Did you know that employers can face penalties if they fail to provide W-2s to their employees or file them late? Ensuring workers (and the Social Security Administration) receive W-2s on time — and without errors — can go a long way toward avoiding unwanted attention from Uncle Sam. But what happens if something falls through the cracks? It’s important to understand the penalties when W-2s are completed incorrectly or filed after the deadline.
More from our experts
What you’ll learn
What you’ll learn
Fast facts about W-2 penalties
- Deadline for W-2: Employers must furnish W-2s to employees and the Social Security Administration by January 31 each year
- January 31 falls on a Sunday in 2027, so the filing deadline shifts to the next business day (Monday, February 1)
- Penalties start at $60 per form for incorrect or late W-2s
- Late filers may apply for an extension with Form 8809, but the IRS only approves an extension when you have extenuating circumstances, like a natural disaster, serious illness, fire, or data loss
- The penalties for intentionally disregarding filing requirements are $690 per W-2 for the 2026 tax year
In this business owner’s guide, we’ll cover the common reasons the IRS assesses fees, what the penalties are, and ways to avoid fees altogether.
Keep in mind
If you’re worried about a potential penalty, watch for a letter from the IRS, not a phone call. The IRS contacts employers about penalties by mail first. They won’t call, text, or email unless they’ve already sent written notices.
Scammers know issuing W-2s can be stressful for business owners and often pose as IRS agents demanding immediate payment. If you get an unexpected call from someone claiming to be the IRS, hang up and call the IRS directly at 1-800-829-4933 to verify.
What are the penalties for failure to file Form W-2?
Generally, the IRS assesses penalties when employers:
- Fail to send their employees a completed W-2 on or before the January 31 deadline
- Do not file a W-2 and W3 with the Social Security Administration by the annual January 31 deadline
To keep the facts straight, we asked Romeo Razi, a CPA, owner of TaxedRight, and former IRS revenue agent who has more than a dozen years of tax experience, to weigh in. “W-2 penalties are based on two things: (1) how many are late and (2) how late do you file them.”
Penalties are also likely should the IRS, or a company’s employees, receive a W-2 that contains errors or incorrect information. The IRS assesses fines per W-2, which means that if you have a large number of employees on your payroll, penalties can quickly add up. So, If you accidentally forget to file a W-2 by the January 31 deadline, Razi says the first step is to “file the missing W-2 immediately.”
Additionally, he says there will be more documents to double-check. “You need to file an amended Form W-3 (which is the total of all your W-2s), and possibly amended 941s (quarterly wage reports), since the numbers on all three forms should all match — to the penny.”
With that out of the way, let’s review the penalties for filing late.
Did you know?
Should January 31 fall on a holiday or weekend, employers would use the following business day as the deadline.
Penalty for employer not sending W-2: What happens when they are late or not sent?
Penalties range from $60 to $690 per form for the 2026 tax year and are usually based on when the correct Form W-2 is filed after the missed deadline. In other words, there are specific dates business owners must be aware of.
- If you miss the January 31 deadline but can still get forms filed within 30 days of the due date, penalties start at $60 per W-2
- The stakes rise as August 1 approaches. That’s because if you file 30 days after the January 31 deadline or before August 1, fees increase to $130 for each information return or payee statement.
- Should you file on or after August 1, fees start getting more serious and are $340 per W-2.
- Last but not least — literally — are the charges for intentional disregard, which is a fancy way of saying that filing is being ignored. At this point, fees are $690 per W-2 and there’s no maximum penalty.
This can be a lot of numbers to juggle, and tax penalties typically adjust due to inflation, so below is a table to get a better sense of how the penalties are scheduled to rise in the upcoming 2026 tax year.
| Filing timeframe | 2025 penalty (per W-2) | 2026 penalty (per W-2) | Small business maximum (2025 / 2026)* |
| 30 days late or less | $60 | $60 | $239,000 / $244,500 |
| 31 days late through August 1 | $130 | $130 | $683,000 / $698,500 |
| After August 1 (or not filed) | $330 | $340 | $1,366,000 / $1,397,000 |
| Intentional disregard | $660 (minimum) | $690 (minimum) | No maximum limit |
*The IRS considers you a small business if your average annual gross receipts for the three most recent tax years are $5 million or less.
We talked about the most common reasons why employers may face W-2-related penalties, so let’s talk a little about the other reasons why fees crop up.
Expert perspective on W-2 penalties
“The IRS collects most of their tax dollars through W-2s and payroll. To them payroll taxes and W-2s are the “sacred cow.” It is the one area of the tax code that they are the least forgiving about and hand out the most penalties. It pays to plan so you don’t get caught in the IRS line of fire by filing your W-2s late.”
