Form W-2 Changes for the 2024 Tax Year
The IRS periodically updates Form W-2, the Wage and Tax Statement, to reflect changes in reporting requirements, tax laws, and other regulations. Luckily, the changes for 2024 are pretty straightforward.
Increased Social Security Wage Limit
Employees pay Social Security taxes on income up to the Social Security wage limit. The IRS will refund any taxes paid over that limit when the employee files their tax return. For the 2024 tax limit, the IRS has increased the wage limit from $160,200 to $168,600.
When you write Form W-2, you should check your math to ensure that Form W-2 aligns with the new wage limit. For example, you should ensure that the sum of Box 3 (Social Security wages) and Box 7 (Social Security tips) is not greater than the new limit of $168,600.
Furthermore, you should confirm that Box 4 (Social Security tax withheld) is not greater than $10,453.20. $10,453.20 should be the maximum in Box 4 because it’s 6.2% (the current Social Security tax rate) of $168,600.
New Code for Box 12
The IRS added code II for box 12 on the form. The IRS made this change so you can report income from Medicaid waiver payments that you didn’t report in previous boxes.
Penalty Increases
Timely filing of W-2 forms is essential, and the IRS has updated penalty amounts to encourage compliance.
Penalties vary depending on how late you filed the form and your business size. Small businesses with average yearly earnings of $5 million or less over the last three years face lower penalty limits. Large businesses earning more than $5 million annually have higher penalty limits.
This table highlights the new penalty amounts for 2024, helping you stay on track and minimize potential expenses.
| Days Late | 2024 Penalties | Fine Limits Per Year |
|---|---|---|
| Less than 30 days late | $60 per form | $220,000, small businesses $630,000, large companies |
| More than 30 days late but filed before August 1 | $130 per form | 664,500, small businesses $1,993,500, large companies |
| Filed after August 1 | $330 per form | $1,329,000, small businesses $3,987,000, large businesses |
| Intentional disregard (the employer intentionally fails to file W-2s) | $660 per form | No maximum fine |
Who Needs Form W-2?
As an employer, you must submit Form W-2 to any employee who received at least $600 in payments from you or had any taxes withheld (regardless of the payment amount). Compliance with this requirement is essential so employees can file their personal income tax returns via Form 1040.
Even if taxes weren’t withheld, you will still need to complete and file a W-2 if the employee should have had taxes withheld based on their Form W-4.
How to Fill Out a W-2 Form
The form provides clear instructions for filling out each box. Here is everything you need to know to complete a W-2 form accurately and efficiently.
- Identifying information: Enter employer and employee details, including Social Security numbers and addresses
- Financial information: Report wages, tax withholdings, and other compensation details
1. Identifying Information
Boxes A-F show who the employee and employer are. These boxes ensure that the form is correctly linked to the right records for the IRS and Social Security to process the taxes properly.
- Box A: Enter your employee’s Social Security number. In some cases, your employees may have applied for a Social Security number but not received it yet. In these cases, enter “applied for” in Box A.
- Box B: Enter your employer identification number (EIN). You can get your EIN by filing a Form SS-4.
- Box C: Enter your company name and address.
- Box D: Enter your control number if your company uses control numbers. If not, leave this blank.
- Boxes E and F: Enter your employee’s name and address.
2. Financial Information
Boxes 1-20 summarize an employee’s financial earnings and tax withholdings. These boxes ensure both you and your employee report and pay the correct amount of taxes based on wages and deductions throughout the year.
- Box 1: Enter all wages, tips, and compensation your employee received that are subject to federal income tax (excluding pre-tax benefits such as retirement plan contributions and health insurance premiums).
- Box 2: Input the amount of federal income tax you withheld from your employee’s paychecks throughout the 2024 tax year.
- Box 3: Include your employee’s wages subject to Social Security taxes. Remember that the limit for these wages for the 2024 tax year is $168,600.
- Box 4: Enter the amount of Social Security tax withheld throughout the year.
- Box 5: Provide your employee’s wages, tips, and other compensation that is subject to Medicare taxes (this should be the same as the amount that is subject to federal income tax).
- Box 6: Record the amount of Medicare taxes you withheld from the employee.
- Box 7: Detail any tips the employee earned that are subject to Social Security tax. Keep in mind that the $168,600 Social Security wage limit includes tips, so boxes 3 and 7 should add up to no more than $168,600.
- Box 8: Input your employee’s allocated tips, if any. Remember that these tips are not included in the above boxes. Employees will need to calculate the taxes on these tips on their own using Form 4137.
- Box 9: Leave this blank.
- Box 10: Enter any dependent care benefits provided to your employee during the year up to a maximum of $5,000. Add any dependent care benefits above $5,000 to taxable wages in Box 1.
- Box 11: Provide the total of any distributions from a non-qualified deferred compensation plan.
- Box 12: Several codes may come into play in Box 12. These codes often relate to employee benefits. For example, if you offer a 401(k) match, you report the dollar amount you matched for the year here. You may also use this box to report other items, such as uncollected Medicare taxes on tips.
- Box 13: Box 13 includes three check boxes (statutory employee, retirement plan, and third-party sick pay). Check the box that applies to any data reported in Box 12. For example, if you entered retirement plan contributions into Box 12, check the “retirement plan” option in Box 13.
