Home / Finance / Everything To Know About Form W2

Everything to Know About Form W2

The W2 form (also known as W-2 or form W-2) is a document employers use to report employees’ salary and income information to the IRS. It also provides employees with information about taxes withheld from their paycheck and any additional income tax they owe. The W2 form is crucial for filing tax returns, making it essential for employees and employers to understand what goes into it and how it affects taxes.

Everything to Know About Form W2

Filling out the form

According to the IRS, employers are required to file the W2 Form as a tax form to report wages and taxes withheld from their employees’ paychecks. It is a document you give to your employees at the end of the year. It tells them how much money they made, taxes withheld from their salary, and any other deductions. For filling out a W2, you will need employees’ salary-related information. Employers would have to fill in each employee’s Social Security Number, address, and marital status. Further, the form would require details regarding contributions to 401(k) and the health savings account, the amount earned from tips and wages, premiums for health or life insurance paid by the employers, and the amount of money withheld from their paycheck for federal income tax purposes. Employers can then use this information to fill out the form W-2G (Gambling Winnings Statement), form W-3 (Transmittal of Wage and Tax Statements), Form 941 (Employer’s Quarterly Federal Tax Return), and form W-2 (Wage and Tax Statement) itself. Business owners can file W2 online for free, especially if they have more than 100 employees.

Submission considerations

Here are important considerations before submitting the W2 form:

First, employers need to verify that all the information is correct so that inaccurate details are not submitted to the IRS.

Second, it is important to review and verify each employee’s Social Security number and check the spelling and numbers with the personnel records. Further, the employer ID number should also be checked for errors.

Third, have all the necessary documents at hand, like marriage certificates or divorce decrees.
Fourth, if an employee has changed their name or had children, it is important to fill in the updated information in the payroll register to match the information on the W2 form.

Finally, do not wait until the last minute to submit the form. If W-2 is submitted before the deadline, you can make corrections in case of errors in the copy mailed. Employers can void the incorrect copy and fill out a new one.

Penalty for not filing W-2

For employees, there is no penalty for failing to submit form W-2 when filing tax returns. However, if they do not receive a copy of their W-2 by February, they should contact their employer and also check if it has been submitted to the government. Employees can even get in touch with IRS to report the delay.

When an employer fails to submit the W2 form to the IRS, it can result in an audit of the employer and employee(s) whose information was not provided to the government. This means that not only will the IRS review business’s books and records but also those of employees who worked for you during that year. Further, penalties can range from $75—$500 per form or more (depending on other violations). In addition to being subject to penalties, employers may also be charged interest on unpaid taxes and be required to pay all penalties, including interest, and in rare cases, they may face criminal charges.

W-2 versus W-4

The key difference between the two forms is who files them. While W-2 is filled out and submitted to the IRS by the employers at the end of each year, it is the employee who completes the W-4 form when starting a new job. While W-2 is sent to the IRS, W-4 is sent to the employer. The W-2 reports the details on the tax and income for the employee along with the deductions from paychecks (for example, contributions to the company’s retirement plan). The W-2 is used by employers for payroll records for the future. The W-4 tells the employer how much money they should withhold from each paycheck so that the employees don’t end up owing too much in taxes at the end of each year. Employees can also use the form to request more money to be withheld if they have other sources of income (like an investment account). Further, the W-4 calls for employees’ personal information like marital status and home address. Additionally, the W-4 should be submitted to the employer within the first month of employment. If there are changes later on in one’s personal financial information, then this should be updated in the W-4.

Employees can find W-2 online, and the copy can be downloaded for filing tax returns. Filing W-2 is a legal requirement for business owners in the country that should not be delayed. Every year, the IRS fines thousands of employers for failing to submit their employees’ W2 forms correctly or on time.

Disclaimer:
The information available on this website is a compilation of research, available data, expert advice, and statistics. However, the information in the articles may vary depending on what specific individuals or financial institutions will have to offer. The information on the website may not remain relevant due to changing financial scenarios; and so, we would like to inform readers that we are not accountable for varying opinions or inaccuracies. The ideas and suggestions covered on the website are solely those of the website teams, and it is recommended that advice from a financial professional be considered before making any decisions.