W-2 Form

Form W-2 is a statement prepared by an employer for individuals who were employed at any time during the previous year.

Also known as a statement of earnings or Wage and Tax Statement, the W-2 Form indicates the total gross earnings of an employee. It also shows the employee's Social Security earnings, Medicare earnings and federal and state taxes withheld from wages over the previous year.

Note: this form is due to employees by January 31 of each year, as it’s used to complete their annual tax return.  

Payroll Register and W-2 Preparation

The information for W-2 tax forms is gathered from your business payroll register. This payroll register should record each employee's wages, as well as withholding for FICA, Medicare and Social Security. Deductions for health savings accounts, medical plans, and any other deductions should also be recorded.

Required Employer Information

For each W-2 tax form, include the Federal Employer ID Number, the full legal name of the business and the business mailing address.

When preparing a large number of W-2 tax forms, some employers add a control number to help with processing and tracking. Most payroll preparation software programs have the option to add this number to the tax forms.

Employee Earnings Reported

Box 1 includes total wages, tips and any other type of compensation earned during the previous year. Corresponding boxes will include any other amounts to be withheld.

On each W-2 tax form, the employer must check the correct box to indicate an employee's participation in a retirement plan, another type of non-qualified plan or if the employee received any third-party sick pay. Elective deferrals like 401(k) and 403(b) plans are also recorded here.

Depending on the employee, you may need to provide information in other boxes, such as for:

• Allocated tips

• Dependent care benefits

• Other (miscellaneous)

Distribution of Forms

Once all the appropriate information has been double checked for accuracy, and recorded on the W-2 tax forms, it's time to send the right forms to the right places.

• The employee gets copies B, C, 1 and 2.

• The Social Security Administration gets copy A, along with the employee's W-3 form

• The employer keeps Copy D

If additional copies of any tax forms are needed, they can be picked up at a local office supply store or ordered from the IRS directly.

Check with a qualified tax professional or CPA for complete information regarding all IRS tax forms. You can also use a payroll service, like SurePayroll, that automatically creates and distributes W-2s on your behalf.