IRS Form W-2

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IRS Form W-2

The persons who run businesses or manage companies and have employees know what a W-2 form is. If the company or the business pays remuneration to its employees, including electronic (non-cash) payments of over $600 a year per person, the employer has to present this particular form to the employees so that they could prepare and file their tax return reports to the US Internal Revenue Service (IRS).

Every taxpayer ought to know their rights. Taxes are a big part of any working process; therefore, we decided to make a comprehensive guide to filing the tax return reports properly and tax regulation basics.

Everyone has an equal right to file their tax returns. The rule does not discriminate against the employees who are related to the employer in any way. The employee is entitled to file for tax returns if any amount of their income was withheld as taxes for social security-related reasons. You can fill out and submit the IRS Form W2 if any of your taxes have been withheld during the current financial period for the following services:

  • Social Security, Personal earnings, and Medicare;
  • Income tax, with not more than one withholding allowance involved;
  • Income tax, if the employee had not claimed any withholding exemption based on the Form W-4 (the IRS Employee’s Withholding Allowance Certificate).

What is the Wage and Tax Statement?

The official W-2 IRS Form is also called a “Wage and Tax Statement.” As we have already stated, this form allows the employee to prepare their tax return report. The employer must complete the W-2 form, provide it to the employee, while the latter must submit it to the IRS office before a specific financial deadline.

The statement contains certain tax information, including the salary earned during the particular financial period and various taxes withheld from the employee’s earnings. Please provide the necessary personal information to the employer if needed, including Social Security Number (SSN) and the Employee ID (if applicable). Make sure to double-check if the submitted information is accurate. Providing any wrong or inaccurate data on purpose will be followed by penalties for both the employee and the employer.

Individuals can also use Form 1040 to report their tax returns. The most basic difference from the W2 is that the employees can fill out and send the 1040 form independently.

Who can use the W-2 Form?

The W-2 form goes a long way to finally get to the IRS office. As we have briefly mentioned above, the Form W-2, just like the IRS Form W-3 (Transmittal of Corrected Wage and Tax Statements), is generally filled out by the official employer and used by the employee to submit a tax report. The tax return reports then go to the relevant SSA offices, and further, the SSA sends out a certain amount of W-2 forms to the Revenue Service directly.

Please note that in some territories, the forms W-2 have a slightly different name. The Revenue Service uses a two-letter code at the end of the Form W-2 to indicate a corresponding territory’s name. As an example of such codes, the GU in W-2GU form stands for Guam. However, single letter codes can indicate territorial extent if certain corrections are made (like the form W-2c, for example).

When do you use the Form W-2?

The employer must send the Form W-2 to the company’s employees by first-class mail before January 31 of the current year. The tax return reports are due before April 15, the official universal tax due date. Thus, the employees have about two months to fill out and submit their taxes before the deadline. The employers also use the Form W-2 to report one’s FICA (Federal Insurance Contribution Act) taxes to the local Social Security Administration (SSA) office.

The SSA receives the filled-out form by the end of February; therefore, we strongly advise you to mail the documents via first-class mail. Please remember that the documents sent after the deadline will not be excepted, which can cause serious problems for the employee. It is important to mention that self-employed persons and freelancers shall be filing other IRS forms to report their tax expenses. Please keep in mind that the employers must send an additional copy of the W-2 form to the relevant SSA office to inform them of the employee’s income.

How does Withholding Tax work?

Anybody who has been working officially for a while now has faced income tax withholding and filing various state tax documents. The essence of the process is that your official employer hires someone to withhold income taxes for certain services from you and pay those taxes to the government. Tax reports are part of the accounting records; therefore, certain forms are used to perform them. You can use special software to make the process easier.

Specialized, bookkeeping software products are becoming very popular nowadays. If you decide to work with such a product in preparing your tax report, the program will automatically calculate the tax withholding based on your company’s information you input. Your tax withholds directly depend on your withhold allowance plan.

Laws and Requirements

The US federal law articles require all employers to prepare and send out Form W-2 to their employees so that the latter ones could file their tax return statements. The W-2 form has to be filled out regardless of the wage rate. The employees can submit their W-2s to the relevant IRS office either in paper or electronically. Besides, the employers must file a copy of the W-2s with the Revenue Service department.

