January is often the most stressful month for HR managers and business owners. Between managing daily operations and closing out the fiscal year, the looming January 31 deadline for W-2s can feel like a ticking clock. You want to ensure your team gets their documents on time, but navigating the shifting landscape of IRS regulations—especially with new mandates on how to send W-2s electronically—can feel like trying to hit a moving target.
At Lift HCM, we’ve guided hundreds of businesses through the transition from manual, paper-heavy processes to streamlined, compliant digital systems. We understand the fear of missing a small detail that leads to a large IRS penalty. This article provides a comprehensive breakdown of the 2025 electronic filing thresholds, employee consent laws, and data security requirements. You will walk away with a clear roadmap to handle your year-end reporting confidently and compliantly.
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Before diving into electronic filing specifics, let's cover the fundamentals. Form W-2, officially called the "Wage and Tax Statement," reports the wages you paid to each employee and the taxes you withheld from their paychecks during the tax year.
You must provide a W-2 to any employee who earned at least $600 in total compensation during the year, including non-cash benefits. This means if you paid someone $500 in wages plus $100 in benefits, they still need a W-2. The form reports crucial information including total wages, federal and state taxes withheld, Social Security and Medicare taxes, and various benefits like health insurance coverage.
The key deadline to remember: January 31st. You must both furnish W-2s to your employees AND file copies with the Social Security Administration (SSA) by this date. If January 31 falls on a weekend or holiday, the deadline extends to the next business day.
Don't forget that you may also have state and local filing obligations if you withheld those taxes, and deadlines can vary by location.
The short answer is yes – W-2s can absolutely be filed and furnished electronically. In fact, depending on your situation, electronic filing might not just be allowed, it might be required.
Here's what you need to know: if you're filing 10 or more total information returns (which includes W-2s, 1099s, and other tax forms), you must file electronically with the IRS unless you receive a special hardship waiver. This is a significant change from the previous threshold of 250 forms per type.
However, there's an important distinction between filing requirements and delivery methods. While the IRS might require you to file electronically, you still need employee consent before delivering W-2s to them online instead of by mail. If employees don't consent to electronic delivery, you'll still need to provide paper copies even if you're required to file electronically with the government.
📌 One critical rule: W-2s cannot be sent as email attachments due to security risks. Instead, you can email secure portal links where employees can access their forms.
The electronic filing landscape changed significantly when the IRS implemented new regulations under the Taxpayer First Act. For years, many small businesses relied on the "250-form rule," which meant you only had to file electronically if you had 250 or more of a specific form. However, the IRS has significantly tightened these requirements.
As of 2025, the threshold has dropped to just 10 forms. What makes this rule particularly tricky is the "aggregation" requirement. You don't just count W-2s; you must total nearly all information returns you file. This includes:
According to the IRS, if the sum of these forms equals 10 or more, you must file electronically. This requirement applies to the combined total across all information return types, not per individual form type.
If you need to file electronically, you'll use either the IRS Filing Information Returns Electronically (FIRE) system or approved third-party software that meets IRS specifications. For W-2s specifically, you'll file with the Social Security Administration (SSA) electronically through their Business Services Online portal.
Failing to file electronically when required can result in the IRS rejecting your paper filings, which effectively means they count as "not filed," leading to steep penalties. It can take up to 45 days to obtain a Transmitter Control Code (TCC) from the IRS, so plan ahead if you're filing electronically for the first time.
Before you can file electronically, make sure you have all the required information organized and accurate. Missing or incorrect data can cause processing delays and potential penalties.
Employer Information:
Employee Details:
Financial Information:
The most critical step is validating all this data before submission. Double-check Social Security Numbers against employee records, verify wage amounts match your payroll records, and ensure all withholding amounts are accurate. Errors can trigger IRS notices and delay processing.
|
Data Point |
Verification Step |
|
SSN |
Cross-check with the employee’s original W-4 or SSA verification. |
|
Address |
Confirm the current mailing address (even for electronic delivery). |
|
Tax IDs |
Ensure state-specific tax ID numbers are included for state filings. |
|
Benefits |
Verify that non-cash compensation (like company cars) is included. |
If you want to deliver W-2s to employees electronically (rather than mailing paper copies), you must follow specific consent and disclosure rules.
You cannot simply decide to go paperless – you need each employee's explicit consent before delivering their W-2 electronically. This consent must demonstrate that the employee can access the electronic format you plan to use.
The consent must be provided electronically, confirming that the employee can access the format in which the W-2 will be furnished. If you make material changes to the hardware or software requirements for accessing W-2s online, you need new consent from affected employees. For example, if you switch from a simple web portal to a mobile app that requires specific device capabilities, that would trigger a new consent requirement.
