Small Business Minute: Tips for handling W-2 forms
By Brian Leaf
It's tax time and companies are getting ready to distribute W-2 forms to employees.
But what should you do if you can't find a former employee?
It happens every year. Someone from your staff quit and moved. The contact information you have is bad. And the W-2 you send today may come back tomorrow marked no forwarding address?
So what should you do?
Entrepreneur magazine says returned W-2s, statements employees use to document their earnings to the IRS, should not be opened. Instead, file them in the original, unopened envelope.
The magazine says by opening returned W-2s and tossing the original envelope, you will muddy compliance. W-2s must be sent by January 31. Without the original envelope, it's harder to prove the forms were sent on time. The same rule applies to 1099s the forms you send to subcontractors you paid more than $600 during the year.
If the former employee asks for their W-2s, make a copy of the returned envelope and keep it in your files. Then send the unopened W-2 to your former staffer in a bigger envelope.
That way you'll protect yourself if the IRS decides you need to be audited. That's protection you can't afford to be without.
For more information go to http://www.irs.gov