The legislation changes constantly, and you need to keep an eye on the latest amendments in tax regulation. Check the official Revenue Service website to research and find out more about the terms, conditions, and languages provided. Apply site navigation to find the legal regulations and forms you need. Your software bookkeeping system may help you calculate the following taxes and returns included with the W-2:

  • Federal income tax (as the federal income is compiled of federal tax);
  • State income tax (the income acquired by the employee in the state during the year);
  • Local income tax (the income acquired by the employee in the city, town, or village);
  • Social security tax (taxes the employee had to pay for social security services);
  • Medicare tax (taxes the employee had to pay for medical assistance during the year).

Other IRS Forms for Self-employed

Apart from Form W-2, employers need to file a number of other legal forms, depending on some factors. Learn what other IRS forms might be mandatory for your specific type of business.

Useful Tips on Filling Out the Form W-2

The tax form W-2 is the most common form used by US residents. Of course, this variety of empty boxes may seem a bit frustrating and complex at the first glimpse. But do not worry; we are here to help you figure it all out. Just follow our guidelines, and you will be able to fill out the tax form W-2 without making any mistakes.

There are boxes named A, B, C, and so on, and boxes with numbers. We will follow a specific order when filling out the form, so please stick to that order.

1. Enter the employee’s SSN

The employer has to fill in the Social Security Number of the subject employee in Box A for starters.

step 1 enter the employee's ssn filling out an irs w 2 form
2. Insert the employer’s information

In Boxes B and C, insert the Employer Identification Number (EIN). Then, indicate the company’s full name and legal address, including the state and zip code.

step 2 insert the employer's information filling out an irs w 2 form
3. Enter the employee’s personal data

Insert the employee’s personal control number assigned to him or her by the company’s payroll processing system in Box D.

Then, fill in the employee’s full legal name (make sure it matches the employee’s ID card) and their physical address, including the state and zip code in Boxes E and F.

step 3 enter the employee's personal data filling out an irs w 2 form
4. Provide the employee’s income and taxes information

Proceed to the right side of the page and keep on feeling the fields as indicated below.

Fill in all the salary, tips (if applicable), and other remuneration amounts, including annual bonuses received by the employee in the current financial period, into Box 1. Insert the taxes withheld amount in Box 2. Then, list all the social payments received by the employee in Box 3. Finally, in Box 4, define the amount of money withheld in taxes.

step 4 provide the employee's income and taxes information filling out an irs w 2 form
5. Determine the social services tax withheld amounts

In Boxes 5 and 6, indicate the Medicare tax and tax withheld amount, respectively. Enter tip income reported by the employee to the employer in Box 7, and then enter the employer’s tip income to the employee in Box 8.

step 5 determine the social services tax withheld amounts filling out an irs w 2 form
6. Provide information on verification and Dependent Care benefits

If you are still part of the verification code program, enter your verification code into Box 9. Most people that do not have the code leave this part of their W-2s empty.

If you are taking care of a sick family member, indicate any earnings you get for Dependent Care or any related expenses, you need to reimburse yourself in Box 10. Box 11 is designed for those involved in non-qualified payment plans and programs. Most businesses do not have such plans, thus leaving the section empty. Box 11 may also be used to report any non-governmental pension plan.

step 6 provide information on verification and dependent care benefits filling out an irs w 2 form
7. Describe contributions

In Box 12, provide for any deferred compensation information. Usually, there are instructions for filling out the W-2 form along with the document. There is an explanation for each code in this box. You may also need extra information to complete the deferral tax returns.

