What Is W2 Form? Know All About the Popular W2

Form W2 is defined as a standard tax form showing the total wage paid to an employee and the taxes withheld during the calendar year. Form W2 is issued and required by an internal revenue service or IRS in the United States for daily wage workers and employees. It is a wage and tax statement form to report the wages paid and the taxes that are included and send to the federal and state authorities.

The W2 form contains all the spaces to fill in the information regarding salary or the wage that one receives.

The form is also used to report the FICA taxes to the social security administration. This form is to be filled by the employer and the deadline is given around 2months to prepare their return.

This form cannot be issued for business owners, entrepreneurs, freelancers, or any independent worker with self-earning methods in other words it can be termed as an annual payroll report for employees.

The Information Included in the W2 Form

W2 forms are divided into sections, such as federal and state sections but they are the same in every sector made for every employee.

Since the W2 form is made for every single employee, there are some spaces are allotted to provide information.

The annual amount of earnings of an employee is recorded including security tax, federal income tax, state ID number, paychecks, and others.

An employee has to fill in all the information if the employment changes or shifts to another company.

All the other information related to business, retirement, personal information, dependent care benefits, and earnings are also included.

Filling the W2 Form

The filling of the W2 form can be done digitally, the filling of the form has become easier with time. There are six copies of the form which are defined as copies A, B, C, D,1, and 2.

The Form W-2, along with Form W-3, must be filed by the employer with the Social Security Administration by the end of February and on the other hand, the copies of B, C, 1, and 2 are to be sent by January 1.

The employee gets a copy of the W2 form attached with the tax return. The last date of filling the digital form is January 31st of every year.

The W-2 form is divided into boxes that report various items relating to the income of employees. Each box is of importance and must be filled correctly, the description and what to fill in each box is given below.

  • Box 1 of the W-2 is to fill about annual wage and salary payments with the amount of federal tax withheld from it in the box.
  • Box 3 reports an amount that is less than total annual wages. Other boxes on the W-2 form include Medicare tax, Social Security taxes that are withheld, and information on state income tax withholding.
  • Box 4 is about social security tax withheld for students working and enrolled at least half time and attending classes, as well as nonresident employees visiting the U.S. for a limited period visa and performing services to carry out the purpose for which such visas have been issued.
  • Box 5 represents income subject to Medicare tax. Medicare wages are deducted under health or vision insurances, and parking.
  • Box 6 contains the total amount of Medicare tax, much like Social Security taxes and Medicare taxes.
  • Box 7 has any tips that need to be reported.
  • Box 8 shows any allocated tips that are required for an employee.
  • Box 9 is blank, as this requirement has expired. It’s currently in the process of being removed from Form W-2.
  • Box 10 reports the total amount deducted from wages for dependent care assistance programs.
  • Box 11 reports the total amount distributed for a non-qualified deferred compensation plan.
  • Box 12 has multiple divisions. For instance, 12 C calls for a Group-Term Life Insurance (GTL), the 12 E is for Salary Reductions, the 12 G for Contributions made to the Commonwealth’s Tax-Deferred Savings Plan.
  • The 12 P for the non-taxable moving expenses for which you were reimbursed directly. The last box of 12 DD is for the cost of employer-sponsored health coverage. The paid portion of health insurance for informational purposes only is listed here.
  • Box 14 also has divisions to mention additional tax information. For instance, 14A is for health Premium paid to the employee, 14B Parking Deductions, and 14C is for flex deductions and fees and others.
  • Box 15 is for the State ID Number of an employee for taxation purposes.
  • Box 16 represents the total of taxable wages earned in that state.
  • Box 17 represents the total of state income taxes withheld from your paycheck for the wages reported in Box 16.
  • The last Box 18, 19, and 20 are for the out-of-state employees only, whose tax residency states collect local income taxes.

Purpose of the Form

The purpose of the form is to keep an official record of the wages and salaries received by the employees. Along with the federal, state, and local taxes withheld from their salaries.

The purpose of the form also includes a yearly income tax return that employees get to withheld Medicare, income tax, and social security tax.

The W2 form works as a document of proof that a person has worked in a company or organization for a period of time and getting waged.

Penalties

Under few circumstances, some penalties can sometimes be mentioned such as:

  • In case of any single error is found in the Form W-2 then the penalty charge is $250 per form. It includes both the employer and the IRS combined has to pay the penalty of $500.
  • In case of late filings within 30 days of the due date incur a penalty of $30 per form can be charged. After 30 days but before August 1, the penalty increases to $60 per application.
  • After August 1, the penalty increases to $100 per application and it also depends on the size of the business.

Impact of W2 Form in Recruitment

W2 form has a major impact on the recruitment process and selection of employees. The reason being is that nowadays many recruiters had given importance to the W2 form of the candidate.

The importance of the W2 form is mentioned by many employers in the sense of finding out about the history of the candidate. Their working history can be easily found and noted with the help of the W2 form.

When processing the recruitment, many recruiters do choose to understand the professional behavior and experience of the candidate.

The experiences of the candidate and the wages that they have been receiving from their previous jobs do make an impact on the recruitment.

Many recruiters do ask for the W2 form to check and evaluate the tax and their fulfillment based on the date of wage. Taxes are also somewhere related to the fines that one has to pay if there are any defaults or pending.

The pending fines or tax can put the candidate in the not preferred zone of the company that will make the hiring of the candidate hard. The whole processing of the recruitment includes the history check of the candidate especially in the zone of financial activities.

An employee should have the W2 form in the form of a pdf with full detailed information by the authorities so that it becomes easy for the next authority to check and register.

Any employee can ask for a W2 form from their company or organization and they must. The legal revenue department of the country will sanction the W2 form and the legal stamp on the form will prove the honesty of the candidate during recruitment.

The chances of fraud in such forms are common and not at all beneficial to the candidates. During the recruitment process, the candidate should come out clean and honest and without any flaws.

Candidates should be aware that there is mentioned some time the much software available in the market that can detect fraud. Numerous tools and software designed to detect multiple issues and flaws in such forms are used by many recruiters.

So, it is advisable to not take the road to the shortcuts and choose the easy way to fill and frame a form such as W2 for job offers.

With the process, a candidate can get the W2 form and no one has the right to stop or question them. Both the employer and the employees should have a record of all the finance they come through while working in a company and have documentation of them.

The good point is that the W2 form is the most legit piece of document that can be used as an important source of information during the recruitment process. The filled W2 form with all the correct information can reflect a good impression on the recruiter and ask for the updates in case of quitting and finding a new one is also advisable and recommended.

Tisha Garcia

I write with any knowledge that I have about this world, the words that I write are the reflection of my thought and how I see the world. I have written blogs about diverse things and still tried to share some knowledge about the things that I have seen and gained. Written words are just an inside thought of my mind which I would love to share and explore more.