— Romeo Razi, CPA and former IRS revenue agent
Other reasons for W-2 penalties
Beyond the most common reasons mentioned at the beginning of this article, there are other issues the IRS may flag after receiving files.
- In addition to adding the wrong information, there can be penalties if you forget to include all information
- Using paper forms when you’re required to e-file or file electronically
- Reporting an incorrect tax identification number (TIN)
- Forgetting to add the TIN altogether on a form
- Failing to file paper Forms W-2 that can be read by a machine
If you’re wondering if it’s possible to make amends after an oversight, sometimes there are exceptions. For example, can you demonstrate that the late filing was due to reasonable cause, rather than willfully ignoring the rules? (This would include events beyond your control.) Or can you show that you did everything possible and took action to meet the deadline? These are among the exceptions the government may consider.
In addition to filing with the federal government, some states require employers to file W-2s, and it’s a good idea to understand the rules (or potential late fees) that apply where you do business.
Do states impose separate penalties if employers don’t provide W-2s?
Yes. In addition to federal penalties, some states impose their own fines if employers fail to furnish W-2s to employees or file them with the appropriate state agency by the deadline.
For example:
- Georgia: Employers may face penalties ranging from $10 to $50 per W-2, depending on how late the forms are filed with the Georgia Department of Revenue.
- Kansas: An employer or payer that willfully fails to furnish an employee or payee with a Form W-2 by January 31 may be subject to a penalty of up to $100 per occurrence. Separately, failing to file the state copy of Form W-2 with the Kansas Department of Revenue by January 31 may result in a $50 penalty for each W-2 not submitted.
- Illinois: Fees start at $5 per late W-2 and it’s only acceptable to file electronically with the Illinois Department of Revenue.
Because state filing requirements and penalties vary, employers should review the rules in each state where they do business to ensure they remain compliant.
Next, let’s talk about how to avoid penalties altogether.
How to avoid penalties for not filing Form W-2 on time
There are various ways to avoid any punitive peril if you’re retaining payroll records. Employers should make sure they have the most accurate and most up-to-date information for each employee, including their:
- Name
- Social security number
- Address
“Before filing, verify that the wage and tax amounts on each W-2 match the amounts you’ve already reported to the IRS on your quarterly Form 941s. Discrepancies are a common penalty trigger.”
— Janet Berry-Johnson, CPA, CFEI, and OnPay contributor
A few other things to keep in mind:
- You may have to file electronically: If you issue 10 or more information returns per year, paper filing is not an option. You must file electronically.
- Act early if you think you might miss the deadline: You can request an extension using form 8809 (more on that below). But there’s no guarantee the IRS will approve it. If they turn you down, you’ll want time to file before penalties kick in.
- Issue a corrected W-2 if you catch errors after filing. File Form W-2C with the Social Security Administration and give your employee an updated copy as soon as possible. The longer you wait, the higher the potential penalty.
- A solid payroll process is your best defense. Payroll software makes filing W-2’s simpler, so there’s one less thing to worry about. It also helps to have a solid plan for running payroll and calculating payroll taxes. Whether you’re looking for a refresher or want to identify potential gaps in your process, our guide to payroll processing covers everything from start to finish.
Can I avoid penalties with a file extension?
Form 8809 (also known as the Application for Extension of Time to File Information Returns) is what you would use to request an extension for late filing. While you are able to request a file extension using this form, there’s no guarantee the IRS will grant it. Razi agrees that this is the step to take. “If you’re running behind running your W-2s, you can ask the IRS for an extension to file them late by using Form 8809,” he says. “However, you must have a special circumstance as to why you’re asking for an extension.”
While some data suggests that small business owners work twice as much as regular employees, unfortunately, having a lot on your plate is not on the list of reasons why someone may be able to file late. Again, we tapped Razi for his insights. “To qualify for a W-2 extension, there are some different circumstances that may apply.” While he says there’s no guarantees on extensions being granted, some criteria the IRS may consider for late filers include:
- The business suffering a catastrophic event
- It’s your first year in business
- There was a disaster that affected business operations
- There was a serious illness or death regarding the person who files the returns normally
If one of these issues applies, there’s a chance you may be eligible for an extension, but again you would need to complete Form 8809, and then the decision lies with the IRS.
Prevent penalties
To avoid penalties for entering incorrect information on a W-2 (or missing the deadline), basic organization and documentation can go a long way. Whether you are an employer that’s been in business for a couple of years (or just getting ready to open the doors), having a basic understanding of how penalties work and the ways to avoid them can help you prepare before tax time rolls around.
Also, keep in mind that most companies that provide small business payroll software make filing W-2’s a simpler process (so there’s one less thing to worry about).
Good luck as you grow your business and stay one step ahead of your tax paperwork!
This article is provided for informational purposes only and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors for formal consultation.
Take a tour to see how easy payroll can be.
Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.