Let’s be honest, no one loves paying taxes or filing them either. However, filing and paying taxes is something you have to do to be on the right side of the law. Missing the W-2 deadline is one thing, but failing to pay your taxes is entirely out of the question.
If you’re like most people, you’ve probably contemplated missing the W2 deadline. The 2020 W-2 submission deadline was 31st January for both employers and employees, and lots of people probably missed it.
If you miss the deadline, don’t fret, about 7 million people fail to file their taxes each year. However, the question still remains, is there something like a penalty or fine for failing to file taxes on time? While the IRS clearly stipulates the W-2 submission deadline, it doesn’t elaborate on what happens should you miss the deadline.
Read on and find out about the repercussions of missing the W-2 submission deadline, if any. That way, you can plan your next move if you missed the deadline.
The W-2 Deadlines
If you’re an employer, your employees must have copies of their W-2s by the 31st of January. Not to mean that you should send them on January the 31st. They should be in your employees’ mail by the said date.
If, for whatever reasons, you are unable to furnish them with these documents on time, then send an extension request in writing to the IRS. The letter should clearly explain the reasons as to why you’re unable to send out the W-2s on time. It’s up to the IRS to decide whether they should grant you a submission extension.
If you are eligible for electronic tax-filing, then you should submit your W-2s before the 2nd of April.
What Happens if You Miss the W2 Deadline?
Before we get into what happens when you miss the filing deadline, we must first establish that you can’t face any jail time for failing to file taxes on time. That’s because most people don’t intentionally miss the deadline or fail to file their taxes. Most cases are just honest mistakes or because of unavoidable circumstances.
However, if you do it intentionally or fraudulently, then there’s a high chance you’ll get up to five years in prison.
So what happens if you fail to file your W-2 on time?
You May Face a Financial Penalty
A financial penalty is just a fancy term for a fine. Plus, the term highly exaggerates the fine amount. You may have to pay $50 for every W-2 you file within 30 days past the deadline. The more employees you have, the more the fine you have to pay.
However, the fine should never exceed $536,000 a year or $187,500 if you’re a small business. The fine increases to $100 if you file it past the 30 days but before the 1st of August. The maximum fine also increases to $1,106,000 for ordinary businesses and $536,000 for small ones.
Filing Taxes Past the 1st of August
You’re just pushing it if you fail to file your taxes before 1st August. The IRS won’t take it too kindly if you do so, and you have to pay a $260 penalty for the lateness. The maximum fine becomes $1,073,000 for small businesses and $3,218,500 for more established businesses.
Does Filing Incorrectly Count as Late Filing?
Filing with incorrect information doesn’t count as a late filing, even if you have to do it all over again. You may, however, get penalized for filing your W-2 incorrectly. The penalty also applies if you file an incomplete form or file the wrong form.
Also, remember you have to file your W-2s electronically if you’re filing 250 or more files. The only exception is if you can sufficiently demonstrate that circumstances preclude you from submitting the W-2s electronically.
What If You Notice the Mistakes Too Late?
The IRS is somewhat lenient on W-2 errors because everyone makes mistakes once in a while. However, you have to notice you made the mistakes early enough before they penalize you.
If you find out you made a mistake when filing your W-2, then notify the IRS via writing as soon as you can. You then have to submit a new form after making all the necessary corrections.
In the unlikely event that your business closes before the financial year terminates, you still have to furnish your employees with W-2s. It’s still your onus to file the W-2s on time and correctly. You’ll have to wait until next year to forget about filing W-2s.
You could always use a paystub maker when filing your W-2s to make things easier. It also helps you avoid making costly mistakes while filling in your W-2s.
What If You Have a Refund that Nullifies the Taxes?
Do you still have to file W-2s if the IRS owes you? This usually happens when employers over withhold employee taxes. As such, employees are due to a refund from the IRS.
The simple answer is yes; you still have to file a W-2. That’s because the IRS will most likely withhold your refund until you file your W-2. Alternatively, the IRS can send you your tax refunds without filing your W-2, but don’t count on it.
What If I Don’t File My W-2s?
You can always choose not to file your tax returns ultimately. Of course, this never ends well for you. When it comes to late filing, the more you delay, the worse it becomes for you.
If you don’t file your W-2s, it’s you that stands to lose the most and not the IRS. Don’t think for a second that the IRS won’t know you didn’t file your returns. Thanks to advanced technology, the IRS will pick you out for failing to file taxes in a split second.
Do Your Best to File Your W-2s on Time
So, yes, there’s a penalty for missing the w2 deadline, not very steep, but a penalty still. To be in the taxman’s good books, just file your W-2s on time. Remember, you can always get help if you think you won’t be able to file your taxes on time.
Lastly, don’t even think about not filing your taxes because the IRS will still catch up with you.
For more informative reads, be sure to check out the other articles on the site.
