When you ship Varieties W-2 to your staff, you don’t have to fret concerning the annual type till subsequent 12 months. Or, do you? For those who don’t know the right way to fill out Kind W-2, it’s possible you’ll run into issues.
Your staff may come to you with questions on Kind W-2. And, your staff might imagine you made a mistake if their W-2 Field 1 worth is decrease than what they imagine they earned.
Prepared to chop by means of the confusion? Learn on to discover ways to fill out Kind W-2, field by field, and what all of it means.
fill out Kind W-2
You might need your Kind W-2 tasks all the way down to a science. Enter worker data; ship copies to staff; file the shape with the SSA and state, metropolis, or native tax division; and repeat the next 12 months.
Or, you simply may spend hours gathering worker data and attempting to decode the Wage and Tax Assertion.
Whether or not you full Varieties W-2 by yourself, use payroll software program, or have a tax preparer, you have to be semi-fluent in realizing the right way to fill out Kind W-2.
As a generalization, Kind W-2 packing containers present identification, taxable wage, taxes withheld, and advantages data.
Packing containers A-F are easy. They checklist figuring out details about your small business and worker. The numbered packing containers, Packing containers 1-20, can get a bit of extra difficult.
In order for you Kind W-2 defined, dive into every field’s objective beneath.
Field A: Worker’s Social Safety quantity
Field A reveals your worker’s Social Safety quantity. Social Safety numbers are 9 digits which are formatted like XXX-XX-XXXX.
In case your worker utilized for a Social Safety card and has not obtained it, don’t depart the field clean. As an alternative, write “Utilized For” in Field A on the Social Safety Administration copy. When the worker receives their SS card, you need to challenge a corrected W-2.
Field B: Employer Identification Quantity (EIN)
Field B reveals your Employer Identification Quantity. EINs are nine-digit numbers structured like XX-XXXXXXX.
The quantity you enter in Field B is identical on each worker’s Kind W-2. The IRS and SSA establish your small business by means of your distinctive EIN.
Don’t use your private Social Safety quantity on Varieties W-2. For those who wouldn’t have an Employer Identification Quantity, apply for an EIN earlier than submitting Kind W-2. Then, mark “Utilized For” in Field B.
Field C: Employer’s identify, deal with, and ZIP code
Field C additional identifies your small business by itemizing your organization’s identify and deal with. Use your small business’s authorized deal with, even when it’s completely different than the place your staff work.
Your staff might ponder whether the deal with is wrong if it’s completely different than their work deal with. Confirm your authorized enterprise deal with and guarantee your worker it’s correct.
Field D: Management quantity
Field D is likely to be clean, relying on whether or not your small business makes use of management numbers or not.
A management quantity identifies Varieties W-2 so you may hold data of them internally. For those who don’t use management numbers, depart this field clean.
Packing containers E and F: Worker’s identify, deal with, and ZIP code
Field E reveals the worker’s first identify, center preliminary, and final identify. Reference the worker’s SSN to enter their identify appropriately.
Enter the worker’s deal with in Field F.
Field 1: Wages, ideas, different compensation
Field 1 experiences an worker’s wages, ideas, and different compensation. That is the quantity you paid the worker through the 12 months that’s topic to federal revenue tax.
Funds not topic to federal revenue tax embrace pre-tax retirement plan contributions, medical health insurance premiums, and commuter advantages.
The wages you report in Field 1 is likely to be increased or decrease than different wages on Kind W-2. This isn’t a mistake.
For instance, an worker’s Field 1 wages might be decrease than Field 3 wages. Some pre-tax advantages are exempt from federal revenue tax however not Social Safety tax.
Field 2: Federal revenue tax withheld
Field 2 reveals how a lot federal revenue tax you withheld from an worker’s wages and remitted to the IRS.
Federal revenue tax withholding relies on the worker’s taxable wages and submitting standing.
In case your worker has a query about their refund quantity or why they owe taxes, instruct them to Field 2. The IRS compares what the worker paid all year long in federal revenue taxes to their whole legal responsibility.
Field 3: Social Safety wages
Field 3 reveals an worker’s whole wages topic to Social Safety tax. Don’t embrace the quantity of pre-tax deductions which are exempt from Social Safety tax in Field 3.
The quantity in Field 3 shouldn’t be increased than the Social Safety wage base. For 2022, the wage base is $147,000.
For those who should report Social Safety ideas (Field 7), the whole of Packing containers 3 and seven have to be lower than $147,000 for 2022.
Field 4: Social Safety tax withheld
Field 4 experiences how a lot you withheld from an worker’s Social Safety wages and ideas.
The worker portion of Social Safety tax is 6.2% of their wages, as much as the SS wage base. Field 4 can’t be greater than $9,114.00 ($147,000 X 6.2%) for 2022.
