What Is a W-2 Form?
The W-2 form is a wage and tax statement filed by an employer and provided to the employee to document their annual wages and taxes. It is mandated by the government according to the information returns guide. A complete W-2 form highlights employees’ total gross salary and how much was withheld for their Medicare, Social Security, and federal and state taxes.
The Internal Revenue Service (IRS) requires employers to provide a W-2 form to the employee and Social Security Administration by 31st January each year. Employees use Form W-2 to prepare their taxes and help ensure they receive any income tax returns owed to them. Kick off with our CocoDoc W-2 form 2020 and quickly fill in the necessary details before the deadline strikes.
Components of a W-2 Form
A W-2 Form must contain specific information, the majority of which can be retrieved from your payroll and other personnel records. The necessary components are as follows:
You'll need to include the following business information on each W-2 form:
- Employer Identification Number (EIN)
- Full legal business name
- Full address, including business zip code
- Your Business's State Tax ID Number
- Control number; (Your payroll processing software assigns the W-2 a control number for record-keeping purposes)
Up-to-date personal information is needed for each employee.
- Employee Social Security Number
- Employee full legal name
- Employee address
- Employee ID
Employee Compensation Information
Next, each employee's total earnings and withholding records from the previous year should be included.
- Total wages: including wages/salary, bonuses, tips, and other miscellaneous compensation
- Federal income tax withheld
- Total Social Security wages
- Social security tax withheld: The amount of money the employer paid to SSA on behalf of the employee
- Total Medicare wages and tips
- Medicare tax withheld
- Social Security and allocated tips.
Information on Retirement Plans
For each W-2 form, you must state if an employee participates in a retirement plan or a non-qualified plan with your company, if the individual is a statutory employee, or if the employee receives third-party sick pay.
Information on Special Benefits
The W-2 form should also include information about deductions for employee benefit programs and other deductions that must be reported on the employee's income tax return.
How to Fill out a W-2 Form?
Once you've gathered all the necessary information, filling out a W-2 is pretty straightforward. The W-2 form is subdivided into boxes that detail several aspects of your income. Follow the step-by-step instructions below carefully to fill out the form and avoid any errors.
STEP 1: Provide business information
Box a: Fill in the employee's SSN.
Box b: Enter the EIN for the business.
Box c: Add the employer's name, address, and zip code.
STEP 2: Provide employees details
Box d: Enter the control number
Box e: Next, enter the full employee name, starting with the first name, the middle initial, then the last name. Add a suffix to the small box.
Box f: Record the employee's address (including city, state, and zip code).
STEP 3: Provide compensation information
Box 1: Enter the total wages, or salary tips, bonuses, and other compensation paid to the employee hourly.
Box 2: Fill in the total money withheld for federal income taxes.
Box 3: Record employee's social security wages.
Box 4: Include the amount of Social Security tax withheld on behalf of the employee.
Box 5: and indicate the amount of income eligible for the Medicare tax.
Box 6: Enter the amount of Medicare tax withheld.
Box 7: List all tip income reported by the employee to the employer.
Box 8: Record any tip income issued by the employer.
Box 10: Enter the total reimbursement money for dependent care
STEP 4: Record savings or retirement plans
Box 11: Record any money paid to an employee as part of a non-qualified compensation plan or non-government pension plan.
Box 12: Here, enter the employee’s deferred compensation, including savings and retirement.
Box 13: Mark the appropriate boxes.
Box 14: Add any necessary additional information.
STEP 5: Provide state information
Box 15: Add the employer's state ID number.
Box 16: Compile a list of all taxable earnings earned in the state.
Box 17: Provide the amount of state income tax withheld.
Box 18: List how much of an employee's pay is subject to local, city, or other taxes.
Box 19: Enter, the amount of local income tax withheld.
Box 20: Indicate the locality or city being paid locally.
Ensure every detail is accurate before signing. Using incorrect information could result in legal problems for both the business and the employees when filing their tax returns.
What is W-2 Form Used for?
The purpose of the W-2 form is to provide the employee with the critical information to be included in their income tax form. Form W-2 reflects employee income earned, plus the federal, state, and other taxes withheld from the prior year's paycheck. This information is extremely important when preparing employee tax returns.
Employers also use the W-2 form essential to report Federal Insurance Contributions Act (FICA) taxes for their employees throughout the year. Therefore, employers use the W-2 to keep track of the salary they pay their employees and any taxes.
The Social Security Administration and the IRS information also use the W-2 form to verify the employee's income tax return. With a W-2 form, the IRS can easily track an employee’s tax obligations. Whenever there is a discrepancy between income reported on an employee’s taxes and the one written on Form W-2, the IRS may conduct an audit. At the same time, the SSA uses the W-2 information to calculate the Social Security benefits entitled to each employee.
W-2 Form: Who Has to Fill It Out?
Employers are required by law to record employees’ salary and tax information on a W-2 form and send the copies to their employees, Social Security Administration, IRS, and the state and local tax authorities. An employer must file a W-2 for any employee paid at least $600 during the year.
You must receive a W-2 form from your employer if you are an employee. The W-2 will essentially tell you how much you were paid and how much you've already paid in taxes to the IRS and your state. Each year, the employee fills out form W-2 to file their federal and state tax returns.
W-2 Form Additional Resources
For more resources, check out below:
CocoDoc also has a comprehensive collection of free downloadable tax documents for businesses, including 1099-MISC, 1099-INT, W-9, and pay stubs. These tax forms may be filled out using our simple pdf editor and are updated every year to the most recent version.