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What Is a W-2 Form definition?
The W-2 form is one of the most frequently used forms by taxpayers. It is also called the Wage and Tax Statement. An employer fills this document for their employees. The W-2 form for 2021 is short but informative and extremely important for taxpayers as the data is crucial to complete tax return documents.
Additional Requirements on W-2 Tax Form
The W-2 form 2021 should be filed using several copies. One copy goes to the employee, the second to the Social Security Administration, and the third to the local state tax department. The last three copies stay with the company, so all documents are kept in paper or digital storage for four years if needed for a tax audit. The Social Security Administration reviews W-2 forms to stay informed of employee payments. Providing the wrong data can lead to problems with the IRS and SSA, so ensure you have provided the correct, up-to-date, and relevant information.
To avoid problems or delays, encourage employees to inform you about any changes to their addresses, legal names, marital statuses, etc., as soon as possible. This way, you will have the most accurate details for every employee to complete corporate documents correctly. Remember that officially hired individuals file the W-2 tax form. Independent contractors, who provide their services to the company but are not employed, should file forms with another tax return. Those individuals should carefully track their payments, as only they are responsible for reporting them to the local IRS department.
W-2 Tax Form Parts
Before you begin filling out the W-2 tax form, let's take a closer look at its components. We highly recommend employers speed up the form filling process by using a template with fillable fields. The document contains general information about the employer, employee, and tax payments, particularly the withdrawal sum. Filling out the form may seem complicated with its numerous small boxes and data fields. We will review each of the sample’s items to help everyone who handles the W-2 form for 2021. Let's take a closer look at what details the employer should include about the company:
- The full name of the business or company
- Complete office address with the ZIP code
- Correct Employer Identification Number
- The State ID Number and control number (needed for record-keeping purposes)
The employee's details include their first and last name and complete mailing address with ZIP code. The tax part is divided into several separate cells, itemizing general and particular payments and tips. We'll take a closer look below.
Form W-2 Instructions
Every item in the W-2 tax form has a header for better navigation. The document contains three main parts.
The First Part — General Details
The left part of the W-2 tax form includes the following details about the company and the hired employee:
- Cell a - Employee's Social Security Number. It is essential to provide the correct number as mistakes can lead to delays in tax report acceptance.
- Cell b - Employer Identification Number.
- Cell c - Employer's or company's full official name, address, and ZIP code.
- Cell d - Control number, assigned by the payroll processing system, used in your company.
- Cell e - Employee's full name, last name, and initial.
- Cell f - The postal address of the hired person, including their state, city, street, and ZIP code.
The Second Part — Tax Payment Details
The second part consists of itemized financial information:
- Includes tips, wages, or any other compensation.
- Contains the federal income tax withheld.
- Social security wages.
- Social Security tax withheld, counted on the employee's behalf.
- Medicare wages and tips may be used to report in the 8959 form like additional Medicare Tax.
- Medicare tax withheld. The sum is 1.45 percent on the whole sum of Medicare tax withheld. If those tips increase by 200,000 dollars, an additional tax is used.
- Social Security tips to record the income reported by the employee to the employer.
- Allocated tips - separate from items one, three, seven, or five. Those tips can be counted when filing the 4137 form; check the amount from there.
- Verification code, used by those who file the template electronically, should contain only numbers and letters from A to F. With it, the IRS can better identify the data submitted while filing your return.
- Dependent care benefits. If the employee has children or dependents, it is essential to include the number of payments in this cell. If they increase to five thousand dollars, report them in the first box.
- Non-qualified plans. This box is for those who get non-qualified deferred compensation. If the individual had distribution and deferral for one tax year, they are not provided here.
- Deferral status for the Internal Revenue Service. It may be used for elective deferrals, designated Roth contributions plans, and simple plan deferrals. There are several codes used in the concrete case. Thus, read the form instructions carefully to use the most applicable code for the employee. It may be more than one category.
- Tax payment plans, including the status of an employee, retired person, or third-party sick pay.
- Report any additional information not applicable to any box. This includes the state disability tax withheld, non-taxable income, health insurance premiums, uniform payments, etc.
The Third Part — the State Tax Payment Details
The bottom of the W-2 tax form is to provide details about state taxing:
15 — the employee's state ID number
16 — State tips, wages
17 — Income tax withheld, paid to the state budget
18 — Local tips, wages, and other payments
19 — Local income tax amount
20 — Locality or city name where the taxes are paid
The last part of the W-2 form for 2021 is applicable to the employer only, as the company pays taxes according to the general tax law and the local state budget. Business laws may vary from state to state; that is why it is crucial to provide this information for the place of your business.
