Workforce.com

Avoid the Most Common Wage Reporting Errors

September 30, 1999
Issue: You want to make sure that your company correctly reports its employees’ Form W-2, Wage and Tax Statement information, because this information directly affects the eligibility for and amount of any Social Security and Medicare benefits payable to employees and their families. Accurate wage reporting saves employers from the productivity loss and administrative problems associated with correcting errors on W-2 Forms. What can you do to alleviate any errors in reporting your employees’ wages?

Answer: One place to start would be the Social Security Administration’s (SSA) manual entitled "Software Specifications and Edits for Annual Wage Reporting -Tax Year 1999." The recently updated publication compiles software standards, specifications, and edits for use by employers and developers of wage reporting software. Also included are employer checklists for use in preparing wage reports and examples for preparing paper forms.

Most Common Wage Reporting Errors

According to the SSA, the most common wage reporting errors that occur are:

  • Omitting or using an invalid Social Security Number (SSN) or Employer Identification Number (EIN);
  • Omitting or using an inaccurate employee name that does not agree with the name on the employee's Social Security card;
  • Failing to submit wage reports to the SSA for a variety of reasons, including going out of business, treating an employee as an independent contractor, failure to report household work, and failure to report wages under $600;
  • Submitting a Form W-2 instead of a Form W-2c, Statement of Corrected Income and Tax Amounts, to correct previously reported wage data;
  • Submitting Forms W-2 with the incorrect tax year, without an accompanying Form W-3, or on nonstandard forms;
  • Submitting reports to an incorrect address;
  • Preparing paper W-2 forms that are not machine readable by SSA's scanning and imaging equipment; and
  • Creating out-of-balance conditions between Form W-2 amounts and either Form W-3 summary totals or the sum of the four quarterly Form 941 reports.

Source: CCH Incorporated is a leading provider of information and software for human resources, legal, accounting, health care and small business professionals. CCH offers human resource management, payroll, employment, benefits, and worker safety products and publications in print, CD, online and via the Internet. For more information and other updates on the latest HR news, check our Web site at http://hr.cch.com.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.