Each year around tax season, businesses issue W-2 forms to their employees. A W-2 form is required to show an employee’s earnings and tax withholdings for the year. W-2 records must be accurate and error-free to avoid penalties and delays in processing tax returns.
This guide will discuss how to draft W-2 forms, avoiding common pitfalls, and our recommended strategies for approaching this endeavor. You’ll also learn to use Fill to elevate your workflow.
How to Write Form W-2: A Quick Guide
Accomplishing a W-2 form can be tricky, but with the proper guidance, you can do it correctly. Here’s every step you need to get started:
1. Gather employee information
To write a W-2 form, you must first gather all necessary employee information. This data includes the following:
- Employee’s full name
- Employee’s addressEmployee’s Social Security Number (SSN).
Match the information you provide with what is on the employee’s payroll records to ensure accuracy and validity.
2. Calculate earnings and tax withholdings
Compute the employee’s earnings and tax withholdings for the year. It should include all taxable wages, tips, and other compensation. You must also provide federal income tax, Social Security tax, and Medicare tax withholdings.
3. Determine box numbers
A W-2 form is composed of several boxes that you need to complete accurately. The record contains personal and financial information.
Figure out which items on the W-2 form to report the employee’s earnings and tax withholdings. Each box represents different information, so write the correct information in the appropriate box. In the next section, we’ll list each box on a W-2 form and its implications.
4. Complete the required copies
Once you’ve entered all the necessary information into the appropriate boxes, complete the remaining copies of the W-2 form. These records must include the following:
- Copy A for the Social Security Administration
- Copy B for the employee
- Copy C for the employer’s records
- Copy D for the employee’s state tax department.
Before completion, you must sign each copy on behalf of the employer. You may use a trusted eSignature app like Fill, which makes it effortless for businesses to create, edit, and sign W-2 forms.
Components of a Standard W-2 FormAs mentioned, writing W-2 forms means focusing on a selection of boxes the IRS provides. There are over a dozen boxes, each with its definition and corresponding purpose. Here are all of them:
- Wages, tips, and other compensation: This box reports the total taxable salaries, tips, and further compensation earned by the employee during the year.
- Federal income tax withheld: This item shows the total national income tax the employer withheld from the employee’s paychecks during the year.
- Social Security wages: This box displays the employee pay subject to Social Security tax for the year. It does not include tips or other compensation not subject to Social Security tax.
- Social Security tax withheld: This section reports the amount of Social Security tax the employer withheld from the employee’s paychecks within the year.
- Medicare wages and tips: This item shows the total amount of wages and tips subject to Medicare tax for the year.
- Medicare tax withheld: This box reports the amount of Medicare tax withheld from the employee’s paychecks during the taxable year.
- Social Security tips: This box displays the total amount of tips the employee received, subject to Social Security tax for the year.
- Allocated tips: This section reports the number of tips the employer issued to the employee during the year.
- Advance EIC payment: This box shows any advance payments of the earned income credit (EIC) the employee received within the taxable year.
- Dependent care benefits: This item reports the total dependent care benefits the employer paid to the employee during the year.
- Nonqualified plans: This section displays the total amount of compensation deferred under nonqualified deferred compensation plans.
- State wages, tips, etc.: This box shows the total taxable salaries, tips, and other compensation subject to state income tax.
- State income tax withheld: This box reports the state income tax withheld from the employee’s paychecks within the year.
- State: This box shows the abbreviated name of the employee’s home state.
- Employer’s state ID number: This box displays the employer’s state identification number.
- State wages, tips, etc.: This item reports the total taxable salaries, tips, and other compensation subject to local income tax.
- Local income tax withheld: This box shows the amount of local income tax withheld from the employee’s paychecks during the taxable year.
Best Practices When Writing W-2 Forms
Drafting form W-2 for employees may be challenging. So, here are some lesser-known but valuable best practices for writing W-2 records:
1. Use plain language
Utilize straightforward language when filling out the W-2 form. Avoid jargon or technical terms that may be difficult for the employee or IRS to understand. This step will help ensure the process goes smoothly.
2. Be accurate
Ensure that all the information on the form is accurate and up-to-date. Do another check of the employee’s name and SSN to avoid any spelling or numerical errors.
3. Use the correct format
Use the given format for inputting the information on the document. For example, use the correct codes for different compensation types, such as regular pay, bonuses, or fringe benefits.
4. Keep up with changes
Keep abreast of any tax laws and regulations changes that may affect the information you must include on the document. Researching beforehand may be helpful when writing W-2 forms.
5. Be timely
Ensure that the W-2 forms are completed and distributed to employees promptly. The deadline for distributing W-2 records is typically January 31st each year, although it may change with prior notice.
6. Keep records
Keep accurate records of all W-2 forms issued to employees. These records may be required for tax purposes or for resolving any issues that may arise in the future.
7. Provide additional resources
Give additional resources to employees, such as instructions on how to read and understand the form or guidance on filing their taxes.
Utilizing Fill For Your IRS W-2 Form Creation
A robust eSignature app like Fill can significantly augment IRS W-2 form creation by streamlining the process and making it more efficient. Fill is a cloud-based electronic signature platform that allows you to create, edit, and sign tax forms in one intuitive app.
Fill can help ensure that W-2 forms are accurate, secure, and easily accessible—essential for compliance with tax regulations and maintaining correct employee records.
Try our W-2 form template now and get started for free.