IRS Changes to W-2: What to Expect
Now that e-File is open, we know the 2015 tax filing season is well underway for you tax pros. By now, many of your clients should have received their W-2 form. If not, it should arrive any day now, as the deadline for employers to send W-2 forms to employees approaches next week.
The IRS has made some changes to Form W-2 and reporting requirements, so I wanted to review one of the key differences you can expect to see this year: Returned Wage Reports from the Social Security Administration.
Returned Wage Reports from the Social Security Administration (SSA): Effective January 2015, the SSA will return Form W-2 electronic and paper wage reports under the following conditions:
Medicare wages and tips are less than the sum of social security wages and social security tips.
Social Security tax is greater than zero; Social Security wages and social security tips are equal to zero.
Medicare tax is greater than zero; Medicare wages are equal to zero.
Additionally, Forms W-2 and W-2c electronic and paper wage reports for household employers will be returned under the following conditions:
The sum of Social Security wages and Social Security tips is less than the minimum yearly earnings subject to Social Security and Medicare tax withholding for a household employee.
The Medicare wages and tips are less than the minimum yearly earnings subject to Social Security and Medicare tax withholding for a household employee.
If the above conditions occur in an electronic wage report or a paper wage report, the SSA will notify the submitter by email or postal mail to correct the report and resubmit it to the SSA.
Medicare waiver payments. Notice 2014-7 provides that certain Medicare waiver payments are excludable from income for federal income tax purposes.
Virtual Currency. Notice 2014-21 describes the treatment of virtual currency for federal tax purposes. Bitcoin is an example of a virtual currency. The fair market value of virtual currency, such as Bitcoin, paid as wages is subject to federal income tax withholding, Federal Insurance Contributions Act (FICA) tax and must be reported on Form W-2, Wage and Tax Statement.
Third-party sick pay recap reporting. For wages paid in 2014, Form 8922, Third-Party Sick Pay Recap, will be used to report total third-party sick pay wages paid to employees when liability for the employer and employee portions of FICA taxes on the wages is split between the employer for whom services are normally rendered and the third-party payer. Form 8922 replaces the Third-Party Sick Pay Recap Form W-2 and the Third-Party Sick Pay Recap Form W-3.














