Any employer who pays an employee $600 or more for the year, including noncash forms of remuneration, must file a form W-2 for each employee who was subject to income and payroll tax withholding. Employers file a copy of form W-2 with the IRS for information-reporting purposes and send a copy to the employee for use in preparing his or her annual tax return (form 1040, 1040A or 1040EZ) and determining total income tax liability. Employers can file form W-2 with the IRS electronically or by mail if they have fewer than 250 subject employees; if they have 250 or more subject employees, employers must file their W-2s electronically.

On form W-2, employers must report their employer identification number; their name, address and zip code; the employee’s name, address and zip code; the employee’s wages, tips and other compensation; the federal income tax the employer withheld from the employee’s pay (which it should have remitted to the IRS); the amount of the employee’s wages subject to Social Security and Medicare taxes; the amount of Social Security and Medicare taxes withheld; Social Security tips; allocated tips; dependent care benefits that the employer paid to or incurred on the employee’s behalf; nonqualified plan income; and other forms of income, which may or may not be taxable, such as the cost of employer-sponsored health coverage and salary deferrals to 401(k) plans (both nontaxable as of 2014). Employers also report each employee’s state and local income and taxes withheld on form W-2.

If an employer makes a mistake on form W-2 and catches it after filing the form, they should complete a form W-2c and send copies to both the IRS and the employee to correct the error. Employers should give each employee who is subject to W-2 reporting a copy of the form by the first business day in February (usually February 1).

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