It is hard to believe that the new year is just a few weeks away! A crucial part of wrapping up the current year is to prepare your business for tax season. Many businesses try to gather all the information needed to file before the holidays and then come back to it when New Year’s rolls around.
If you think your business is ready for tax season, you may be in for a surprise.
The IRS makes annual updates to many of the common tax forms that business owners must file. One of these forms is the W-2, there are a few minor updates that employers must be aware of for the 2022 tax year.
As you may know, Form W2 is one of the crucial IRS information return statements used to report annual wages and tax withheld from the employee’s paycheck during the year.
As a business owner, it is essential for you to adjust to these changes in order to maintain IRS compliance. Here in this blog, we have listed the latest IRS changes to Form W-2 for the tax year 2022. Without wasting time, let’s delve in.
Form W-2 Penalty Changes
As part of the annual inflation adjustment, the IRS has increased the penalty rates for W2 Form. The updated penalty charges below will apply to forms that are filed to the IRS after December 2022.
Duration of delay
For Tax year 2021
For Tax Year 2022
Filed within 30 days from the deadline.
Minimum: $50/form Maximum: $556,500 per year ($194,500 for small businesses).
Minimum: $50/form Maximum: $588,500 per year ($206,000 for small businesses).
Filed after 30 days from the deadline and within August 1st.
Minimum: $110/form Maximum: $1,669,500 per year ($556,500 for small businesses).
Minimum: $110/form Maximum: $1,766,000 per year ($588,500 for small businesses).
Filed after 30 August 1st.
Minimum: $280/form Maximum: $3,339,000 per year ($1,113,000 for small businesses).
Minimum: $290/form Maximum: $3,339,000 per year ($1,113,000 for small businesses).
Minimum: $570/form Maximum: No limits
Minimum: $580/form Maximum: No limits
Updates to the Form W-2 Employer section
The social security wage limits have increased from $142,800 to $147,000 for the 2022 tax year. This means the total of box 3 (Social Security wages) and box 7 (Social Security tips) should not exceed the SSA limit of $147,000.
However, the social security wage base has not been increased for household workers. The wage limit remains the same.
Box 4: Social security tax withheld limit has also increased from $8,853.60 ($142,800 x 0.062) to $9,114.00 ($147,000 × 6.2%).
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