Payroll in Practice: 12.2.2024

Question: A company changed payroll service providers. The new provider suggested that each provider prepare Forms W-2 based on the payroll that it processed rather than try to load data from the previous provider into the new provider’s system. Can an employer file more than one W-2 under the same Employer Identification Number for each employee?

Answer: Yes, an employer may file more than one Form W-2, Wage and Tax Statement, for an employee using the same EIN. Following the new provider’s suggestion might make reconciliation easier and help to avoid errors that otherwise might occur during data conversion. The main issue is ensuring that employees understand that they will receive two forms and that the information from both must be reported on their tax returns

Multiple Forms W-2 should not cause any problems from a reporting standpoint. If the employer files on paper, the reconciliation process will entail comparing the totals from Form W-3, Transmittal of Wage and Tax Statements, with the totals from Forms 941, Employer’s Quarterly Federal Tax Return, Forms W-2, and accounting records to the year-end totals for each employee. If the employer files electronically, a similar reconciliation must be done for the amounts reported in the electronic file.

It is important to verify certain amounts as part of the reconciliation. For example, if there are entries in Boxes 3 and 7, Social Security Wages and Social Security Tips respectively, the total amounts reported for Box 5, Medicare Wages and Tips, must equal or exceed the sum of Boxes 3 and 7. Otherwise the forms will be rejected by the SSA.

For multiple Forms W-2, Box d, Control Number, may be used to distinguish between the forms. The Social Security Administration does not require that Box d be used.

The SSA treats multiple Forms W-2 from an employer for a given employee as separate filings rather than as duplicate or replacement filings. Each submission is recorded separately despite having the same payer and payee information. The SSA system is able to handle multiple forms even if subsequent correction is required for any of the original submissions.

For example, to make a correction to a Form W-2 filed on paper, the employer files a Form W-2c, Corrected Wage and Tax Statement, to correct the original rather than sending in a new Form W-2. For an electronically filed Form W-2, the employer or service provider must use the SSA’s Business Services Online W-2c/W-3c application to prepare an electronic correction.

Whether paper or electronic, the Form W-2c instructs the SSA to remove incorrect information and replace it with the correct information. When making a correction where more than one Form W-2 has been issued under the same EIN, the employer has the option to either combine the amounts from all the Forms W-2 filed for that employee or to use only the amounts from the form that is being corrected.

The IRS provides an example in the 2024 General Instructions for Forms W-2 and W-3. An employee was issued two Forms W-2. One correctly reported Social Security wages of $20,000. The other incorrectly reported Social Security wages of $30,000 when $25,000 was the correct amount. To make the correction, the employer may file a Form W-2c reporting Social Security wages of $50,000 in the “previously reported” box and $45,000 in the “correct information” box. Alternatively, the employer may file a Form W-2c reporting Social Security wages of $30,000 in the “previously reported” box and $25,000 in the “correct information” box.

Further evidence that filing multiple Forms W-2 for the same employee is routine appears in the sick pay instructions in IRS Publication 15-A, Employers Supplemental Tax Guide. The employer reporting sick pay may either combine the wage payments and the sick pay into one Form W-2 or produce two separate forms, one for the regular pay and one for the sick pay.

Issues indirectly related to the Forms W-2 but requiring employer oversight include ensuring that wage bases, such as the maximum annual wages for Social Security and unemployment taxes, are not exceeded for any employees and that the Additional Medicare Tax is appropriately withheld. The employer must also monitor benefit limits such as 401(k) and flexible spending account limitations.

This column does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., or its owners.

Author Information
Patrick Haggerty is the owner of a tax practice in Chapel Hill, North Carolina, and an enrolled agent licensed to practice before the Internal Revenue Service. The author may be contacted at phaggerty@prodigy.net.

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