W-2/1094/1095 Corrections

Correcting a W-2 after filing requires submitting a Form W-2c (Corrected Wage and Tax Statement) to both the IRS and the affected employee. The W-2c shows the previously reported incorrect amounts in the 'Previously reported' column and the correct amounts in the 'Correct information' column. Employers file W-2c forms along with Form W-3c (Transmittal of Corrected Wage and Tax Statements), which summarizes the corrections. The W-2c must be furnished to the employee promptly so they can file or amend their personal income tax return if necessary. If the corrections affect Social Security or Medicare wages, the employer may also need to file Form 941-X to adjust previously reported FICA taxes. Corrections discovered after the original deadline should be filed as soon as possible—the IRS assesses penalties for incorrect information returns, but the penalty amount is lower for corrections filed within 30 days of the due date than for those filed later. Aurora Training Advantage's Accounting webinars cover W-2 correction procedures and payroll compliance in detail.

A corrected Form 1095-C is required when errors are discovered in the original ACA health coverage information return filed with the IRS and provided to employees. Common errors include incorrect employee Social Security numbers, wrong coverage offer codes in Part II, incorrect employee share of premium amounts, or missing covered individual information. To file a correction, reissue the Form 1095-C with the 'CORRECTED' checkbox marked at the top of the form and submit it with a new Form 1094-C transmittal—checking the 'Authoritative Transmittal' box if applicable. The corrected forms must be provided to affected employees and filed with the IRS. If the original filing was electronic, corrections must also be filed electronically if the volume requires it (250 or more forms). Corrections to 1095-C forms should be made promptly to avoid IRS notices and potential penalties. The penalty structure is tiered based on how quickly the correction is filed after the due date. Aurora Training Advantage's Accounting webinar series covers ACA reporting corrections and compliance for payroll and benefits administrators.

The IRS imposes penalties on employers for filing incorrect or incomplete W-2 forms, with the amount determined by how quickly the error is corrected after the original due date. For the current penalty structure, the tiered amounts are: $60 per form for corrections filed within 30 days of the due date; $130 per form for corrections filed between 31 days and August 1; and $330 per form for corrections filed after August 1 or not filed at all. Intentional disregard of the filing requirement carries a minimum penalty of $660 per form with no cap. Separate penalty tiers apply to the employee copies and IRS copies. The aggregate annual penalty caps vary based on employer size—small businesses (average annual gross receipts of $5 million or less for the prior three years) have lower maximum penalties. Penalties can be waived if the employer demonstrates reasonable cause and not willful neglect. Maintaining accurate payroll records and reconciling W-2 data before filing significantly reduces correction risk. Aurora Training Advantage's Accounting webinars help payroll teams minimize W-2 errors and understand their compliance obligations.

Form 1094-C is the transmittal form that employers file with the IRS to accompany their Form 1095-C submissions for ACA employer mandate reporting. It summarizes aggregate employer information, including the total number of 1095-C forms filed, the employer's ALE (Applicable Large Employer) status, and month-by-month information about minimum essential coverage offers. When filing corrected 1095-C forms, a new Form 1094-C must accompany the correction batch. If the 1094-C itself contains errors—such as incorrect ALE member information or wrong monthly minimum essential coverage indicator codes—it must also be corrected by filing a new 1094-C marked as the Authoritative Transmittal with corrected information. For ALE groups with multiple entities, only one 1094-C per ALE member may be designated as the Authoritative Transmittal, and it must reflect complete and accurate aggregate group information. Understanding the relationship between 1094-C and 1095-C is essential for avoiding compounding errors during ACA correction filings. Aurora Training Advantage's Accounting webinar programs provide comprehensive ACA reporting guidance for benefits and payroll administrators.

Several recurring errors drive the majority of W-2 and 1095-C corrections filed each year. For W-2s, the most common issues include incorrect or transposed Social Security numbers; misclassified wages (taxable fringe benefits omitted from Box 1); incorrect Box 12 codes for items like HSA contributions, group term life insurance, or employer health coverage costs; state tax withholding reported in the wrong state; and year-end reconciliation failures where payroll totals do not match deposited tax amounts. For 1095-C, frequent errors include using the wrong Line 14 offer of coverage code, incorrect Line 15 employee required contribution amounts (especially for plans with variable premiums), missing covered individual information for self-insured plans, and wrong safe harbor codes on Line 16. Many of these errors originate from payroll system configuration issues, mid-year benefit changes not captured in real time, or insufficient year-end review processes. Implementing a systematic pre-filing reconciliation checklist significantly reduces correction volume. Aurora Training Advantage's Accounting webinar series provides practical guidance for preventing and correcting W-2 and ACA reporting errors.