Prior Year Adjustments and W-2Cs

What is a W-2C?

The short answer: A W-2C is a corrected version of the W-2 form. As simple as that! (not really…)

Most employees will never see a W-2C, but they are needed occasionally. Let’s explore when they are needed, the information you enter in UKG Pro that will trigger a W-2C, what you need to successfully complete any prior year adjustments, and how to report those changes.

What does a W-2C look like?

Since the purpose of a W-2C form is to correct the information on the W-2 form, other than the employee’s identifying information, the only data on the form will be that which is corrected. For example, if you correct an employee’s State Taxable earnings, the form will show the “old” data and the corrected information for State Taxable earnings, but no other data will be there.

What triggers a W-2C?

There are four types of changes that you can make to an employee record in UKG Pro that will trigger a W-2C:

  • Name changes, even something as simple as adding a middle initial.
  • Address changes, whether or not the change impacts the employee’s taxable wages.
  • SSN corrections
  • Changes to YTD taxable wages or taxes withheld

As a Payroll Manager, what kind of issues should I be preparing for?

By now, all your employees should have their W-2 forms. Between now and April 17, you will receive phone calls from employees who want changes made to their W-2s. Not every request should be made, or will trigger a W-2C, but the most common ones that will require some action on your part are:

  • The employee moved mid-year, but taxes were not adjusted.
  • State or local taxes were not withheld in error, either because the location is set up incorrectly, or the employee was marked “exempt” or “block” in error.
  • You’ve already made Prior Year adjustments, but they were made after the W-2s were printed.

What do I need to get started with this process?

  • All the changes you need for your entire organization. You don’t want to make these changes in small batches. We recommend holding all requested changes until late March to be sure that most, if not all, changes can be made at once.
  • Do not try to squeeze these fixes into spare moments through a busy week. Block the time on your calendar to dedicate solely to making these changes.
  • For each problem: the date the problem started (for example, the first pay date in the new location), and if it was fixed, the date it was fixed.
  • Reports, which you will run before you make any changes, and again after you have finished.
    • Examples include:
      • Tax Liability Grand Total – You want this for the entire prior year, and for the 4th quarter of the prior year (this is where all changes will post).
      • Wage Detail and W-2 Detail for each employee for the full year.
  • Summary Payroll Register for the period needing the corrections.
  • Most important, a communication plan. Employees should know that a W-2C is coming their way. They should know when the form is expected, and should know what it covers so they can plan accordingly.

So, what’s the actual process I need to follow?

  1. First, reverse all the impacted checks. To simplify – if there is one check in the middle of the pile that isn’t impacted, reverse that one too. Reversals and adjustments made to the Prior Year will always post to a system-created Supplemental Per Control.
  2. Enter your adjustments. You don’t need one adjustment for each check. Best Practice is one adjustment for each quarter.
  3. Once your adjustments are in and posted, run Tax Recon for the 4th quarter of the prior year. You can run this just for the employees who have had corrections made.
  4. Re-run all the reports that you ran before starting this process. This gives you a before-and-after record of the changes made.
  5. Generate your W-2C forms in UKG Pro.
  6. Once all this is complete, report the changes to the relevant tax authorities and file the W-2C forms with the SSA and the applicable state and local authorities.
  7. In UKG Pro – Open a case, and provide them with the before-and-after Tax Liability Reports, and an Excel spreadsheet detailing the changes that were made – EE name, SSN, taxing authority, amount of change, and file the W-2C copies

For the copy that goes to the Social Security Administration, you will need to set up an account with Business Services Online (BSO).  Start by visiting this page on the Social Security Administration’s website. This page has useful information on the process, and a link to set up an account with BSO or to log in if you already have an account.

Note: UKG Pro was formerly UltiPro.