The importance of reviewing W-2 forms and completing them correctly for each employee cannot be overestimated. A simple mistake can cause multiple problems for your employees, including an unexpected IRS wage garnishment. In addition, it can be difficult, time-consuming, and costly to correct W-2 mistakes once they have been transmitted to the proper authority, so great care should be used in completing the forms correctly. Some of the most common errors include:

1. Using a downloaded form. Copy A of the W-2 uses a shade of red ink that cannot be dup licated by printing it on your home or office printer. Office supply stores, the IRS, and certain software companies carry the correct forms. Contact one of these three types of providers for the right W-2 forms.

2. Using the form for the current year, not the taxable year for the income. Wages earned in 2013 must be printed on a 2013 W-2 form, not 2014. Using the wrong year can result in an employee’s income being reported as twice the actual income, and usually results in an IRS wage garnishment. Garnishment can negatively affect credit, car loan approvals, and the ability to open a bank account. Be aware that garnishments by the IRS do not require a court order, and sometimes the employee is unaware of W-2 mistakes until the garnishment has taken place. The three conditions under which the IRS may garnish wages include:

* Tax assessment and written Notice and Demand for Payment
* Refusal of taxpayer to pay the tax within the deadline
* 30 days before garnishment, the IRS must send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing

3. Over-reporting Social Security wages, and continuing to withhold Social Security taxes beyond the maximum taxable wages. When this occurs, the employee must be paid back; Form 941 and the W-2 must be corrected; and the quarterly wage and tax report must be corrected.

4. Submitting W-2 forms to the IRS, instead of the Social Security Administration. Transmittal form W-3 should be sent to the IRS by the end of February, which contains all W-2 information. Prior to this, all employees should be given Social Security forms, which must be filed at the same time the W-3 transmittal form is sent.

5. Failure to complete the W-2 form information correctly, such as not including the decimal and cents; not using black ink; using a font that is too small or too large (12 pt. Courier is recommended); and formatting the employee’s name incorrectly (first name and middle initial should be in the first box, the second box should contain the employee’s last name, and suffixes go in the third box). Other forbidden practices include erasing, crossing out, or whiting out errors. If a mistake is made, an X should be placed in the void box and the next Form W-2 should be completed with no errors. Writing “corrected” on Form W-2 is not acceptable. Do not type “0” if a box doesn’t apply; instead, leave it blank.

These are the five most common mistakes made when employers complete W-2 forms. Avoid unpleasant surprises, panicked employees, and costly corrections by completing W-2 forms correctly. Your employees and bank account will appreciate the extra effort it takes to ensure the job is done right.