A:

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).

RELATED FAQS
  1. How do I report Simple IRA contributions on a W2?

    Learn how Savings Incentive Match for Employees, or SIMPLE IRA, contributions are reported for the participant on Form W2 ... Read Answer >>
  2. What’s the difference between IRS Forms 1040 and 1040EZ?

    Though very similar, the differences between the 1040 and 1040EZ Forms are significant when it comes to filing your tax return. ... Read Answer >>
Related Articles
  1. Taxes

    Understanding the W-2 Form

    The W-2 Form is a standard Internal Revenue Service (IRS) form that employers are required to furnish employees at the end of each year.
  2. Retirement

    Employers: Don't Forget IRS Form 941

    Your obligations as an employer include various employment taxes. Use this form to report them.
  3. Taxes

    Have Household Help? Don't Get In Tax Trouble

    Hiring household workers can be a complicated process. Know what the government requires so you can prevent penalties and problems down the road.
  4. Financial Advisor

    Life Insurance Plans to Help Your Small Business Retain Employees

    How to use and design cash value life insurance plans as an incentive to help attract and retain key employees.
  5. Personal Finance

    What's Your Employee Value?

    Have you ever wondered how much you're worth to your boss? Here's a method for calculating that value.
  6. Retirement

    6 Benefits You're Required by Law to Offer Your Employees

    Learn about the benefits that a business must offer to employees, such as family and medical leave, as well as various forms of insurance coverage.
  7. Small Business

    Employer? Steps To Fill Out Immigration's I-9 Form

    Step-by-step, here's how you and the employee you've hired fill out this required form from the U.S. Citizenship and Immigration Services.
  8. Small Business

    Hiring? Regulations Small Businesses Need to Know

    When a small business becomes an employer, it has new responsibilities. Make sure you familiarize yourself with regulatory requirements.
  9. Personal Finance

    What To Bring To The Tax Man

    Forgetting these forms can cost you your refund.
  10. Insurance

    Life Insurance as a Bonus Plan for Key Employees

    A Section 162 plan is a life insurance plan provided by an employer to key employees.
RELATED TERMS
  1. W-2 Form

    The W-2 form reports an employee's annual wages and the amount ...
  2. Form 4506

    A tax form distributed by the Internal Revenue Service (IRS) ...
  3. Withholding

    The portion of an employee's wages that is not included in his ...
  4. Payroll Tax

    Tax an employer withholds and/or pays on behalf of their employees ...
  5. Form 1095-C

    An IRS form sent to anyone who received health insurance coverage ...
  6. W-4 Form

    A form completed by an employee to indicate his or her tax situation ...
Hot Definitions
  1. Five Cs Of Credit

    A method used by lenders to determine the credit worthiness of potential borrowers. The system weighs five characteristics ...
  2. Straddle

    An options strategy in which the investor holds a position in both a call and put with the same strike price and expiration ...
  3. Trickle-Down Theory

    An economic idea which states that decreasing marginal and capital gains tax rates - especially for corporations, investors ...
  4. North American Free Trade Agreement - NAFTA

    A regulation implemented on Jan. 1, 1994, that eventually eliminated tariffs to encourage economic activity between the United ...
  5. Agency Theory

    A supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving ...
  6. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
Trading Center