Wage and Tax Statement: W2 Employer Form Guide for Small Business
Last Updated April 14, 2023
Taxes wait for nobody. Not even for the small business startup which is in its early growth days. Why? Once you start your business, make the first purchase, and generate the revenue will make you eligible for the W2 employer form!
Insurance and taxes are the two major components of any form. But filing a W2 form from the employer allows you to analyze the salary and added benefits too. It is important for any business startup to understand the taxes and the forms involved.
In this blog, we will discuss the W2 Form and its respective candidates in detail.
Table of Contents
What is a W2 Employer Form?
Also known as the Wage and Tax Statement, is used for the purpose of individual’s taxes. The salary information about an employee is included in the W2 Form. The form states the amount of tax the employer can withhold from the employee’s pay.
It is important to report the information to the IRS through W-2 Form, and also provide a copy of the W2 Form to the employee.
Who Uses W2 Form?
A W2 form from the employer is a must. But is the business owner only responsible for using it? No. multiple copies are shared with the following entities;
A business owner, by law, is required to send the copies of the W2 Form to the employee and to the Social Security Administration, IRS, and the State and local tax authorities.
An employee who earns at least $600 during a year is eligible for the W2 Form. Employers record the wagers on the form and are liable to withhold the tax from the paycheck of the employee.
If they had hired someone on a salary, wage, or other forms of compensation they must issue a W2 Form to their employee. This does not include independent contractors or self-employed workers.
To fulfill their individual tax responsibility, an employee uses Form W2 to complete their tax returns every year.
They must fill the form appropriately about the earned wages and the tax information. Employees keep one copy to themselves and send one copy to the state or local return.
If an employee is doing multiple jobs, let’s say two jobs at a time, they will receive W2 Forms for both jobs. They must collect the right information to complete their tax returns.
To evaluate the amount an individual owes for the year, the IRS also requires a copy of the W2 Form. All reported wages of the employees are recorded on the W2 Form to keep track of earnings and tax liabilities.
In case the income doesn’t match with reported earnings in the form, then an IRS audit notice is issued.
State and Local Tax Authorities
A W2 Form from the employer is also reported to the State and local tax authorities. It indicates whether the employee is eligible for the tax refund that year or not.
Almost all states and cities require their residents to pay individual income tax.
Basic Responsibilities of Filing W2 Form from Employer
It’s important to ensure all employees file their tax returns on time. Employers’ responsibility is to provide the W2 forms before February 1.
Additional copies are always sent to the Social Security Administration (also on the same date).
W2 Form from Employers Sends Copies to
- Copy B – Employee tax returns are filed
- Copy C – Employee keep it for a personal record
- Copy 2 – Given to State Tax Authorities (when required)
Social Security Administration
- Copy A
State Tax Authority
- Copy 1
- Copy D
Does W2 Employer Form have a Replacement?
In case the W2 Form is lost, the employer is responsible to replace the previous form with a new one.
It is not obligatory, but an employer can charge a nominal amount for providing this service.
Penalties for Non-Compliance of Filing W2 Form from Employer
An individual can file the tax forms either by mail or online. Fling tax forms online are always preferable.
But if you file more than 250 W2s by mail instead of online submission, the individual is liable for a penalty. The documents are scanned by the machine, so if the machine clarifies the tax form as unreadable you will also be penalized.
In case of failing to submit the W2 Form,
“A late submission of up to 30 days is fined for $50 (per form), while the maximum penalty for a small business is for $197,500 and $565,500 for a large-sized firm.
If submitted after 30 days, before August 1, the fine imposed will be $110 (per form). Small businesses will be fined for $565,500 (maximum) while larger businesses will be penalized for $1,696,500.”
Why do you need the W2 Form from the Employer you Previously worked for?
Employees change their jobs for a variety of reasons. So when an individual switches jobs, he must have a W2 form from the previous employer to file taxes. With the help of the W2 Form they can expect a tax refund but need information as;
- The amount of money employees earned in the former company
- The total amount of federalism state social security and Medicare taxes withheld from the paycheck
- Retirement fund contributions
- Dependent care benefits amount
So whether it’s your former employer or a new one, filing W2 Form from an employer is a must for every employee.
How to get a W2 Form from an Old Employer?
IRS determines the former employer to provide their ex-employee a copy of the W2 Form before the end of January.
In case the form is lost or not received in the early weeks of the year, action must be taken to avoid any tax penalties.
Down below are a few important tips employees can follow;
Look into the Date
It’s important to remember the tax dates. For instance, your old employer has till 31 Jan to mail you the W2 Form. it should arrive by the first week of February.
Update the Address
If you moved to a new address and your old employer had a former address when you worked for them, then the individual must inform them.
Fill out the change-of-address form from the local United States Post Office. Wait for at least 7-10 days for the process to take place. The mail will arrive at your new address. If the person forgets to fill the form at the time of moving, the postal service may return the W2 Form to your old employer otherwise.
Scan the Emails
Opting to get a paperless tax form is a good option for obvious reasons. It’s faster and safer. Just search your inbox, and in some cases check the spam folder. The received notice will consist of a link to the online platform, secured, and you will have access to it. Download the From W2 easily from there.
Contact your Old Employer
Under the circumstances, when the W2 employer form is not received at the end of January you should contact your old employer. Call the HR department, if the company has any, or email the representative and ask about the W2 Form status and also confirm the mailing address.
So if you failed to update the address, the W2 Form may get lost in the mail or might be returned.
Contact Payroll Administrator
Sometimes small businesses use third-party resources to handle the payrolls. If so, confirm your mailing address in the file they have. Also, ask for a replacement copy in case the mail didn’t reach you.
Contact the IRS
If you fail to contact either of the above-mentioned entities, then do not hesitate to contact the IRS at 800-829-1040.
Provide them the company’s EIN. you may also need to provide your social security number and contact formation, employer’s contact information, your estimated earning, and dates you work to and from in the former company.
You can also schedule an appointment at a local IRS Taxpayer Assistance Center. Just bring the required information (as mentioned above), it will help to speed up the process.
Things to Do if You Can’t get W2 Form from Employer
Despite following the above steps, if you do not receive the W2 Form from your employer by April 15, you have two options left;
Request for Extension
In this case, you need to submit Form 4868, also known as Application for Automatic Extension of Time to File U.S.
On acceptance, you will receive an extension of 6 months to pay your taxes, and yet be on time.
File without W2 Form
Let’s say your former employee is no longer in business, you can submit Form 4852, a.k.a Substitute for Form W2.
You can estimate your earnings and withholding from the former employer and complete this form. In case you receive a delayed W2 Form, then double confirm the estimates to avoid any inaccuracy.
Remember that if you appeal for an extension then it can slow down the process which also means a delayed refund.
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