Employees always retain the right to withdraw their consent and request paper copies instead. When they do, you must provide paper W-2s going forward. Keep in mind that withdrawn consent doesn't apply to previously issued W-2 forms.
Before obtaining consent, you must provide employees with specific disclosures explaining their options and rights:
At Lift HCM, we handle all consent management and disclosure requirements automatically through our secure software, ensuring you stay compliant without manual tracking.
Draft Disclosure:
Consent for Electronic W-2 Statement
By clicking "I Accept," you agree to receive your Form W-2 electronically instead of via mail.
- Paper Option: You have the right to receive a paper W-2; if you do not consent, one will be mailed to your address on file.
- Scope: This consent applies to all W-2s provided by [Company Name] until consent is withdrawn.
- Withdrawal: You may withdraw this consent at any time by [emailing HR / updating your portal settings].
- Hardware/Software: To access your form, you will need a device with internet access and a PDF viewer.
- Termination: If your employment ends, you will [retain access to the portal for X days / receive a paper copy via mail].
Moving to a digital-first model isn't just about avoiding penalties; it’s about modernizing your operations.
The advantages of electronic consent for Year-end forms are:
For Employers:
Eliminate printing, paper, and postage expenses Reduce manual handling that often leads to errors Better integration with payroll software Immediate confirmation of successful transmission Easier to track when employees access their forms Faster processing times with the SSA and IRS
For Employees:
Immediate access on January 31st (no waiting for mail) Convenient for remote workers or those who recently moved Reduced risk of mail theft or identity fraud Easy integration with tax preparation software – many tax programs allow direct download Access to historical forms in one secure location Ability to download and print multiple copies as needed Quick access to salary information for other purposes like loan applications or student aid.
The security benefits are substantial for both parties. Mailed W-2s can be stolen from mailboxes or lost in transit, potentially exposing employees to identity theft. Electronic delivery through secure portals with password protection and encryption significantly reduces these risks.
The IRS takes W-2 compliance seriously. These penalties apply per form, which means even a small business can rack up thousands of dollars in fines for a single late filing season.
Current Penalty Rates for 2025:
These penalties apply to each individual form, so if you have 20 employees and file everything 45 days late, you're looking at $2,600 in penalties ($130 x 20 forms).
For small businesses with average annual gross receipts of $5 million or less over the past three years, there are lower maximum annual penalty caps:
However, the per-form amounts remain the same regardless of business size.
The best defense against penalties is preparation and electronic filing. Electronic systems help reduce errors through built-in validation checks, and they provide confirmation of successful submission, giving you proof that you met the deadline.
Managing the transition to send W-2s electronically can be overwhelming. A professional HCM provider like Lift HCM acts as your compliance shield by managing the entire lifecycle of the document:
By leveraging a provider, you shift the technical burden onto experts. This allows your HR leaders to spend January focusing on talent strategy rather than data entry.
Q: When are W-2s available online? A: W-2s are available online as soon as your payroll provider or employer posts them to the secure portal. By law, employers must furnish W-2s no later than January 31, but many make them accessible earlier once year-end payroll is finalized.
Q: Do I have to file W-2s electronically? A: If you file 10 or more information returns combined (W-2s, 1099s, etc.), you must file electronically. If you file fewer than 10, it is optional but highly recommended.
Q: Can I email W-2 forms to employees? A: No. You cannot send W-2s as email attachments. You must provide a secure link to a password-protected portal.
Q: What if an employee doesn't consent to electronic delivery? A: You must provide them with a paper W-2 by January 31st. Employee consent is required for delivery, even if you are mandated to file electronically with the IRS.
Q: How long must W-2s remain accessible online? A: They must be available to employees from January 31st through at least October 15th of that year.
Q: What happens if my electronic filing is rejected? A: The SSA or IRS will notify you of errors. You must correct the issues and resubmit. Partnering with a provider like Lift HCM helps minimize these rejections through pre-submission validation.
Q: Do federal employees who receive W-2s also need to provide consent for electronic delivery?
A: Yes, the same consent requirements apply to all employees, including federal workers.
Providing clarity on how to send W-2s electronically is the first step toward a stress-free tax season. By understanding the 10-form threshold and securing proper employee consent, you can move your business into a more secure, digital future.
Remember, the pain of manual year-end reporting—the paper jams, the postage costs, and the fear of IRS penalties—is a hurdle you don't have to face alone.
To ensure you are ready for the 2025 deadline, we recommend auditing your current employee and contractor list today. If you're nearing that 10-form threshold, it's time to move to a digital-first approach.
At Lift HCM, we want to take the "tax-season weight" off your shoulders. We provide the secure portals, manage the employee consents, and handle the electronic filing for you. Whether you’re a local restaurant or a growing service company, we ensure your payroll is a source of stability, not stress.