In order to prepare Form W-2, you will need the tax information for the employer and employees, as well as the amounts paid and withheld for the employees.
You will need to include the following information in order to prepare Form W-2 for each employee:
Prepare Form W-2: Employer Information
- Federal Employer Identification Number (EIN)
- Employer Name
- Employer Address
Prepare Form W-2: Employee Information
- Employee Social Security Number or Taxpayer Identification Number (SSN/TIN)
- Employee Name
- Employee Address
Prepare Form W-2: Reporting Amounts
Box 1: Wages, tips, other compensation. The total taxable wages, tips, and other compensation paid to the employee during the reporting year.
Box 2: Federal income tax withheld. The total federal income tax withheld from the employee’s wages for the year.
Box 3: Social security wages. The total wages paid before payroll deductions that are subject to employee social security tax but do not include social security or allocated tips.
Box 4: Social security tax withheld. The total employee social security tax withheld, including social security tax on tips.
Box 5: Medicare wages and tips. The total Medicare wages and tips. Wages and tips subject to social security tax (boxes 3 and 7) are also subject to Medicare tax.
Box 6: Medicare tax withheld. The total employee Medicare tax withheld, including any Additional Medicare Tax, for the reporting year.
Box 7: Social security tips. Enter the tips that the employee reported even if you do not have enough employee funds to collect the social security tax for the tips.
Box 8: Allocated tips. If the employer is a large food or beverage establishment, enter the tips allocated to the employee. This amount is not included in Boxes 1, 3, 5, or 7.
Box 9: Verification code. If you are participating in the W-2 Verification Code pilot, enter the appropriate code on Copies B and C.
Box 10: Dependent care benefits. The total dependent care benefits under a dependent care assistance program paid or incurred by you for the employee.
Box 11: Nonqualified plans. This box is used by the SSA to determine if any part of the amounts reported in Box 1 or Boxes 3 and/or 5 were earned in a prior year.
Box 12: Codes. These IRS codes are designated for certain items being reported, including uncollected social security or Medicare tax on tips, taxable costs of group-term life insurance over $50,000, or elective deferrals.
Box 13: Checkboxes. These boxes are to indicate situations that apply to the employee, including whether they are a statutory employee or if they were an active participant in a retirement plan.
Box 14: Other. If you included 100% of a vehicle’s annual lease value in the employee income, it must also be reported here or on a separate statement. This box may also be used for other information you may want to give to the employee.
Boxes 15-22: State and local income tax information. Enter the state and local income tax information to be reported.
Important Note: Always check box limits/maximum amounts before filing!
In summary, to accurately prepare Form W-2, you must gather detailed employer and employee information, along with precise financial figures on wages, taxes, and benefits. Each section of the form plays a critical role in ensuring tax compliance and clarity for employees. Employers must be diligent in reporting and verifying this information, always mindful of box limits and maximum amounts.
Equally important is the need to be aware of filing deadlines to ensure timely submission and stay ahead of any potential issues.
BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.