Field 5: Medicare wages and ideas
Enter how a lot the worker earned in Medicare wages and ideas in Field 5.
An worker’s Field 5 worth is mostly the identical as Field 4’s quantity. Nonetheless, there is no such thing as a Medicare wage base. If the worker earned above the Social Safety wage base, the quantity in Field 5 is increased than Field 3.
For instance, the worker earned $150,000. The worker’s Social Safety wages, (Field 3) ought to present $147,000 whereas Field 5, Medicare wages and ideas, shows $150,000.
Field 6: Medicare tax withheld
Field 6 shows how a lot you withheld from an worker’s wages for Medicare tax. The worker share of Medicare tax is 1.45% of their wages.
The quantity in Field 5 multiplied by the Medicare tax fee ought to equal Field 6. But when the worker earned above $200,000 (single), their tax legal responsibility ought to be larger.
For those who paid an worker above $200,000 (single), you need to have additionally withheld the extra Medicare tax fee of 0.9% from their wages above $200,000.
Field 7: Social Safety ideas
In case your worker earned ideas and reported them, enter the quantity in Field 7. Additionally, embrace these tip quantities in Packing containers 1 and 5.
Once more, the whole of Packing containers 7 and three shouldn’t be greater than $147,000 for 2022.
Field 8: Allotted ideas
Report the guidelines you allotted to your worker in Field 8, if relevant. Allotted ideas are quantities that you just designate to tipped staff. Not all employers must allocate tricks to their staff.
Don’t embrace the quantity in Field 8 in Packing containers 1, 3, 5, or 7. Allotted ideas are usually not included in taxable revenue on Kind W-2. Workers should use Kind 4137 to calculate taxes on allotted ideas.
Field 9: (Clean)
Depart Field 9 clean.
Field 10: Dependent care advantages
Did you give an worker dependent care advantages underneath a dependent care help program? If that’s the case, embrace the whole quantity in Field 10.
Dependent care advantages underneath $5,000 are nontaxable. Advantages over $5,000 are taxable. For those who gave an worker greater than $5,000, report the surplus in Packing containers 1, 3, and 5.
Field 11: Nonqualified plans
Field 11 experiences employer distributions from a nonqualified deferred compensation plan to an worker.
Embody the distribution quantities in Field 1, too.
Field 12: Codes
There are a number of W-2 Field 12 codes it’s possible you’ll must placed on an worker’s Kind W-2. If relevant, add the codes and quantities in Field 12.
These codes and values might decrease the worker’s taxable wages.
Let’s say an worker elected to contribute $1,000 to a retirement plan. You’ll write D | 1,000.00 in Field 12.
Field 13: Checkboxes
Field 13 shouldn’t embrace values. As an alternative, mark the packing containers that apply. There are three packing containers inside Field 13:
- Statutory worker
- Retirement plan
- Third-party sick pay
For instance, in the event you entered Field 12 code D to point out the worker’s retirement contributions, additionally examine the ‘Retirement plan’ field.
Field 14: Different
Report quantities and descriptions in Field 14 akin to car lease funds, state incapacity insurance coverage taxes withheld, and medical health insurance premiums deducted.
Field 15: State | Employer’s state ID quantity
Like Field B, Field 15 identifies your small business’s employer ID quantity. However, Field 15 is state-specific. Mark your state utilizing the two-letter abbreviation. Then, embrace your state EIN.
Some states don’t require reporting. Depart Field 15 clean when you’ve got no reporting requirement along with your state.
Contact your state in the event you wouldn’t have an employer’s state ID quantity and want one.
Field 16: State wages, ideas, and so on.
Field 16 reveals an worker’s wages which are topic to state revenue tax. If the worker works in a state with no state revenue tax, depart Field 16 clean.
An worker’s Field 16 quantity might differ from Field 1. This isn’t a mistake. Some wages are exempt from federal revenue tax and never state revenue tax.
Field 17: State revenue tax
Report how a lot you withheld for state revenue tax in Field 17. For those who didn’t withhold state revenue tax, depart Field 17 clean.
Field 18: Native wages, ideas, and so on.
In case your worker’s wages are topic to native revenue tax, embrace their whole taxable wages in Field 18. Depart this field clean if the worker works in a locality with no revenue tax.
The quantity you checklist in Field 18 may differ from Packing containers 1 and 16.
Field 19: Native revenue tax
Report any native revenue tax withheld from the worker’s wages in Field 19. Depart this field clean whether it is inapplicable.
Field 20: Locality identify
Field 20 ought to present the identify of town or locality.
This text has been up to date from its unique publication date of February 20, 2019.
This isn’t meant as authorized recommendation; for extra data, please click on right here.