In order to streamline the process and for compliance purposes, agencies are no longer required to prepare Form W-2Cs. OSC will produce W-2Cs monthly based on Workers’ Compensation awards or agency request.
Form W-2C adjusts an employee’s wages reported for a previous calendar year. The correction is necessary because this adjustment took place after the employee’s original Form W-2 was issued. The adjustment may be a result of a Workers’ Compensation Award or other changes to reported data.
Wages paid under New York State Workers’ Compensation Law are exempt from Federal taxes in accordance with Internal Revenue Code Section 104(a) and Section 3121(a)(2).
Generally, when Workers’ Compensation benefits are awarded in the same year as the employee’s disability and this information is received by the Office of the State Comptroller during the calendar year-end processing, the non-taxable benefits will be reflected in the employee’s Form W-2. When benefits are awarded for a previous year or the information is received after the calendar year-end processing, a correction of the previously issued Form W-2 is required.
Employees who received a Workers’ Compensation award in a previous calendar year were allowed to use their C-8 form to amend their taxes. The IRS no longer allows employees to use this document when filing amended tax returns.
Other Reasons for W-2Cs:
- Adjustments to wages due to late reporting of fringe benefits, or errors to previously reported income and deductions.
- Report of Check Returned for Refund or Exchange (AC 230) processed after the close of the calendar year.
- Erroneous reporting of wages paid to full-time students and nonresident aliens as subject to employment taxes but should be exempt.
- Erroneous reporting of wages as exempt from employment taxes but should be subject to these taxes.
The Form W-2C may be used to submit an amended tax return to report decreased or increased taxable wages.