Form W-2

What Is Form W-2: Wage and Tax Statement?

Form W-2, otherwise called the Wage and Tax Statement, is the document an employer is required to ship off every employee and the Internal Revenue Service (IRS) toward the year's end. A W-2 reports employees' annual wages and the amount of taxes withheld from their paychecks. A W-2 employee is somebody whose employer deducts taxes from their paychecks and submits this information to the government.

Who Files Form W-2: Wage and Tax Statement?

An employer is legally required to convey a W-2 form to each employee to whom they paid a salary, wage, or one more form of compensation. This does exclude contracted or self-employed workers, who file taxes with various forms. The employer must send the employee the W-2 form prior to Jan. 31 every year, so the employee has adequate opportunity to file income taxes before the cutoff time (which is April 15 in many years).

Employers must likewise utilize W-2 forms to report Federal Insurance Contributions Act (FICA) taxes for their employees throughout the year. Toward the finish of January, employers must file, for the previous year, Form W-2, alongside Form W-3, for every employee with the Social Security Administration (SSA). The SSA utilizes the information on these forms to ascertain the Social Security benefits to which every worker is entitled.

Tax documents are filed for the previous year. For instance, in the event that you receive a W-2 form in January 2022 it mirrors your income earned for 2021.

How to File Form W-2: Wage and Tax Statement

On the off chance that you are an employee of a company and will receive a W-2 for your income taxes, it will be shipped off you consequently every year by your employer. Your employer will likewise submit a copy of your W-2 with the IRS.

The information provided on Form W-4 (or sometimes Form W-9) when you are first recruited provides the information your company needs to keep track of payroll, tax withholding, employer-provided benefits, and pre-tax contributions to things like a 401(k) retirement plan. The W-4 form advises the employer the amount of tax to withhold from an employee's paycheck in light of the individual's marital status, number of allowances and dependents, and different factors.

When you prepare your income taxes, you will have to include the data found on your W-2 into a Form 1040 individual tax return, either manually or electronically. Online tax readiness software now allows you to import the information on your W-2 from your payroll provider as a rule straightforwardly.

What Information Does Form W-2: Wage and Tax Statement Include?

Each W-2 has similar fields, regardless of the employer. W-2 forms are divided into state and federal segments since employees must file taxes on the two levels. A few fields provide the employer's information, including the company's Employer Identification Number (EIN) (federal) and the employer's state ID number. The leftover fields are generally subtleties of the employee's income from the previous year.

The employee's total earnings from the employer for the year are recorded, alongside the amount withheld in taxes from the employee's paychecks, isolated into the withholding for federal income tax, Social Security tax, and that's only the tip of the iceberg. In the event that the employee likewise works for tips, a field shows how much money in tips the employee earned for the year.

Assuming you work multiple positions that provide W-2s, you want to include each separately.

When the employee files taxes, the amount of tax withheld by the W-2 form is deducted from their gross tax obligation. In the event that more tax was withheld than owed, a refund will be issued.

The IRS additionally utilizes Form W-2 to follow an employee's income and tax liability. In the event that the income reported on an employee's taxes doesn't match the income reported on the Form W-2, the IRS might audit the taxpayer. However, taxpayers are required to report all salary, wage, and tip income even on the off chance that that income isn't reported on a W-2.

How to Read Form W-2: Wage and Tax Statement

W-2 forms incorporate both numbered and lettered boxes that an employer must finish up and reflects how much you earned and taxes withheld.

Boxes A through F

The lettered boxes on a W-2 incorporate the name and address of you and your employer, your Social Security number, and your employer's EIN and state ID number.

Boxes 1 and 2

Box 1 shows your taxable income, including wages, salary, tips, and bonuses, while Box 2 shows how much federal income tax your employer withheld from your pay.

Boxes 3 and 4

Box 3 subtleties how a lot of your earnings were subject to Social Security tax and Box 4 the amount of Social Security tax that was withheld.

Boxes 5 and 6

Box 5 explains how quite a bit of your pay is subject to Medicare tax and Box 6 how much was withheld. The employee portion of the Medicare tax is 1.45%.

Boxes 7 and 8

Assuming part of your pay is as tips, these crates show how much you reported in tips (Box 7) and how much your employer reported in tips it paid to you (Box 8).

Box 9

This crate was utilized to mirror a now-outdated tax perk, so it is left unfilled.

Box 10

Box 10 reports how much you received from your employer in dependent care benefits (if applicable).

Box 11

This crate subtleties how much deferred compensation you received from the employer in a non-qualified plan.

Box 12

Box 12 subtleties different types of compensation or reductions from your taxable income and a single or double letter code that compares to each. It could incorporate, for instance, contributions to a 401(k) plan. Codes are itemized in the IRS' W-2 directions.

Box 13

This container has three sub boxes intended to report pay that isn't subject to federal income tax withholding, assuming you participated in a employer-sponsored retirement plan, or on the other hand assuming you received sick pay by means of a third-party, like an insurance policy.

Box 14

Box 14 allows an employer to report some other extra tax information that may not squeeze into different segments of a W-2 form. A few models are state disability insurance taxes withheld and union duty.

Boxes 15-20

The last six boxes on a W-2 all connect with state and nearby taxes, including how a lot of your pay is subject to these taxes and how much was withheld.

Form W-4 is completed by each employee for the end goal of withholding. The employer utilizes the information to decide how much tax to withhold from the employee's paychecks. Most employees must finish up this form when they begin working for a company.

On the off chance that the employee is paid $600 or something else for the company during the year, the company issues a 1099 form showing the earnings and deductions made. This generally shows up toward the finish of January of the following year.

Form W-2G is a tax form that a gaming facility, for example, a casino might send you on the off chance that you received winnings from gambling in the prior year.

Students receive a 1098-E statement for any year in which they paid interest on a federal student loan. Students likewise receive a 1098-T statement reporting college tuition expenses that could qualifies students for tax deductions or credits.

Features

The IRS additionally utilizes W-2 forms to follow individuals' tax obligations.
Employers use W-2s to report FICA taxes for employees.
Form W-2 mirrors your income earned and taxes withheld from the prior year to be reported on your income tax returns.

FAQ

What Do I Do If I Lost My W-2?

On the off chance that your W-2 is accessible online, you might access it as the need might arise. In the event that you lose your password or credentials for accessing the online site, you can frequently request automated password recovery. On the off chance that you actually need assistance accessing your information online, or on the other hand assuming that you want to request a new paper copy, you ought to contact your payroll or HR supervisor.

How Much Money Do You Need to Make to Get a W-2?

As a rule, you will receive a W-2 from an employer on the off chance that you earned no less than $600 in a given year. You will likewise receive a W-2 in the event that you had taxes withheld earning any amount from your employer. Note that on the off chance that you were a contracted individual and not an employee, you will probably receive a 1099 rather than a W-2.

How Can I Get My W-2?

Your employer is required to provide you with duplicates of your W-2 every year assuming you are eligible to receive one. The cutoff time for companies to provide this form is normally toward the finish of January or early February following the tax year that just ended. W-2s might be sent via mail as a printed copy or made accessible online in electronic form, either through the employer straightforwardly or by means of their payroll provider.

What Is the Difference Between a W-2 and a W-4?

A W-4 is filled out by employees to provide their employer with their tax ID number (generally SSN), marital status, number of allowances and dependents, and how much tax to withhold with every paycheck. The W-4 is filled out when an employee is first recruited or on the other hand in the event that any changes must be made to filing status or withholding. The W-2 is filled out by employers toward the finish of the tax year and shipped off employees to include on their tax returns.