Starting in January 2024, the Internal Revenue Service (IRS) has instituted an important change for employer filing of informational tax forms. Previously, only electronic filing was required from those filing 250 or more forms. If you’re submitting 10 or more information returns, including Forms W-2 or 1099, you’ll now be required to file electronically unless the IRS has exempted or waived you.
This new rule will be imposed on employers and third parties handling tax records on behalf of companies. It’s one of several steps the IRS and Social Security Administration (SSA) are taking to simplify tax reporting and increase efficiency.
Options for Filing Wage Reports
Employers have two main options for filing wage reports: electronically or by paper. However, the new 10-form threshold significantly limits paper filing. Here’s what you need to know about your electronic filing options:
1. Use the SSA’s free W-2 Online tool
The W-2 Online tool is a free service offered through the Business Services Online (BSO) webpage. With this tool, you can:
- File Forms W-2 and W-2C (used to correct errors on a previously submitted W-2).
- Enter information directly into an online form.
- Submit reports to the SSA without downloading or purchasing any software.
This is a great option for small businesses that do not use payroll software and want a no-cost solution.
2. Upload a file in EFW2 format
If you use payroll or accounting software that produces W-2 forms in the Electronic Filing W-2 (EFW2) format, you can upload the file directly to the SSA through the BSO website.
This method is helpful for employers filing many forms at once, as it allows for batch uploads and reduces manual data entry errors.
3. Use commercial software to file
There are many commercial software products available that integrate tax filing capabilities. These products allow you to:
- Generate W-2, W-2C, and W-3 forms.
- Electronically file your reports with the SSA.
- Keep digital copies for your records.
This method is often used by businesses with more complex payroll needs or those who want an all-in-one solution for managing tax forms.
Consider hiring a third-party filing service
If you prefer not to handle tax form preparation and filing yourself, you can hire a third-party provider. These services:
- Prepare and file your W-2s electronically.
- Often handle corrections and filings for multiple agencies (SSA, IRS, state).
- Charge a fee, but it can save time and reduce compliance errors.
Be sure to choose a reputable provider that complies with SSA and IRS standards.
Final thoughts
With the IRS’s new threshold, electronic filing is now the norm for most employers. Whether uploading through payroll software, using SSA’s free tools, or engaging a third party, it is important to know your options and select the approach that best serves your business.
