A W-2 is a form used in the US to report employees’ annual tax withholding and total earnings data. This may include information like social security and Medicare contributions, as well as income taxes. Employers usually provide their employees with this form by the end of each tax year. They are also required to submit W-2 documents to the relevant authorities depending on which states their employees reside in.
What’s included in a W-2 form?
The W-2 form will usually include the following information:
- Employee information and identification
- Wages and salary
- Social security and Medicare
- Federal and local state taxes withheld
- Additional data like retirement plans
What is the process required for W-2 forms?
The process behind W-2 forms includes steps like gathering the necessary information about the employee, ensuring the right tax calculations are made, and summarizing the employee’s earnings and compensation for the entire tax year.
The W-2 form must be given to the employee by the deadline required – usually at the end of the year. Multiple copies are required, both for record keeping purposes and to submit to the Social Security Administration, or any other relevant parties depending on the state.
Common considerations concerning W-2 forms
Here are some important considerations you may want to keep in mind about W-2 forms:
- Deadlines: W-2 deadlines are basically non-negotiable when it comes to avoiding compliance bumps. On top of that, keeping deadlines for submitting these forms to your employees also allows them to get back to you in time in case any amendments are needed.
- Tax updates: Tax requirements may change from time to time. It’s important to stay aware of these updates to ensure you’re always making the right tax calculations.
- State requirements: Individual states may have specific requirements for W-2 forms. It’s important not to overlook these policies.
- Record keeping: Maintain an organized system for keeping records of your W-2 forms for the legally required amount of time.
What is the difference between W-2 and 1099 forms?
The main difference between W-2 and 1099 forms lies in the employment category. W-2 forms are issued to employees by their employers, reflecting their wages, taxes withheld, and benefits. On the other hand, 1099 forms are provided to independent contractors, freelancers, or self-employed individuals, showing their earnings from clients or businesses. Unlike W-2 employees, 1099 recipients are responsible for paying their own taxes and don’t have taxes withheld by the payer.