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.

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