An Employer’s Guide to Tax Form W-2
This article was last edited on 9/11/2020. For updated information on W-2, visit https://www.irs.gov/forms-pubs/about-form-w-2.
Employees rely on their Form W-2 to help complete their tax returns each year. As an employer, you’re responsible for filing the form and providing it to each of your team members.
At a glance:
- What is Form W-2?
- Who needs to file the form?
- What information do I need?
- Where do I put amounts paid and withheld?
- How do I collect the info I need?
- When is the form due?
- Who receives a copy?
- What if I make a mistake on Form W-2?
- What happens if I file the form late?
What is Form W-2?
Form W-2 is a wage and tax statement used to report how much you paid your employee during the year and how much you withheld from their pay for taxes. It provides each worker with a record of what they earned and what taxes they paid. They need this info to file their tax returns accurately.
The Social Security Administration (SSA) and IRS use Form W-2 to track wages paid to your staff and taxes paid on your workers’ behalf. The form ensures the government has the right info about your business and the people who work for you.
Who needs to file the form?
As an employer, you will need to file a W-2 for each employee you paid during the year. If you paid any independent contractors, you would file Form 1099-NEC to report their payments.
What information do I need?
To fill out Form W-2, you will need:
- your company’s Employer Identification Number (EIN), name, and address
- employee’s name, address, and Social Security Number (SSN)
- total amounts paid to the employee
- taxes withheld from employee’s paychecks
Where do I put amounts paid and withheld?
The few boxes ask for information about your workers’ wages and federal tax info:
- Box 1 – Enter the total amount paid, including wages, tips reported, bonuses, and other compensation. Do not include the employee’s contributions to a 401(k) or 401(b) plan.
- Box 2 – Enter the total federal income tax withheld.
- Box 3 – Enter the total wages subject to Social Security taxes – do not include any tips the worker reported to you or anything above the annual wage base.
- Box 4 – Enter the amount of Social Security taxes withheld.
- Box 5 – Enter any wages subject to Medicare tax, including tips reported. If the employee earned more than the wage base, Box 5 and Box 3 would not match.
- Box 6 – Enter the amount of Medicare taxes withheld.
- Box 7 – If your employee reported any tips to you, enter that amount. Boxes 4 and 7 should not add up to more than the wage base.
- Box 8 – If your company is in the food or beverage industry, enter any tips allocated to the employee. Do not include this amount in any of the previous boxes.
The next few boxes ask for information about benefits and other compensation:
- Box 10 – If you paid for any dependent care benefits, like childcare, enter the amount here. If you paid more than $5,000, only enter $5,000 in Box 10. Include the excess amount in Boxes 1, 3, and 5.
- Box 11 – You’ll enter any distributions from a nonqualified plan or nongovernmental Section 457(b) plan.
- Boxes 12a-d – These fields are used to report any deferred compensation, like contributions to a 401(k) plan. In each box, enter the corresponding code and amount.
Then, you’ll enter information about the employee and their deductions:
- Box 13 – Check all boxes that apply to the worker.
- Statutory employee: A statutory employee is an independent contractor treated as an employee for tax withholding purposes. Their earnings are subject to Social Security and Medicare taxes, but not federal income tax.
- Retirement plan: The employee participated in your company’s retirement plan.
- Third-party sick pay: A third-party sick pay payer will also be filing a W-2 for this employee.
- Box 14 – If you provided any other compensation or deducted anything from the employee’s paycheck that they’ll need to disclose on their tax return, include each amount and label it. You might include disability insurance tax withholding, union dues, or uniform payments.
The last section of Form W-2 is where you’ll include any state and local tax info.
- Box 15 – Enter the state’s two-letter abbreviation and your state identification number.
- Box 16 – Enter wages subject to state income tax.
- Box 17 – Enter the total amount of state income tax withheld.
- Box 18 – If applicable, enter wages subject to local taxes.
- Box 19 – Then, enter the amount of local taxes withheld.
- Box 20 – Finally, enter the name or code of the locality.
How do I collect the info I need?
You’ll find most of the information for your team’s W-2s on your payroll register, which will show year-to-date totals for wages, withholdings, and deductions. You can find your employee’s full name, address, and SSN from their Form W-4.
If you use payroll software, like Workful, they will typically fill out and file your company’s W-2s for you.
When is the form due?
Form W-2 is due to your employees, the state, and the SSA by January 31 each year. If January 31 is on a weekend or holiday, the forms are due the following business day.
Who receives a copy?
The tax and wage statement has multiple copies:
- send Copy A to the SSA
- Copy 1 goes to your state, city, and/or local tax department
- give Copies B, C, and 2 to your employee
- keep Copy D for your company’s tax records
What if I make a mistake on Form W-2?
If you discover that you made a mistake on the form, you will need to file a copy of Form W-2c with the SSA. You’ll also send copies to your employee and state, city, and/or local tax department.
What happens if I file the form late?
If you don’t meet the filing deadline, you may have to pay a hefty penalty. And the longer you wait to file, the higher your fine could be.
|When return is filed||Penalty per return||Max penalty|
|Not more than 30 days late||$50||$194,500|
|Between 31 days late and August 1||$110||$556,500|
|After August 1 or not at all||$270||$1,113,000|
|Intentional disregard||$550||No maximum|
You might be fined for not giving Form W-2 to your employee if you
- don’t provide the correct statement by the due date without reasonable cause
- done include all the required information
- include incorrect info
You might face penalties for not filing with the SSA if you
- don’t submit the form by the due date
- don’t include all the required info
- include incorrect info
- report an incorrect taxpayer identification number (TIN)
- fail to report a TIN
- do not file a corrected statement in a timely manner
- file by paper when you’re required to file electronically
- don’t submit a machine-readable form
If you knew you were supposed to file W-2s and didn’t, then you run the risk of being fined for intentional disregard.
Penalties are up to the IRS’s discretion, so there are some cases where you might be able to avoid a fine:
- Reasonable cause – You need to show that the failure to file was due to events beyond your control or significant mitigating factors. You’ll need to prove that you acted responsibly and took the necessary precautions to avoid the mistake.
- Inconsequential errors – Inconsequential errors are mistakes or omissions that do not hinder the IRS or SSA from processing the form, connecting the information on the form to the recipient’s tax return, or using the form as intended. An error will never be inconsequential if it’s related to a TIN, recipient’s surname, dollar amount, or significant part of the recipient’s address.
- De minimis rule – If you initially filed the form on time but need to make corrections, you may be able to avoid the penalty if you file corrections by August 1.
- Safe harbor rule – You might be able to avoid penalties for incorrect dollar amounts if
- no amount differs from the correct amount by more than $100
- no tax withheld amount differs from the correct by more than $25