Form W-2: Everything You Ever Wanted To Know
Last Updated October 5, 2021
It’s the time of the year when everyone is preparing for taxes. Soon by 31 January, you need to submit your W-2 form. It’s not just a piece of paper but the obligatory summary of the income and all other taxes you are eligible for.
The “W” stands for “Withholding”. It’s the official record of the previous year about your income. To help you better understand we have categorized the information.
Table of Contents
Learn About The W-2 Form
Also known as the Wage and Tax Statement is a report about the employee’s income of the last year, the amount of tax payable, and the other relevant information. The W-2 form is given by the employer to its employee in January. One copy is also sent to the IRS while the employee prepares their tax returns using the W-2 form.
Besides the W-2 form, employers also need to report the Federal Insurance Contributions Act (FICA) taxes. After its submission, a W-3 form is also filed for each employee with the Social Security Administration (SSA). With the help of this information, the Social Security benefits are calculated to which each worker is entitled.
As An Obliged Employee
The W-2 form represents the amount you have earned from your employer in the last year, the withholding tax you have paid already (deducted amount from the earnings). When it’s about time to do the taxes, you will need to fill in the information correctly and revise the form before its submission.
Components Of W-2 Form
This form represents a lot more than just the tax. The details about your retirement plan are printed on it in detail for instance information about the amount paid by your employer for your health insurance, the amount you received independent care benefits, etc.
The information on the W-2 form is the same regardless of the employer. They are divided into 2 sections
- State Sections
- Federal Sections
It is compulsory for the employee to file taxes at both levels.
An employee who earns $600 in wages is eligible to pay the tax. However, even if you are earning less than $600 you still need to report it because there is no W-2 minimum amount to file. Tip income is also included in this form.
The Reading Sequence Of Boxes
Two types of boxes are given on the form – numbered and lettered. You need to fill out each box carefully.
A to F
The lettered boxes from A-F include your name, personal address, employer’s address, your social security number, employer’s EIN, and State ID Number.
1 and 2 Boxes
Box 1 represents the taxable income (wages, salary, tips, or bonus), whereas box 2 represents the amount of federal income tax withheld from your pay by the employer.
3 and 4 Boxes
Box 3 includes the earning subjected to Social Security Tax while box 4 shows the amount withheld for social security tax.
5 and 6 Boxes
Box 5 shows the Medicare tax (1.45%) while box 6 shows the amount withheld for tax.
7 and 8 Boxes
Box 7 shows the tip income (if you have any) and the amount reported in tips whereas in box 8 the tips in reports by the employer are shown.
9 and 10 Boxes
Box 9 was used to show the defunct tax perk (it is left empty) but in box 10 the amount of dependent care benefits, if given by the employer, is shown.
11 and 12 Boxes
Box 11 shows the deferred compensation received by the employee for a non-qualified plan by the employer. Box 12 shows the reductions or compensation from the taxable income with a single/double letter code.
13 and 14 Boxes
Box 13 has 3 sub-boxes. Those boxes are subjective to federal income tax withholding, employer-sponsored retirement plan, or the sick pay you received by a third party. Box 14 includes additional tax information the employer can report like state disability insurance taxes and union dues.
The remaining information related to state and local taxes is included in the last six boxes. It also includes the amount deductible for these taxes and the withheld amount.
Check The Accuracy Of Information
Following is the part of the information you need to revise closely.
- Once the W-2 form is filled, check it for accuracy. Always check the employer’s/EIN.
- Check your name, address in box E, and F.
- Check income tax and entries. Compare them with your pay stubs (box 1-20).
- In case of inaccurate information, immediately report your employer and request a new form. This is to be done before you eFile your taxes.
The Division Of Copies Of W-2 Form
The form is not only submitted to one department only. It’s a multipart;
- Copy A for Social Security Administration
- Copy 1 for the city, state, or locality
- Copy B for employee’s federal tax return
- Copy C for the employee’s record
- Copy 2 for the city, state, and locality (another copy)
- Copy D for employer’s record
Where To Find And Fill The W-2 Form?
A copy of the form isn’t available on the internet for several reasons. For instance Copy A is printed on distinct paper. Official forms must be used and you get the W-2 Forms from a copy shop or from a tax software program or tax preparer.
2 Ways To File W-2 Forms With Social Security
Send the SSA paper copies for all employees. If the W-2 form is sent by mail, then attach a W-3 form (transitional form) showing totals of all boxes.
The filing address for both forms is Social Security administration, Direct Operations Center, Wilkes-Barre, PA 18769-0001.
Online filing is rather encouraged by the SSA as they also provide the Business Services Online portal. Register first then file the W-2 form online only. The online filing requirements will be changing in the near future as follows;
- A business with 100 W-2s to file must file it online (2021 tax year).
- A business with 10 or more W-2s to file must file them all online (tax years after 2021).
Collect The Required Information For The W-2 Form
As an employee, you will get the needed information from the payroll register.
Payroll is the payments of employees made by their employer, these are the official business’s financial records shown on the employee pay. It includes information like a year to year totals of all employees, their wages, and withholdings. Deductions from medical plans, health savings, and so on are also recorded.
A W-4 form for each employee is also needed. The information about the withholding federal income tax and FICA tax, also known as Medicare Tax, is completed by the employee.
W-2 forms are complicated so fill up the information carefully and check them twice to make sure you got the information right. It’s best to take help from a payroll expert, or professional accountant which is why My Count Solutions help you to keep on track of all relative information.