As an employer, you use Form W-2 (accompanied by Form W-3) to report to the government how much you paid to and withheld from each employee.
Form W-2 can be confusing. When do you need it? Where do you send it? Where do you get the forms? Keep reading to find the answers to those questions and more.
When do I need to use Form W-2?
You need to create a Form W-2 for every employee you paid during the previous year. You need to create a Form W-2 even if you paid the employee for one day. You also need to send out a Form W-2 for relatives you employ.
Exception: independent contractors
An independent contractor provides a service to your company, but a contractor is not your employee. You will not fill out a Form W-2 for contractors. If you do use an independent contractor during the year, you will fill out Form 1099-MISC instead.
Independent contractor or employee?
There are very strict guidelines for determining if a worker is an employee or an independent contractor. You need to know the difference between an independent contractor vs. employee to keep your business out of legal trouble.
If you are unsure if a worker is a contractor or an employee, complete IRS Form SS-8, and the IRS will determine the worker’s status.
When are W-2 forms due?
You must complete and send Form W-2 to employees by January 31. Also, send Form W-2, along with Form W-3, to the Social Security Administration (SSA) by January 31. You can send Forms W-2 and W-3 by mail or by e-filing.
If January 31 falls on a weekend or holiday, Form W-2 is due on the next business day.
Form W-2 distribution
Form W-2 has six copies, labeled as copies A, B, C, D, 1, and 2.
- Copy A goes to the Social Security Administration (with Form W-3).
- Copy D is for your records.
- Copy 1 (if required) is for state, city, or local tax departments.
- Copies B, C, and 2 all go to the employee.
What’s on Form W-2?
There is an “informational only” version of Form W-2 available online, but it cannot be sent to the SSA.
Here is the standard information to include on each Form W-2:
- Employee Social Security number
- Your Employer Identification Number (EIN)
- Your business’s name, address, and ZIP code
- Employee’s name, address, and ZIP code
- Wages, tips, and other compensation
- Taxes withheld (e.g., income taxes, Social Security taxes, Medicare taxes)
You will see other spaces available, like allocated tips and nonqualified plans, which you would fill in if appropriate. You can use the Instructions for Form W-2 to learn exactly what to put in each box.
Common errors filling out a W-2
If there are errors on Form W-2, processing can be delayed, and you might be subject to penalties.
Employers make common errors on Form W-2. Here are a few errors to avoid while filling out Form W-2:
- Using Form W-2 directly from the IRS website. The Form W-2 on the IRS website is for informational purposes only. You must purchase official copies of Form W-2 from the IRS or an authorized seller.
- Using the wrong name for an employee. Make sure you use the employee’s legal name. Do not use shortened names or nicknames on Form W-2.
- Using dollar signs. You do not need to include dollar signs in any of the money fields.
Where can I get W-2 forms?
You can order blank Form W-2 copies from the IRS website. You can also get Form W-2 from office supply stores and other authorized retailers.
One last reminder
The IRS updates Form W-2 each year, so make sure you use the correct version of the form and its instructions.
Use Patriot’s Full Service Payroll to make Form W-2 even easier. We will use the information from your payrolls to submit Forms W-2 and W-3 for you. You just need to give Form W-2 to your employees. Start your free trial now!
This article was updated from its original publication date of 10/15/2014.