When you ship Types W-2 to your workers, you don’t have to fret concerning the annual type till subsequent 12 months. Or, do you? When you don’t know fill out Type W-2, you could run into issues.
Your workers would possibly come to you with questions on Type W-2. And, your workers 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 Type W-2, field by field, and what all of it means.
Instance Type W-2
Earlier than we dive into fill out Type W-2, right here’s a easy pattern of a Type W-2 for an worker who earns $50,000 yearly.
Tips on how to fill out Type W-2
You may need your Type W-2 obligations all the way down to a science. Enter worker info; ship copies to workers; file the shape with the SSA and state, metropolis, or native tax division; and repeat the next 12 months.
Or, you simply would possibly spend hours gathering worker info and attempting to decode the Wage and Tax Assertion.
Whether or not you full Types W-2 by yourself, use payroll software program, or have a tax preparer, you have to be semi-fluent in realizing fill out Type W-2.
As a generalization, Type W-2 bins present identification, taxable wages, taxes withheld, and advantages info.
Containers A-F are simple. They record figuring out details about your small business and worker. The numbered bins, Containers 1-20, can get slightly extra tough.
If you’d like Type W-2 defined, dive into every field’s goal under.
Field A: Worker’s Social Safety quantity
Field A reveals your worker’s Social Safety quantity. Social Safety numbers are 9 digits which can be formatted like XXX-XX-XXXX.
In case your worker utilized for a Social Safety card and has not acquired it, don’t depart the field clean. As a substitute, write “Utilized For” in Field A on the Social Safety Administration copy. When the worker receives their SS card, it’s essential to difficulty 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 similar on each worker’s Type W-2. The IRS and SSA determine your small business by means of your distinctive EIN.
Don’t use your private Social Safety quantity on Types W-2. When you don’t have an Employer Identification Quantity, apply for an EIN earlier than submitting Type W-2. Then, mark “Utilized For” in Field B.
Field C: Employer’s title, handle, and ZIP code
Field C additional identifies your small business by itemizing your organization’s title and handle. Use your small business’s authorized handle, even when it’s totally different than the place your workers work.
Your workers might ponder whether the handle is inaccurate if it’s totally different than their work handle. Confirm your authorized enterprise handle 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 Types W-2 so you may hold information of them internally. When you don’t use management numbers, depart this field clean.
Containers E and F: Worker’s title, handle, and ZIP code
Field E reveals the worker’s first title, center preliminary, and final title. Reference the worker’s SSN to enter their title appropriately.
Enter the worker’s handle in Field F.
Field 1: Wages, ideas, different compensation
Field 1 studies an worker’s wages, ideas, and different compensation. That is the quantity you paid the worker in the course of the 12 months that’s topic to federal revenue tax.
Funds not topic to federal revenue tax embody pre-tax retirement plan contributions, medical insurance premiums, and commuter advantages.
The wages you report in Field 1 is likely to be larger or decrease than different wages on Type W-2. This isn’t essentially 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 complete legal responsibility.
Field 3: Social Safety wages
Field 3 reveals an worker’s complete wages topic to Social Safety tax. Don’t embody the quantity of pre-tax deductions which can be exempt from Social Safety tax in Field 3.
The quantity in Field 3 shouldn’t be larger than the Social Safety wage base. For 2023, the wage base is $160,200.
When you should report Social Safety ideas (Field 7), the entire of Containers 3 and seven have to be lower than $160,200 for 2023.
Field 4: Social Safety tax withheld
Field 4 studies 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 $9,932.40 ($160,200 X 6.2%) for 2023.
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 usually 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 larger than Field 3.
For instance, the worker earned $180,000. The worker’s Social Safety wages, (Field 3) ought to present $160,200 whereas Field 5, Medicare wages and ideas, shows $180,000.
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 charge ought to equal Field 6. But when the worker earned above $200,000 (single), their tax legal responsibility ought to be larger.
When you paid an worker above $200,000 (single), you must have additionally withheld the extra Medicare tax charge 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, embody these tip quantities in Containers 1 and 5.
Once more, the entire of Containers 7 and three shouldn’t be greater than $160,200 for 2023.
Field 8: Allotted ideas
Report the information you allotted to your worker in Field 8, if relevant. Allotted ideas are quantities that you simply designate to tipped workers. Not all employers must allocate tricks to their workers.
Don’t embody the quantity in Field 8 in Containers 1, 3, 5, or 7. Allotted ideas aren’t included in taxable revenue on Type W-2. Staff should use Type 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? In that case, embody the entire quantity in Field 10.
Dependent care advantages underneath $5,000 are nontaxable. Advantages over $5,000 are taxable. When you gave an worker greater than $5,000, report the surplus in Containers 1, 3, and 5.
Field 11: Nonqualified plans
Field 11 studies employer distributions from a nonqualified deferred compensation plan to an worker.
Embrace the distribution quantities in Field 1, too.
Field 12: Codes
There are a number of W-2 Field 12 codes you could have to placed on an worker’s Type 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 401(okay) retirement plan. You’ll write D | 1,000.00 in Field 12.
Field 13: Checkboxes
Field 13 shouldn’t embody values. As a substitute, mark the bins that apply. There are three bins inside Field 13:
- Statutory worker
- Retirement plan
- Third-party sick pay
For instance, in case you entered Field 12 code D to point out the worker’s retirement contributions, additionally test the ‘Retirement plan’ field.
Field 14: Different
Report quantities and descriptions in Field 14 reminiscent of car lease funds, state incapacity insurance coverage taxes withheld, and medical 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, embody your state EIN.
Some states don’t require reporting. Depart Field 15 clean when you’ve got no reporting requirement together with your state.
Contact your state in case you don’t have an employer’s state ID quantity and wish one.
Field 16: State wages, ideas, and so forth.
Field 16 reveals an worker’s wages which can be 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 essentially 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. When you didn’t withhold state revenue tax, depart Field 17 clean.
Field 18: Native wages, ideas, and so forth.
In case your worker’s wages are topic to native revenue tax, embody their complete taxable wages in Field 18. Depart this field clean if the worker works in a locality with no revenue tax.
The quantity you record in Field 18 would possibly differ from 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 title
Field 20 ought to present the title of town or locality.
Chill out—Patriot’s payroll software program has you lined.
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This text has been up to date from its authentic publication date of February 20, 2019.
This isn’t meant as authorized recommendation; for extra info, please click on right here.
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