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Year-end Tax Filing Reminders

Overview

Year-end tax filing involves multiple deadlines and compliance requirements that must be completed correctly. This checklist covers the key tasks you need to address before filing W-2s, Form 940, and state reconciliation forms. Review these reminders early to avoid last-minute issues with your year-end processing.

Allocated Tips

You should calculate the tips allocation before printing W-2 forms.

ProPay may facilitate the computation of the amount of allocated tips to each employee based on the hours worked method. According to the instructions with Form 8027, this method may be used for establishments with generally less than the equivalent of 25 full-time employees during a payroll period.

940 E-file

Form 940 online returns are calendar year ending, annual returns, having the same due date as a paper Form 940 (January 31 of the following year). If all taxes are paid timely, the due date is extended by ten days (February 10).

State W-2 Electronic Filing (EFW2)

A majority of the states now have an agreement with the federal government to exchange information, so in many cases you only need to file once. Check with your own state for specific requirements. If you need to file, most states accept the EFW2 format (formerly MMREF-1).

The RS record

The W-2 file created for SSA using the MMREF-1 file format contains the RS record.

The RS record contains state information and although it is ignored by SSA, it is used by many states since it contains state information such as:

  • Employee's wages subject to state withholding
  • State tax withheld for the year
  • Employer's state ID numbers

Form W-3

Form W-3 is not required if you file W-2s electronically.

ProPay generates Form W-3 automatically based on your Forms W-2.

For more information, see: https://www.irs.gov/pub/irs-pdf/iw2w3.pdf

Annual State Income Tax Reconciliation

ProPay provides a generic paper form for each state called XXST_W3.TAX (where XX = the name of the state).

Some states accept this form as a substitute form. If not, the state form must be filled out manually using the information provided in the generic form.

Some states may also accept the W-2 electronic file in lieu of the annual state income tax reconciliation form. Check with your state to be sure.

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