5 Things to Consider When Preparing Employee W-2’s

Year End W-2 Additions

As the year is winding down, there are many items to be considered before filing W-2’s for the year. Below are some items that need to be considered before you or a payroll company prepares your W-2’s.

Health Insurance

All health insurance premiums paid for S-Corporation owners by the business in the year must be reported on their W-2. The amount added back to your W-2 would also include any premiums paid for family coverage. The premiums are reported in Box 1 and 14 on the W-2 and are not subject to Social Security and Medicare taxes.

**This only applies to owners who own 2% or more of the S-Corporation.

Disability Insurance

All owner disability insurance premiums paid by the business in the current year must be reported on their W-2 as compensation. The premiums added to compensation are subject to Social Security and Medicare taxes.

Personal Use of Company Auto

If you drive a company owned vehicle other than just for business, the personal portion needs to be added to your W-2. The calculation is based on a percentage of personal and business miles for the year. You will need to provide your accountant total miles driven, personal miles driven, and business miles driven for the year in order to calculate the portion added to your W-2. The calculated portion added to your W-2 subject to Social Security and Medicare taxes.


By the end of the year, you will want to make sure that you have deferred the correct amount of 401k deferrals for the year. The maximum 401k deferrals for 2016 is $18,000. If you are over the age of 50, you can defer and additional $6,000 of catch-up 401k deferrals for a maximum contribution of $24,000.

Year End Bonuses

Many year end bonuses are provided to employees through a manual check rather than direct deposit. If this is the case, then you will need to be sure to let your payroll provider know so they can include them on the W-2’s.


If you have any additional questions, please contact Melissa McDonnell at 314-576-1350 or at mmcdonnell@bwtpcpa.com.

Melissa McDonnell is an Accounting Services member with BWTP, P.C.

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