While it may be tradition to toast the year goodbye with an eggnog, may I suggest another year-end tradition that can make your new year more efficient and stress free? As we say goodbye to 2016, it’s a great idea to review your personal payroll information, which is used to generate form W-2. Form W-2 needs to be included with your personal taxes. If information on the original W-2 is incorrect, form W-2c* will also need to be issued and filed. Here are some ways to ensure your original W-2 is correct.
For most payroll systems, what shows on your paycheck will be reflected on your W-2. Review your name to make sure it is spelled correctly and matches your legal name as registered with the U.S. Social Security Administration. If your name has changed due to marriage, divorce, or other reasons, you must inform Social Security to get a corrected card.
Confirm that your most recent home address is reflected on your paycheck. Also, if you moved to a different state, review your state taxes to confirm that they accurately reflect the different states that you have lived and worked in during the year.
Your social security number is a key identifier used by the IRS and is essential for filing your taxes. Confirm that the social security number you provided your employer is correct.
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Similar to employees, employers need to ensure that their company information is accurately reflect for payroll.
The company name should be accurate in the payroll system, including the official trade name, the “Doing Business As” (dba) designation. The company name and address should match the company name and address the IRS has on file. The company name and address is always included in all IRS correspondence. You can update your business name using the IRS website.
Changing the business mailing address is done using form 8822-B.
The Federal Employer Identification Number (FEIN), also know as the Employer Identification Number (EIN) is a nine-digit number assigned by the IRS and used to identify business entities.
This unique identification number is included on all W-2s and employer tax filings, and should be reviewed to make sure that the number is correct. Businesses can apply for an FEIN easily using the IRS website.
It is also a good idea to confirm that the identification numbers provided by the state agencies match what’s in payroll. The state identification number for unemployment is important for employer tax filing, and the withholding identification number will show on your employer tax filings and on your W-2’s. You can find these numbers on the filing and rate notifications that the states send each quarter through the mail. If you are subject to local taxes, those identification numbers should be confirmed as well.
It’s a great idea for employees to review their personal information and employers to review their company information before the end of the year. Doing so can prevent W-2 errors, allowing employees to file personal taxes efficiently and with confidence.
*W-2c – A corrected Wage and Tax Statement form. This form is used to correct indicative data on the W-2 such as name, social security number, company name, Federal Employer Identification Number, etc. It’s also used to correct wage and tax information. If needed, form W-2c should be included with your original W-2 when filing your tax return.