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New Form W-2 Deadline and Household Employee Requirements

Posted by Allison Chase on November 30, 2016

Today’s guest post comes from Robert Traester, Senior Accountant at WithumSmith+Brown.

As we head toward the close of another calendar year employers should be aware that as a result of the “Protecting Americans from Tax Hikes (PATH) Act of 2015”, the filing deadline for 2016 Form W-2s has been moved up to January 31, 2017. The January 31st deadline is applicable to both providing employees with their Form W-2 copies and also submitting the respective forms to the Social Security Administration (SSA).

In addition to being prepared for the shorter deadline, individuals should be aware of some conditions that may require a W-2 to be issued for certain household employees.

For 2016 if you pay cash wages of $2,000 or more during the year to any employee or $1,000 in any calendar quarter to an employee, a Form W-2 will generally be required to be issued on behalf of that employee. In addition to providing the employee with a Form W-2, the employer may be required to file Schedule H on their own individual income tax return and register and pay federal and state unemployment taxes.

Individuals are commonly unaware of these requirements when paying someone such as a babysitter or home-aid and may neglect their reporting requirements. It is important to be aware of these thresholds as we head into the end of the calendar year so that proper reporting can be done on a timely basis and penalties can be avoided.

There are also certain exceptions from W-2 filing, such as for cash wages paid to family members that meet certain criteria, and it can be complicated determining who should be classified as an “employee”. Additionally, unemployment taxes can require some extensive research depending on your state requirements. It is encouraged that anyone who is unsure of their reporting requirements speak to a payroll or tax professional to ensure they are in proper compliance.