Distributing tax information securely is very important, and there are lots of ways to do it. Here are some different ways you can securely send W-2s to your employees.
Hand-Deliver the W-2 to Each Employee Personally
Perhaps the safest way to distribute W-2s to your workers is by hand. This is also the most time-consuming method and the easiest way to miss someone.
For many businesses, especially in the current global climate, hand-delivering this information is unsafe due to social distancing best practices or even impossible, as many companies have all or part of their labor force working remotely.
Giving W-2s to employees by hand works best if you have a small number of employees who all work in the same geographic location.
Paper copies of W-2s can also be sent via mail. Remember to send them out in enough time that employees receive them no later than January 31.
To send by mail, first, you need to verify the address of each employee to make sure these documents are sent to the right person. This also saves time and money – if you verify addresses before sending, you won’t have to reprint at the request of employees who moved this year and forgot to update their employee file.
Another good way to cut down on processing time is to create pre-printed address labels. Depending on the software system you use, the employee’s address may already be on the form. Then all you have to do is put them in envelopes with address windows, add postage, and send.
A disadvantage of mailing a paper copy is those W-2s change hands quite a few times between your business outbox and your employees’ mailboxes. Also, mail can be damaged, dropped, or lost. This creates a slightly higher risk of the wrong person receiving that sensitive information.
Undeliverable W-2s
Any mailed W-2s that are returned as undeliverable should be kept for four years from the issue date. Do not send undeliverable employee W-2 forms to the Social Security Administration.
Send Electronically
Sending W-2s electronically is one of the most accurate and secure ways for businesses to distribute tax information. This is one of the most cost-effective distribution methods and ensures that only the employer (or accounting/payroll department) and the employee for which the W-2 is intended will have access to these documents.
Many different options are available for the creation and distribution of W-2s and other payroll and tax information. These documents can be emailed to an employee’s work or personal account, hosted on the company intranet, or through a software service.
Electronic Consent Forms
Many bookkeeping software offers employees the option to opt-in to electronic tax forms, including Patriot Software, Toast Payroll, and Gusto. Employees must give their consent to have W-2s offered electronically (emailed, through an intranet, or other portals) instead of being given a paper copy. If not consent is obtained, they must be given or sent a physical copy.
Note: employers filing 250 or more W-2s must file electronically unless they obtain a waiver from the IRS stating otherwise.
Benefits of sending W-2s to employees electronically
Sending W-2s electronically helps you save on printing and postage costs. It also alleviates any headaches associated with sending documents to employees who no longer work for y our business – after leaving, these employees could relocate without your knowledge and be upset when they haven’t received their tax information.
Another benefit of electronic sending is that employees receive their W-2s earlier, meaning they have more time to correct inaccuracies with you and file their personal taxes.
When you’re ready to file your W-2s to the Social Security Administration, sign up for a free eFile360 account.