CPP Year-End Reporting & W-2 Processing 2 — Questions and Answers
Question 1: What form is used to correct errors on a previously issued W-2?
- Form W-2R
- Form W-2c (Correct answer)
- Form W-3c
- Form 941-X
Correct answer: Form W-2c
Form W-2c (Corrected Wage and Tax Statements) is used to correct errors on previously issued W-2 forms and is accompanied by Form W-3c when filed with the SSA.
Question 2: What Box 12 code on Form W-2 reports the cost of employer-sponsored health coverage under the ACA?
- Code W
- Code DD (Correct answer)
- Code FF
- Code CC
Correct answer: Code DD
Code DD in Box 12 reports the aggregate cost of employer-sponsored health coverage as required for informational purposes under the Affordable Care Act.
Question 3: Starting with tax year 2023, at what threshold are employers required to file W-2 forms electronically with the SSA?
- 250 or more forms
- 100 or more forms
- 10 or more forms (Correct answer)
- 50 or more forms
Correct answer: 10 or more forms
The Taxpayer First Act lowered the mandatory e-file threshold to 10 or more aggregate information returns, effective for returns filed after December 31, 2023.
Question 4: How long must an employer retain an undeliverable W-2 form that is returned by the postal service?
- 1 year
- 2 years
- 4 years (Correct answer)
- 7 years
Correct answer: 4 years
If a W-2 is returned as undeliverable, the employer must retain it for 4 years as part of its payroll records.
Question 5: What Box 12 code reports designated Roth contributions to a 401(k) plan?
- Code D
- Code BB
- Code AA (Correct answer)
- Code EE
Correct answer: Code AA
Code AA in Box 12 reports designated Roth contributions made to a 401(k) plan, which are after-tax deferrals to a Roth account within the plan.
Question 6: What type of information is reported in Box 14 of Form W-2?
- State income tax withheld
- Other employer-discretionary information (Correct answer)
- Local income tax withheld
- Federal income tax withheld
Correct answer: Other employer-discretionary information
Box 14 is a catch-all box where employers may report other information such as state disability insurance premiums, union dues, or after-tax health insurance contributions.
Question 7: Which IRS form is used to report non-employee compensation of $600 or more paid to independent contractors?
- Form 1099-MISC
- Form 1099-NEC (Correct answer)
- Form 1099-K
- Form W-2G
Correct answer: Form 1099-NEC
Form 1099-NEC (Nonemployee Compensation) was reinstated in 2020 to separately report payments of $600 or more made to independent contractors and other non-employees.
CPP Year-End Reporting & W-2 Processing 2
What form is used to correct errors on a previously issued W-2?