Form W-2 Instructions & Tax Reporting Pointers

What You Need to Know About Form W-2

Considered an “information return” by the IRS, the W-2, Wage and Tax Statement, is used to report an employee’s wages, tips and other compensation. The form also captures the withholding for various taxes, such as income, Social Security and Medicare.

You’re required to issue a W-2 to each employee by January 31 for the previous tax year. You’re required to issue a W-2 to each employee by January 31 for the previous tax year. January 31 is also the deadline that you must submit your file to the IRS.

With W-2s, it’s essential that the name and Social Security number (SSN) on the form match the SSN on the employee’s Social Security card. This match allows the proper recording of the worker’s earnings to their lifetime earnings records, which later becomes the basis for determining the eligibility and amount of Social Security benefits.

Be aware, too, that many states have W-2 filing requirements separate from federal filing requirements.

Applicable businesses: Any business with employees

When to file: W-2 forms must be mailed to recipients by January 31, and e-filed with the SSA by January 31 each year. State filing deadlines vary by state.

Not sure if a worker is an employee or contractor? Here’s help.

All of the following may be reported on a W-2:

  • Wages
  • Tips
  • Compensation, such as vacation allowances, bonuses, severance pay, certain moving expense payments, some kinds of travel allowances and third-party payments of sick pay for permanent, temporary and seasonal employees
  • Income tax withholding (Federal, State, Local)
  • Social Security withholding
  • Medicare withholding
  • Other applicable withholdings, such as 401(k) and pre-tax health insurance
  • Any remuneration, including non-cash payments of $600 or more for services performed by an employee.

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