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1095-C vs W-2: A Guide for Every Payer for 2025 TY

1095-C vs W-2

Tax season brings with it a multitude of challenges for businesses. With so many forms to choose from, filing requirements, and tax year 2025 filing deadlines, it’s no wonder many employers dread this time of the year.

If you struggle to understand 1095-C vs W-2, this blog is your go-to resource for staying compliant. Both forms are crucial for tax compliance but serve different purposes. Keep reading to know who must file these forms, who gets them, and how they are reported.

Who are W-2 and 1095-C Payors?

It’s important to understand who a ‘payer’ is to fulfil filing requirements. According to the IRS, a payer is an entity whose Employer Identification Number (EIN) appears on the tax forms. EIN is a unique nine-digit number that the IRS assigns.

So, who are the payers for Forms W-2 and 1095-C?

For W-2, the payer is the employer who paid wages and withheld taxes.

Meanwhile, the payer for 1095-C is the Applicable Large Employer (ALE) that must offer health insurance coverage to full-time employees under the Affordable Care Act (ACA). An ALE is an employer who averaged 50 or more Full-Time Equivalent (FTEs) in the prior calendar year.

Note:

  • This is when Applicable Large Employer rules get interesting. If your company is part of a controlled group with 80% or more common ownership, the IRS counts everyone together when deciding the ALE status.
  • Many companies use A payroll or benefits service to prepare the file to handle their tax filings. But it’s the payer’s EIN which is on every form. So, the payer is liable for accuracy.

1095-C vs W-2: Why Two Forms

It’s important to distinguish between 1095-C vs W-2 to stay compliant and avoid penalties.

W-2 wage report is used to inform the IRS and the employee how much money was paid and how much tax was taken out.

However, 1095-C health offer tells the IRS that the payer offered health insurance to full-time employees, in accordance with the Affordable Care Act (ACA).

Note: Remember this rule – W-2 is about pay, while 1095-C is about health coverage. If you skip either form, it can cost you up to $310 per return (2025 rate, subject to yearly adjustment) along with extra ACA fines.

Who Must File

Here’s a breakdown of the filing requirements for both forms:

Payer Situation File W-2 File 1095-C
At least $600 in wages paid to any worker Yes Only if the payer is an ALE*
Fewer than 50 full-time-equivalent (FTE) employees Yes No, unless the health plan is self-funded
50 or more FTEs (ALE*) Yes Yes, for every full-time employee
Self-funded plan with < 50 FTEs Yes 1095-B (often filed by the insurer)

*ALE – Remember the 50-employee mandate

What Goes on Each Form

Each form consists of different types of information. If you want to get through the tax season unscathed and avoid common mistakes, pay attention to the following table:

1095-C W-2
Main Parts Employee details, health-offer codes (Lines 14-16), coverage months Wages (Box 1), taxes (Box 2), benefits codes (Box 12)
Focus Did the payer offer coverage and what did it cost the employee? How much did the employee earn and what tax was withheld?
Frequent Slip-Ups Leaving Line 16 blank, coding COBRA as active coverage Wrong state ID; missing Box 12 code DD (plan cost)
Quick Fix File a corrected 1095-C File Form W-2c

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Key Deadlines

Missing a deadline can result in IRS penalties 2025 that can add up quickly. So, mark your calendar with these dates and set yourself up for success with filing.

Step 1095-C W-2
Provide form to employees March 4, 2026 *** February 2, 2026 *
Paper file with IRS / SSA February 28, 2026 February 2, 2026
E-filing deadline March 31, 2026 February 2, 2026

*When January 31 is a weekend, dates shift to the next business day. Double-check the IRS calendar for the filing year.

Note: Remember this e-file rule. If you have 10 or more total information returns (W-2, 1099, 1095, etc.), electronic filing is mandatory.

Quick Decision Checklist

Here’s a quick checklist for you to sail through filing this season.

  • Were payroll taxes withheld? File W-2.
  • Did the payer average 50 + FTEs last year? If yes, file 1095-C for every full-time employee along with W-2. If not, skip 1095-C unless the health plan is self-funded.
  • Is the worker an independent contractor? In this case, issue 1099-NEC instead.

Common Errors and Easy Fixes

Mistake What’s Wrong Fix
Blank Line 16 on 1095-C May trigger an IRS penalty letter Send a corrected 1095-C with the proper code
COBRA months coded as active offer Coverage reported wrong Use code 1H/2A for these months
State wages on the wrong W-2 line SSA rejects the file File W-2c for both states
Box 12 code DD missing Incomplete W-2 Add via W-2c

Year-End Prep List

You don’t have to wait till the last minute to begin your tax preparation. When it comes to tax compliance, working smarter instead of harder is the way to go. Here is a simple checklist to keep you ahead in your tax game:

  • Count FTEs in November to confirm your ALE status
  • Update payroll and health-plan records monthly.
  • TIN-match employee Social Security numbers using the IRS TIN Matching Program.
  • Check 1095-C codes with the benefits carrier.
  • Reconcile payroll totals with quarterly Form 941 filings.
  • Import data into Tax1099, review alerts, and e-file. Reliable e-filing platforms help you catch errors in advance and save money later.

Real-Life Examples

Situation Correct Form(s) Why
A 60-employee tech firm with a health plan W-2 and 1095-C Payer is an ALE and paid wages
A 30-employee café with a fully insured plan W-2 Not an ALE; insurer files 1095-B
55-FTE warehouse with no health offer W-2 and 1095-C (code 1H) ALE must still report
A worker quits in March; on COBRA from April-December W-2; 1095-C (1H/2A April-December) COBRA isn’t an “offer”
Seasonal farmhands < 120 days W-2 (if wages) Seasonal staff not full-time for ACA

FAQs

1. Does every worker who gets a W-2 also get a 1095-C?

No, the employee only gets both forms if the payer is an ALE and that worker was considered a full-time employee.

2. Are 1095-C penalties added along with W-2 fines?

Yes. Each form carries its own penalty. For 2025, you can face up to $310 per form for late filing. So, if both forms are filed late, it could cost you double the amount.

3. Do part-time employees ever need a 1095-C?

Only if the payer runs a self-funded plan that covers them.

4. Can I shorten Social Security numbers on copies?

Yes, but only on the copies given to employees, NOT on the copies of the forms filed with the IRS.

5. Does Box 12 code DD change taxable income?

No, it doesn’t. It is only for informational purposes.

6. What should I do if I miss a deadline?

Don’t panic. File as soon as possible. The sooner you file, the lower the penalty.

E-filing 1095-C or W-2 doesn’t have to be stressful!
Tax1099 simplifies the process so that you can stay IRS compliant and audit-ready.

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