer copies All zeroes in W-2 Online or MMREF-1 All zeroes in W-2 Online or MMREF-1 File W-2c after employee receives SSN (E-File preferred) File W-2c after employee receives SSN (E-File preferred)

ITIN Individual Taxpayer Identification Number Individual Taxpayer Identification Number 9xx-7x-xxxx 9xx-7x-xxxx 9xx-8x-xxxx 9xx-8x-xxxx Not valid for U.S. employment Not valid for U.S. employment Issued by IRS to non-citizens for tax filing of non-work income Issued by IRS to non-citizens for tax filing of non-work income Apply for ITIN on IRS Form W-7 Apply for ITIN on IRS Form W-7

Basic Pilot Dept. of Homeland Security and SSA pilot Dept. of Homeland Security and SSA pilot Now web-based and nationwide Now web-based and nationwide Participating employers verify all new hires Participating employers verify all new hires Checks both SSN and I-9 information Checks both SSN and I-9 information Voluntary ― to enroll Voluntary ― to enroll Contact DHS at (888) , or

Items Reconciled Social SecurityMedicare Wages Wages and Tips Wages Wages and Tips Tips Tax Withheld Tips Tax Withheld Tax Withheld Tax Withheld Federal Income Tax Withheld Federal Income Tax Withheld Advance EIC Payment Advance EIC Payment W-2s less than 94x – SSA sends notice W-2s more than 94x – IRS sends notice

How to Contact Us Employer Issues: Select “How To Reach Us” at Employer Reporting Service Center (800) General Inquiries: (800)