Please note that if you turn at least 50 years old in 2021, you can be entitled to a $6,500 additional deferral compensation.

step 7 describe contributions filling out an irs w 2 form
8. Indicate any other relevant benefits information

For Box 13, all you need to do is check the corresponding box suitable for specific tax situations. You may list any additional tax return-related information in Box 14. You may indicate your government tax deductions here (if you gave any).

step 8 indicate any other relevant benefits information filling out an irs w 2 form
9. Indicate the state average salary and tax information

Indicate the employer’s state tax identification number in Box 15. You can leave the records of two different states if you need to. In Box 16, enter the total taxable salary amount that the employee has earned during the financial period. Enter the total of tax withheld in Box 17.

step 9 indicate the state average salary and tax information filling out an irs w 2 form
10. Enter the local tax and wages information

Box 18 is designed to record the employee’s wages subject to local, city, or any other types of taxes. In Boxes 19 and 20, you need to enter the local income taxes withheld and the locality or city to which the employer has to pay taxes.

step 10 enter the local tax and wages information filling out an irs w 2 form

The most commonly made mistakes

There is a series of mistakes people regularly make when filling out the Form W-2. As you remember, any error leads to the form becoming invalid and subject to a fee. From this point of view, we decided to draw some useful tips for filling out the W2.

Tip №1: if you fill out the form by hand, only write in black ink that is bright and well visible. Write in normal-sized letters (not too large, but not too small either).

Tip №2: if you decided to build the form and fill it out online, use an easy-to-read font.

Tip №3: make sure NOT to add a dollar sign in boxes, where it is necessary to enter dollar amounts.

Tip №4: Pay special attention to Box E. People tend to format an employee’s name incorrectly.

Additional things to remember

You have to prepare six copies of your W-2 tax return form. All of them go to different departments (according to the marking at the bottom of the page):

  • Copy A goes to the relevant SSA office;
  • Copy 1 is for the Local Tax Department;
  • Copy B is designated for the employee’s Federal Tax Return;
  • The employee keeps Copy C for his own records;
  • Copy 2 is for the employee’s local income tax return;
  • The employer gets to keep Copy D.

Please note that you have to retain your copy for at least 4 years. Keep a receipt every time you pay your taxes. You can later provide that receipt as payment proof in case an argument occurs. Make sure to get legal advice if you are not sure about certain taxpayers’ data.

Penalties and Remedies

Of course, there is a certain tax liability for failing to obey the local norms and regulations. It is crucially important to stick strictly to the filing deadline. If you happen to fail to send your tax return report in time, you will be subject to a fee. The penalty amount varies depending on the delay. Thus, there are the following penalties applied to unscrupulous taxpayers:

  • The $30 penalty for 30 days and less delay (per one form);
  • The $60 penalty for a delay of over 30 days, but the documents are submitted before August 1 (per one form). Please note that this penalty might be increased to $200–500, depending on the business or company size;
  • The $100 penalty for a delay of over 30 days, but the papers were sent in after August 1 (per one form). Please note that this penalty might be increased to $500–1500, depending on the business or company size.

If you happen to fill in the form W-2 incorrectly, you will be subject to a penalty as well. You (or your employer) will have to pay $250 per one spoiled form. Three million dollars cap this annual penalty amount. If both the employer and the employee fail to fill out the Form W-2 correctly, both parties will have to pay a total $500 penalty. The price for failing to submit the necessary documents internationally increases up to $500 per form.

Frequently Asked Questions

Hereunder, we are going to answer the most frequently asked questions on the W-2 IRS Form.

How do I get W-2 forms?

It is effortless to get this form online. Just click the link here and download the paper from the official US Revenue Service site. You can also register an account in our online bookkeeping system and build any form you like. Or, you can get legal advice from a tax expert in processing the W-2 (or a W-3) to compile and fill out the necessary form. Another way is to hire someone to work with your taxes on your behalf.

Can I get W-2 forms online?

You can get a W-2 form and its variations online. All you have to do is apply the specialized software tools to build any legal form you need. We strongly suggest you use our software products. The forms are very convenient and simple to use. Get an account online and join our users in enjoying the latest online tools.

What is a W-2 form used for?

An employee can use the IRS Form W-2 to report their tax returns for a certain financial period. Besides, the employers send this form to the Social Security Administration office to inform them about the employees’ income statistics. FICA’s taxes may also be reported using the corresponding W-2 form.

What do I do if I lost my W-2 form?

That is one of the reasons there are so many W-2 copies. First up, you need to notify your employer if such a situation occurs. Then, you need to ask your employer to provide you with a copy of your W-2 form (if possible). If you cannot get a copy from any other relevant department’s employer and run out of other options, contact the Revenue Service. Other than that, try to file everything on time and not lose such an important paper.