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With tax season upon us you might be working on getting W-2’s sent out to your employees and possibly previous employees as well. If you are new to the business world and are overwhelmed with taxes and trying to figure out how to create a W-2, you are in the right place.
Keep reading to learn everything you need to know about what to include in a W-2 before mailing them out.
Gather Your Information
Before you start filling out any W2’s you will need to gather your information from your payroll logs. You will need total wages, any withholdings, and health savings accounts deductions and medical plan deductions.
W2 Parts
Once you gather the information above you can begin to fill out the W2 Form Online or manually, whichever you prefer.
Employer and Employee Information
In the employer section, you will put your business information. You will need your business name, address and employer ID number (EIN).
In the employee section, you will fill out the employee’s information including name, address, and social security number.
Employee Earnings
There are several boxes in this section. In Box 1 you will enter the total wages earned for the previous year, and tips if it applies. The total wages is the gross pay for the entire year. In Box 2 you will enter the total amount that was withheld for the year. In Box 3 you will fill in the total social security wages.
Box 4 will include the total Social Security tax that was withheld. Box 5 will be the total Medicare wages and any tips if applicable. Box 6 is the total Medicare tax withheld.
Box 7 includes the Social Security tips if this applies and Box 8 will have the allocated tips (again if applicable). Box 9 will have any Earned Income Credits (EIC) payments that were paid in advance. Box 10 will include any dependent care benefits that were paid.
Retirement Participation
Boxes 11 and 13 are for you to check if the employee participates in a retirement plan. Box 11 is a non-qualified plan and Box 13 is whether or not the employee is a statutory employee or receives third-party sick pay.
Other Compensation
Box 12 is where you can enter up to 4 types of other compensation. This can include things like non-taxable sick pay, reimbursed moving expenses, medical savings account contributions.
Other Deductions
Box 14 is where you will disclose any other deductions the employee had. This can include after-tax pensions, uniform deductions, union dues deductions, health insurance deductions, to name a few.
State and Local Information
This final section is where you will enter state and local wages withheld. Box 15 is the two-letter state code and your business’s State Tax ID. Box 16 is the state wages, box 17 is the total state income tax withheld.
Box 18 is any local wages, box 19 is the local income tax withheld, and last but not least Box 20 is the locality name.
Now You Know How to Create a W-2
As you can see creating a W2 does not have to be as overwhelming as it might sound, now that you are know how to create a W-2. Once you gather your information it will make it easier to fill out a W2 form for each employee.
The key is to stay organized in the payroll department all year to have an easier time collecting the data you need. You do not want to report wrong information and end up with fines and penalties which is why you want to make organization a priority.
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