- Box 14: Enter any amounts associated with health insurance premiums, vehicle lease payments, or state disability taxes withheld.
- Box 15: Select your state and enter your state EIN if state EINs are applicable where your business is located.
- Box 16: Provide your employee’s wages that are subject to state income taxes if applicable in your state.
- Box 17: Input the amount you withheld from the employee for state income taxes.
- Box 18: Enter any wages subject to local income tax (city or other municipalities) if applicable.
- Box 19: Record the amount you withheld from the employee for local income taxes.
- Box 20: Enter the city or other local municipality name for tax withholding reported in Box 19.
How to File Form W-2
It’s important to file your W-2 forms before the January 31 deadline. The simplest way to file is online directly through the Social Security Administration (SSA). Online filing is required for any employer who submits 10 or more information returns (including W-2s).
If you need to submit less than 10 information returns, you can file by mail. To do so, send your forms to the following address:
ATTN: W-2 Process
Social Security Administration Direct Operations Center
Wilkes-Barre, PA 18769-0001
Keep in mind that you may need to make some adjustments if you opt to send W-2 forms via Certified Mail or IRS-approved private delivery service:
- Certified Mail: If you send W-2 forms via Certified Mail, you must use the above address but change the ZIP code to 18769-0002.
- IRS-Approved Private Delivery Service: Use the following address:
ATTN: W-2 Process
1150 E. Mountain Drive
Wilkes-Barre, PA 18702-7997
Different Copies of Form W-2
When you file your W-2s by mail, you’ll need to send multiple copies to different entities. The W-2 packet comes with the following copies:
- Copy A: The official copy that must be printed on special red-ink paper for accurate processing by the SSA.
- Copy 1: For your city, state, or locality if required in your area.
- Copy B: For the employee to file with their federal tax return.
- Copy C: For the employee to keep in their personal records.
- Copy 2: For your employee to file with their city, state, or locality if required.
- Copy D: Your copy as the employer (must be kept on record for at least four years).
If you’re e-filing, you don’t need to print and mail copies to the SSA since it’s done automatically through the e-filing process. You only need to provide Copies B, C, and 2 to your employees, send Copy 1 to the appropriate state or local tax agency, and keep Copy D in your records.
What Happens If I Don’t Send W-2 Forms?
As an employer, you are legally required to file W-2 forms with the SSA and send copies to your employees by January 31 following the year you paid them. Failing to do so could result in fines from the IRS, so it’s important to submit these forms on time.
If you are missing an employee’s current address, you are still responsible for sending the W-2 to the most recent address on file. If the employee has moved and set up mail forwarding, the form should reach them. If it’s not forwarded, you’ve fulfilled your obligation by sending it to the address you have. However, if the form is returned, you should make reasonable efforts to resend it to the correct address.
Additional Tax Forms for Employers
W-2 forms aren’t the only IRS tax forms you should familiarize yourself with to stay on top of your tax obligations. Here are a few others to consider:
- Form 1099-MISC: Report miscellaneous payments like rent, awards, royalties, etc.
- Form 1099-NEC: Report non-employee compensation.
- Form 940: Report Federal Unemployment Tax Act (FUTA) taxes paid.
- Form 941: Report income taxes and payroll taxes you withhold from employees.
Legal Considerations
Paying taxes and following the law is a responsibility we all share, but navigating the complexities of tax filings can be challenging. At Legal Templates, we take this responsibility seriously. Our experienced attorneys provide the most up-to-date Form W-2 from the IRS and closely monitor yearly changes so you can always access the latest, most relevant forms.
That said, it’s essential to fully understand your tax obligations and how to meet them. A solid understanding can help you avoid costly mistakes. If you have any questions about Form W-2 or any other tax document, we strongly recommend consulting a legal or tax professional to ensure you’re on the right track.
How Legal Templates Helps
Legal Templates makes it easy to fill out Form W-2. While you’ll have to file Copy A on special red paper (or complete the filing online through the SSA’s official website), you can complete the other five copies via our PDF editor. Plug in the applicable numbers, download the form, and share the appropriate copies with your employees and local tax authorities.
Frequently Asked Questions
Do employers have to mail W-2s to employees?
You must mail completed W-2 forms to your employees by January 31 following the tax year in question. Doing so means you can avoid fines for delayed forms.
What’s the difference between a W-2 and a W-4?
Employees typically fill out a W-4 form when they get a new job. The W-4 form gives the employer information about the employee, including their identification and address. It also tells the employer how much they should withhold from the employee’s paycheck.
An employer fills out a W-2 form on an annual basis. This form shows the employee and the IRS how much you paid the employee and how much you withheld from their paychecks for taxes, retirement plans, and other purposes.
What’s the difference between a W-2 and a W-3?
While a W-2 form applies to a single employee, a W-3 form is a consolidated form that provides an overview of all money the employer paid to and withheld from employees. Employers must file W-2 and W-3 forms with the IRS by January 31 of the calendar year for the year prior.
What happens if the information on a W-2 is wrong?
If you file a W-2 with incorrect information, the IRS will typically request that you update the information. You should fix the error as soon as possible by filing a corrected form (Form W-2c).
