What Are the W-2 E-File Requirements?

Form W-2 is the document employers use to report an employee’s annual wages and withheld taxes to the Social Security Administration (SSA), which then shares the data with the Internal Revenue Service (IRS). While employers could historically submit paper forms, recent changes mandate electronic filing (e-filing) for most businesses. E-filing is the process of transmitting this wage and tax data directly to the SSA through a secure online portal.

Determining Your Federal E-Filing Obligation

A change in regulations requires more employers to e-file. The factor determining your e-filing obligation is the total number of information returns your business files in a calendar year. If an employer files 10 or more information returns in aggregate, they must e-file them. This 10-form threshold is a reduction from the previous 250-form limit per form type.

The 10-form count is an aggregate of many different types of information returns, including:

• Forms W-2
• The Form 1099 series (e.g., 1099-NEC, 1099-MISC)
• The Form 1098 series
• Forms 3921, 3922, and 5498

Corrected returns, such as a Form W-2c, do not count toward this threshold. However, the Social Security Administration requires employers to e-file Forms W-2c if they expect to file 10 or more of them during the year.

To illustrate, a business with seven employees (issuing seven Forms W-2) and four independent contractors (issuing four Forms 1099-NEC) would have a total of 11 information returns. Because this total exceeds the 10-form threshold, the employer is required to e-file all of them. The deadline for e-filing Forms W-2 with the SSA and furnishing copies to employees is January 31 each year.

Information and Tools for E-Filing

Before e-filing, employers must gather specific information. This includes the company’s Employer Identification Number (EIN), legal name, and address. For each employee, you will need their full legal name, address, Social Security Number (SSN), and the detailed wage and tax withholding figures for their Form W-2.

The primary platform for submitting this information is the SSA’s Business Services Online (BSO) portal, a free service for employers. First-time users must complete a one-time registration process. This involves creating an account with a credential service provider, like Login.gov or ID.me, and then linking it to the BSO system.

Registration requires providing personal and business information for verification. After the initial online setup, the SSA will mail a physical activation code to the employer’s address on record. This final step is needed to gain full access to BSO’s wage reporting services, so you should begin this process well in advance of the filing deadline. As an alternative, many businesses use approved third-party payroll software that can integrate directly to submit the required files.

The E-Filing Process with the SSA

After logging into the BSO portal, you will navigate to the section for reporting wages. The system provides two distinct methods for submitting Form W-2 information, and the choice depends on the number of employees you have.

For businesses with a smaller number of employees, the “W-2 Online” service is a direct approach. This tool allows for manual data entry, where you key in the information for each employee’s W-2 directly into an online form. The BSO system permits the creation of up to 50 Forms W-2 using this method.

For employers with a larger workforce, uploading a formatted file is more efficient. This requires creating a file that adheres to the SSA’s specific EFW2 format specifications. Before uploading, you can use the SSA’s AccuWage Online tool to check your file for common formatting errors, which helps prevent rejections. After submitting the file, the BSO portal will provide a confirmation number, and you can log in later to check the status of your submission.

State-Specific E-Filing Mandates

Meeting the federal requirement to e-file Forms W-2 with the Social Security Administration does not automatically fulfill your state-level reporting duties. States have their own, separate wage and tax reporting requirements. Employers must ensure they comply with the rules for each state in which they have employees.

Most states that have an income tax also mandate the electronic filing of wage and tax information. These state-level e-filing thresholds can be different from, and are often lower than, the federal 10-form aggregate rule. For instance, some states require an employer to e-file even if they only have one employee. Employers must consult the department of revenue for the specific states where they operate to understand the exact e-filing thresholds, deadlines, and file format requirements.

Penalties for Non-Compliance

The IRS, not the SSA, is responsible for penalizing employers who fail to adhere to e-filing requirements. Failing to file electronically when required is treated as a failure to file a correct information return. The penalty structure is tiered, meaning the amount charged per form increases the longer the failure persists after the filing deadline.

For returns due in 2025, the tiered penalty structure is as follows:

• $60 per form if filed correctly within 30 days of the deadline.
• $130 per form if filed more than 30 days late but before August 1.
• $330 per form if filed after August 1 or not at all.
• At least $660 per form, with no maximum, if the failure is due to intentional disregard.

An employer may be able to get a penalty waiver if they can demonstrate “reasonable cause.” This involves showing that the failure was due to circumstances beyond the employer’s control, such as a natural disaster that affected business operations or the first year of the business’s establishment. Proving reasonable cause requires providing sufficient documentation to the IRS.