What Is a W-2 Form?
What Is the W-2 Form For?
The W-2 Form is also known as the “Wage and Tax Statement.” It is one of the most important records needed for an employee during tax season. As an informational return form, the W-2 form contains information about an employee’s total earnings and the amount of federal, state, and other taxes withheld for the prior tax year.
The document also records information about the employee’s social security and any fringe benefits offered by the employer, such as Medicare, worker’s compensation, and retirement plans, among others.
Employees use this information when filing their income tax returns. The IRS also gets a copy to ensure the records filed are true and accurate.
Who Files a W-2?
Employers are responsible for filing their employees’ W-2s. They can file them electronically or send them by mail to the Social Security Administration (SSA) on or before the last day of January every year. After filing, the employer must also send the necessary copies to each respective employee for their records.
The form comes in a packet with six copies: Copy A, Copy 1, Copy B, Copy C, Copy 2, and Copy D. The employer files Copy A to the SSA along with relevant copies of the Form W-3, Transmittal of Wage and Tax Statements, before the end of January.
Copies B, C, and 2 are sent to the employees, who will then attach the documents to their federal and state income tax returns. The employer retains Copy D for at least four years, while Copy 1 is filed with the state tax agency.
Do All Employers Have to File a W-2?
By law, every employer must file the W-2 Forms on behalf of their employees. The IRS defines an “employer” as an entity engaged in a trade or business that pays remuneration, including non-cash payments of at least $600 per year to an employee.
In other words, as long as the employer is paying $600 or more in annual wages to an employee for services performed throughout that year and withholds income tax from their paychecks, they must file a W-2 for the said employee.
There are some exceptions, however. How the employer defines the term “employee” can dictate whether or not the employer needs to file Form W-2 or a different tax form.
For instance, suppose someone is working for an employer on a part-time basis and hired based on a contract arrangement. They may receive steady wages from the company, but they don’t necessarily meet the definition of an “employee.” Instead, this person fits more into the category of “contractor.” Therefore, the employer would not use a W-2 Form when reporting their income and taxes for the year. Instead, they would likely use Forms W-9 and 1099-NEC.
Is the Filing Deadline Fixed?
Employers who cannot meet the deadline will need to file for a 30-day extension using Form 8809, also known as the Application for Extension of Time to File Information Returns document.
However, even if the extension request is granted, the employer must still send out copies of the W-2 form to employees on or before January 31st.
What Is on the W-2 Form?
There are three main parts to the W-2 form.
The left side of the form contains the personal information of the taxpayer. These include the employee’s name and address, social security numbers, employer name and address, control number, and Employer Identification Number (EIN). The boxes in this section are categorized alphabetically from a to f.
The right side of the form contains information about the employee’s wages and federal tax records from the previous year. These include total earnings for the year, including tips and other compensation, federal income tax withheld, social security wages and tax withheld, Medicare wages and tax withheld, and dependent care benefits. The boxes in this section are numbered from 1 to 14.
The third section is at the bottom of the form, which reports state and local tax information. It contains important details regarding the employer’s state ID number, state and local wages and tips, income taxes, and locality name. The boxes are a continuation of the previous section, numbered 15 to 20.
What Happens If the Information on the W-2 Is Incorrect?
The IRS imposes penalties for filing incorrect information on tax forms. Employers must check every detail reported on the form before filing.
Still, human error sometimes happens. For example, the employer might omit a decimal point in the figures recorded, get the dollar amount wrong, or even check the wrong box. In addition, cutting, folding, or stapling documents on the form are also considered W-2 errors.
Generally speaking, it is easier to make corrections to errors on W-2 forms if they have not yet been filed with the SSA. In this instance, the employer can check the void box on Copy A of the W-2 Form and then create a new W-2 using the correct information.
If the error is discovered after the form has already been filed, the employer will need to make the necessary corrections using Form W-2 C, Corrected Wage and Tax Statements document. They also need to include a W-3 C transmittal form filled out based on the corrected information recorded on the W-2 C correction form.
These forms can be downloaded from the IRS online ordering page.
Filing Taxes Without W-2
People can still file taxes without a W-2 form. Usually, when employees do not receive their W-2 or 1099-NEC forms from their employers, they need to ask for a copy of these documents as mandated by the IRS.
However, if they are still unable to get the form, they can still file taxes using Form 4852, the Substitute for Form W-2, Wage and Tax Statement.
Taxpayers (or their representatives) fill this form out when the employer fails to provide them with a W-2. It will be helpful for the taxpayer to have supporting documentation when filing Form 4852 for tax returns.
- The W-2 form or Wage and Tax Statement records information about an employee’s earnings and tax withholding from the previous year. It records information such as the employee’s social security, Medicare, retirement plans, worker’s compensation, and other fringe benefits offered by the employer.
- Employers prepare W-2 documents and file them with the SSA on or before January 31st. Employers must also provide a copy of the W-2 form to their employees by the last day of January.
- Filing incorrect information on the W-2 form can incur penalties from the IRS. Furthermore, if the employer fails to provide the W-2 form, the employee can still file their income tax returns using Form 4852.
- Internal Revenue Service. (n.d.) 2022 Form W-2. Retrieved from https://www.irs.gov/pub/irs-pdf/fw2.pdf
- Internal Revenue Service. (n.d.) Topic No. 752 Filing Forms W-2 and W-3. Retrieved from https://www.irs.gov/taxtopics/tc752
- Internal Revenue Service. (n.d.) About Form W-2, Wage and Tax Statement. Retrieved from https://www.irs.gov/forms-pubs/about-form-w-2
- Internal Revenue Service. (n.d.) Forms and Associated Taxes for Independent Contractors. Retrieved from https://www.irs.gov/businesses/small-businesses-self-employed/forms-and-associated-taxes-for-independent-contractors
- Internal Revenue Service. (n.d.) Article II. PENALTY FOR MISSING TINS AND INCORRECT NAME/TIN COMBINATIONS. IRS Publication 1586. Retrieved from https://www.irs.gov/pub/irs-pdf/p1586.pdf