What is a W-2?
Posted on Fri, Oct 07, 2011
A W-2 is the Wage and Tax Statement that employers must give employees each year. The W-2 reports the employee’s annual taxable wages and taxes withheld (federal, Social Security, Medicare, state, and local). The W-2 also can include other information such as tip income, contributions to a retirement account or health savings account, Roth contributions, deferred compensation, dependent care benefits, as well as other information.
Who gets a W-2?
According to the Internal Revenue Service, every employer who pays an employee for services must file a Form W-2 if they withheld income, Social Security, or Medicare tax from the employee. This rule applies even if the employee is a family member, or if the employee received non-cash payment for their work. Employers also must file W-2s for employees who would have had income tax withheld if they had claimed only one withholding allowance, or who claimed a W-4 exemption from withholding.
Parts of the W-2
The W-2 form consists of several parts for the employer and employee:
- Copy A: The employer mails or files electronically to the Social Security Administration along with Form W-3, the Transmittal of Wage and Tax Statements. The W-3 is a summary of all W-2s for the employer.
- Copy 1: Employer files with the state, city, or local tax department.
- Copy 2: Employee files with the state, city, or local tax department.
- Copy B: Employee files with their federal tax return.
- Copy C: Employee retains the copy for their records.
- Copy D: Employer retains for their records.
Employer Requirements for W-2s
- Employers must make sure that the business name, address, and Employer Identification Number listed on the W-2 matches information reported on Form 941.
- Employers have several processing options for W-2s if they're not using an accountant's payroll services. If they are printing their own W-2s, they must use either the official form or an acceptable substitute (consult Publication 1141 for more information.) Employers can purchase official W-2 forms from an office supply store or online from the IRS. They can also e-file the W-2 with the Social Security Administration's Business Services Online. Using this service, employers can print out employee copies of the W-2 and submit their required Copy A and W-3 to the SSA electronically.
- Employers must give W-2s to employees by January 31. The W-2 is considered timely if it is addressed properly and mailed on or before the due date.
- Employers must file Copy A of the W-2 and the W-3 with the SSA by the end of February; however, the SSA allows a later deadline for electronic filers.
- Employers are required to keep copies of undeliverable W-2s for four years.
This content is provided by Patriot Software, Inc., developer of small business software including SaaS payroll software for American employers. For more information, visit www.PatriotSoftware.com.