A W-2 Form, known officially as a “Wage and Tax Statement,” is an important tax document providing valuable information for employees and the Internal Revenue Service (IRS).
This document shows the total earnings of an employee for the year, as well as the amount of taxes withheld from their paychecks. It also includes other deductions such as contributions to retirement plans, health savings accounts, and other benefits.
A W-2 form is crucial for employees when filing their income tax returns. It ensures that the correct amount of taxes owed or refunded is calculated. Employers are responsible for promptly providing each employee with their W-2 form as an employer. Failing to do so can result in penalties and fines from the IRS.
What to Consider
Employee submission deadline: January 31
Copy distribution: Employees and the Social Security Administration should receive a copy.
Retain copies: Keep them for at least three years after the tax filing deadline.
Who Needs a W-2 Form?
If your business has employees, they need a W-2 form from you to file their taxes. However, independent contractors, freelancers, and other self-employed workers should receive Form 1099 instead of a W-2.
When Should I Send a W-2 Form to My Employees?
Businesses are mandated by law to provide employees with a W-2 no later than January 31 after the end of the tax year.
Why Should I Send a W-2 Form to My Employees?
If you fail to send a W-2 to your employees, you’ll be liable to pay fines to the government, depending on how late you file and how many employees you have. Penalties range from $60 to $630 per form for the 2023 tax year. You’ll also be doing a disservice to your employees and probably cause them to become disgruntled.
Without the W-2, your employees wouldn’t know how much money they’ve already paid to the IRS and your state government, and it would be impossible to calculate their final tax bill.
Your employees may accidentally face penalties for underpaying their taxes or fail to receive a tax refund if they’ve overpaid.
How Do I Submit W-2 Forms to Employees and the Government?
You can provide your employees with a form created for free with our W-2 builder and fulfill your legal requirements to them.
However, when submitting the W-2 to the Social Security Administration (SSA), you should either file them electronically or order scannable paper forms directly from the IRS and mail them.
Businesses that send non-scannable W-2 forms to the SSA are liable for penalties.
Filling Out a W-2 Form
Box 1: Wages, Tips, and Other Compensation
- Total wages and other types of compensation are recorded.
- Compensation can include salary, bonuses, commissions, overtime, tips, non-cash payments, and certain scholarship and fellowship grants.
- Elective deferrals should NOT be included.
- The employer’s matching contributions for retirement plans are not included.
Box 2: Federal Income Tax Withheld
- The amount reported represents the total federal income tax withheld from the employee’s earnings.
- The amount withheld is based on information provided by the employee on a Form W-4.
Box 3: Social Security Wages
- The total wages subject to Social Security tax are given.
- Tips should not be included in this box.
- Pay that is generally excluded from this section is health insurance premiums, expense reimbursements, and tips.
Box 4: Social Security Tax Withheld
- The total amount of Social Security tax withheld from the employee’s pay during the calendar year is reported.
- The social security tax rate for 2023 is 6.45% for the employee and 6.45% for the employer.
Box 5: Medicare Wages and Tips
- The total wages subject to Medicare tax are given.
- Tips are included in this box.
- Pay that is typically excluded is health insurance premiums and expense reimbursements.
Box 6: Medicare Tax Withheld
- The total amount of Medicare tax withheld from the employee’s pay during the calendar year is reported.
- The Medicare tax rate in 2023 is 1.45% for the employee and 1.45% for the employer.
Box 7: Social Security Tips
- Used to report the total amount of tips an employee received and reported to their employer for the tax year.
Box 8: Allocated Tips
- Allocated tips refer to tips employers designate in addition to the tips the employee reports themselves.
Box 10: Dependent Care Benefits
- The total dependent care benefits provided to the employee during the tax year is reported.
- This could include payments made by employers directly to providers or reimbursements for eligible expenses involving childcare, elderly care, disabled dependent care, specialized care services, and other types of dependent care.
Box 11: Non-Qualified Plans
- The total distributions related to non-qualified (taxable) deferred compensation plans are reported.
Box 12a-d: Codes
- Four boxes labeled a-d show the word “code” and a divider.
- The left section on each box allows employers to place one of 29 codes (if any apply to the employee).
- The employer will place the associated amount ($) on the right-hand side.
Box 13
- Three checkbox selections are available if applicable: statutory employee, retirement plan, and third-party sick pay.
Box 14: Other
- If there are additional tax amounts to report that are not covered by the previous boxes, an employer can list them here.
Box 15: State/Employer State ID
- The state abbreviation and the employer’s state identification number to indicate that the employee’s wages are subject to state withholding.
Box 16: State Wages/Tips
- The total amount of wages and tips subject to state tax is recorded.
Box 17: State Income Tax
- The total amount of state income tax paid by the employee is reported.
Box 18-20: Local Wages/Tips
- Any wages or tips are recorded in these boxes if they are subject to local tax.
Frequently Asked Questions
Can You Print a W2 Form?
Yes, you can generate and print Forms W-2 that can be filled in for filing with the Social Security Administration. You can also print copies for filing with state or local governments, distribution to your employees, and for your records.
However, it’s important to note that Copy A of the form must be scannable by the SSA. If you print it yourself from the web, it won’t be scannable. To ensure scannability, you can order the forms from the IRS website, and they will be printed on special scannable paper.
Where Do You Submit a W2?
You can submit a W-2 form by filing it electronically or mailing it to the Social Security Administration. As an employer, it is your responsibility to complete and furnish Form W-2 to each of your employees, which shows the wages paid and taxes withheld for the year.
What Is the Difference Between a W-2 and a W-4?
A W-2 is a form that an employer provides to the employee at the end of the tax year. This form reports the employee’s total income earned during the year and the amount of taxes withheld from their paychecks. In other words, the W-2 is a summary of the employee’s earnings and withholdings for the entire year.
On the other hand, a W-4 is a form that an employee fills out when they start a new job, or anytime they want to update their filing status or withholding allowances. This form tells the employer how much federal income tax to withhold from the employee’s paycheck.
What Do I Do If I Lost My W-2?
If you’ve misplaced your W-2, the best action is to reach out to your employer immediately to request a replacement. Employers must send W-2 forms by January 31 each year, so follow up promptly. If your W-2 is available online, you can access it as often as needed.
How Much Money Do You Need to Make to Get a W-2?
You need to make at least $600 in a year to receive a W-2 from your employer. However, if you were a contracted individual and not an employee, you will receive a 1099 instead of a W-2.
