What Is a W2 Form … and Why Do You Need to Supply One to Your Employees?

What Is a W2 Form ... and Why Do You Need to Supply One to Your Employees?
What Is a W2 Form … and Why Do You Need to Supply One to Your Employees?

As you fill your open positions, you are responsible for conducting background checks for your applicants. The checks could help determine who is qualified for the job. 

If a candidate has a job history of multiple positions, inaccurate information, or unemployment gaps, you may have a problem. Requesting their W2 forms may be a great way to get the relevant information. 

The W2 form is more than a piece of paper. This IRS form holds essential information, including the employer’s name, an employee’s salary and compensation for the calendar year, and other sensitive information. 

What is a Form W-2?

The W2, also known as ‘The wage and Tax statement, shows an employee’s income for the last year. It shows the amount withheld as tax and features plenty of helpful information. As an employer, you need to issue your employees with the form as they use it to prepare tax returns. 

The information on this form lets your employees know if they will be writing a check or receiving a refund during tax time. If an employee received at least $600 in payment from you throughout the year, you need to give them this form. Independent contract workers and freelancers receive 1099s instead of W2s from their clients. 

Creating a W2 Form for Small Businesses

As a small business owner, there are plenty of tax forms to learn about. The W2 is one of the most important ones. According to the IRS, you need to provide it to all the qualifying employees. W2 employees may work part-time or full-time. All employees working under an employment agreement are eligible.

Using a free W2 generator is a great idea. It saves you a lot of time and could help avoid mistakes. The online tools take the guesswork out of W2ceration processes. They help avoid mistakes that would otherwise be costly.

What Does the Form Include?

  • Employees’ deductions and dependents
  • Employees’ ZIP code, name, and address
  • Taxpayer Information Number, Individual Taxpayer Identification Number, or Social Security Number
  • Employee name and address
  • Employer’s Identification Number and control number
  • The taxes withheld from employee’s wages
  • Employer’s name, state ID number, address, and ZIP code
  • Employee’s taxable wages, bonuses, tip income, and overall compensation on dollars.

How to Submit W2 Forms

Every year, you must submit W2 forms to two addresses- the Social Security Administration and your employees’ residence. You may submit the forms to the SSA online or by mail. Ensure that you submit them before January 31, which is the deadline. 

If you choose to submit the forms by mail, include a W3 Transmittal Form. It summarizes the information in your W2 Forms. The fastest way to submit your forms to the SSA is online through Business Services Online. 

W2 Form Variants

There are two main variants of W2 forms-condensed and traditional. Traditional forms have two W2 copies at the top and bottom of the document. You need to fill them out for different employees, separate them, and collate for mailing. The traditional variant is consistent with the IRS/SSA standard. Condensed W2 forms merge different W2 copies for an employee on one page.

Filling out and submitting your employees’ W2 forms does not just help them. It is also a legal requirement. The IRS demands that you submit them before the deadline to avoid penalties. 

If you are an employer, you are obligated to provide your eligible employees with W2 forms. 

They hold important information, including their taxable wages, name, address, and plenty of helpful information. Submitting the information is a legal requirement, and it can help your employees during tax time. Consider using a free w2 generator to avoid mistakes and save money.