W-2 Form 2021: Terms and Requirements
Be sure to review the general requirements and tips to file the W-2 tax form. Below is a list of recommendations for your consideration.
File Templates in Electronic PDF Format
The general requirement for a W-2 tax form is to send it to your employees and governmental and state institutions by US mail or by electronic mail. It is also possible to complete the W-2 form online, sign it electronically, and create a hard copy on a blank piece of paper. Those who have many employees, more than two hundred and twenty, are required to file the record digitally, as it is much easier for the IRS to process numerous electronic documents rather than paper copies. Additionally, e-filing will save you time, and the templates are easy to review, thanks to the printed text format. With this printable W-2 form template, the Social Security Administration will automatically generate the submission record.
Keep Track of Deadlines
Complete and send all samples for the previous tax year before the thirty-first of January. This way, you and your employees will avoid penalties and misunderstandings with government institutions. First, send documents to the Internal Revenue Service to avoid paying penalties. The minimal late-filed fee is fifty dollars per document if filed late but sent during the first thirty days after the deadline. Those who file later than one month after the due date will have to pay one hundred and ten dollars for every document. Records filed later than the first of August will be fined two hundred and eighty dollars per employee. The amount of penalties may vary from $571,000 to $3,426,000 for large companies and from $187,500 to $1,142,500 for small businesses. That is why it’s crucial to complete all W-2 forms for 2021 on time. For employees, it’s best to send documents at the beginning of January to give yourself time to make any corrections or clear up any misunderstandings.
Check Everything Twice
Remember that every item provided in the W-2 tax form should match all other documents. If you have some differences, the IRS will want to know why they are different due to the possibility of additional checks and penalties. Those who do not provide tax information, especially for tips, will be required to pay the highest tax rate. Do not add dollar signs in the fields with sums and use black font while completing the fillable W-2 form online. Mind that you must include decimal points as cents. Any information provided incorrectly may also be cause for incurring penalties. If any circumstances not under your control influenced the templates to be filed incorrectly, provide evidence to the IRS.
Attach a Copy of the Form to any Tax Return Documents
To prove the information in the tax documents, provide the records and any supporting documentation, and a Form W-2 (Tax and Wage Statement). If an employer does not give the form to you on time, it is important to send a request for the document to your company's office.
Pay Taxes Quarterly
Do not leave your payments for the last moment. Instead, you can divide them into smaller, more manageable payments. Businesses file numerous documents every financial year, which is why they should simplify document management processes. Careful tracking and paying taxes quarterly can reduce difficulties and confusion as well.
Don't be Afraid to Correct a Mistake
If you've noticed a mistake in a W-2 form for 2021 after filing it, it is better to correct it and file a new copy. Otherwise, you may have problems in the future. Taking steps to correct the mistake proves that you knew about it and tried to fix it as soon as possible.
Keep all Records in Each Employee's File
A hired individual may fail to receive their document due to incorrect contact information. Do not delete or throw out notifications for receiving USPS or email messages. Keep them as proof that you did everything right from your side. Try to contact an employee and inform them about your case. They should provide you with the correct information. If you cannot connect with an employee, the notification will be adequate proof.
Register Online With the Social Security Administration
Users registered at this online platform have the opportunity to e-file and track reports you've provided. The system will show the application status and error reports (for example, a mismatch in name and SSN). You can use this service to check the W-2 tax form was submitted.
Hire a Qualified Accountant to Avoid Mistakes
A company with more than fifty employees may face problems during the tax season. There is a lot to know about processing payments, so it is best to hire a specialist.
Use the Software or an Online solution for Storing Documents and E-filing
Reporting taxes withheld and filing W-2 forms online would be challenging without the use of specialized tools designed to accelerate the form-filling process. Use pdfFiller to manage and file the W-2 form online – and streamline tax paperwork processes.
How do I fill out the W-2 form in 2022?
Follow the guidelines below to prepare the W-2 form online:
- Select the orange Get Form button.
- Click the first orange field to insert information.
- Navigate through the document using Enter or Tab buttons.
- Turn on the Wizard mode to avoid missing required fields.
- Double-check the document.
- Click Done and export the file in your preferred way.