Both employees and employers need to thoroughly understand what is a W2 employee in order to accurately fulfill their tax responsibilities each year.
Do you know the difference between 1099 vs W2? These terms can refer to different types of tax forms and different classifications of employment. Keep reading if you want to understand what kind of employee you are and what kind of tax form you should use to file taxes each year.
What is a W2 Form?
Form W2 is a tax form used by employees and employers. This form includes information about the employer, the company, the employee, what the employee was paid this year, and what the employee paid in taxes through payroll this year.
In short, a W2 form is a yearly summary of an employee's income received and taxes paid through payroll.
This form is given to each employee, by their employer, at the beginning of every year. Employees then use this form to file their tax return.
What is a W2 Employee?
A W2 employee is a worker who receives a W2 tax form from their employer. W2 employees are generally considered to be the most traditional form of employment.
Workers who are classified under other forms of employment use other tax forms (like 1099 employees) to file their taxes. Hence the name, "W2 employee."
W2 employees are hired and work under their employers. Their employers are the ones who decide where, when, and how they work. Their employers are then responsible for providing the means that allow their employers to do their job like office space, computers, software, tools, etc.
W2 employees enjoy any benefits the company provides like insurance, wellness programs, paid time off, vacation days, retirement contributions, paternal leave, and more.
As a W2 employee, your employer's payroll department will then handle creating your W2 form each year and sending a copy to you and the IRS at the beginning of each year.
When is the W2 Deadline?
You can start filing your taxes as early as January 1st each year, but oftentimes as a W2 employee, you have to wait for your employer to send your W2 forms.
Employers actually have a deadline for when they're supposed to send the W2s to all their employees. Employers need to send W2 forms to employees and the IRS by January 31st each year.
If you haven't received this form yet and it's past January 31st, reach out to your work's payroll department to see what's going on. It could be they don't have the right information from you.
Other deadlines you need to worry about regarding W2 forms are the same general tax deadlines everyone needs to worry about on their tax prep checklist. In a normal year, your taxes will be due mid-April. But you can check on the IRS's website to be sure.
This year, the IRS pushed back Tax Day to May 17th. If you still need to file taxes this year, you can use Check City's tax services. Check City's tax prep rates don't go up no matter how late you are filing taxes. You can even take out a tax refund advance and get your tax refund sooner!
How to Get Old W2s
If you need to get a hold of old W2 forms, the first thing you want to do is contact your old employer and see if they can send you a copy. Most likely, the ones you'll want to contact are the payroll department.
Make sure they have the right contact information for you, whether that's mailing information or online information. Some companies send their W2 forms to employees through the mail, while others offer the option to get your W2s sent to you electronically.
If a previous employer can't help you get your W2s then reach out to the IRS at (800) 829-1040. The January 31st W2 deadline for employers isn't just their deadline to send you their W2, it's also their deadline to send a copy to the IRS. So the IRS should have copies of your old W2s on file as well.
How to Read a W2
There are essentially 2 parts to a W2 form—the lettered sections and the numbered sections. The lettered boxes contain information about you and the company you work for. The numbered boxes contain information about your income received and taxes paid.
Your employer fills out all of these boxes for you, but you still might need to understand a bit about each section when you use this form to file taxes.
Always make sure the information provided about you, the company, the income you received, and the taxes you paid are correct. If anything is incorrect address the issue with your work's payroll department.
Lettered Boxes on a W2 Form
(a) The employee's personal Social Security Number (SSN).
(b) The company's Employer Identification Number (EIN). This number is like your SSN number within the company.
(c) The company's official address. This can sometimes be different from where you actually work.
(d) The company's control number for this W2 form. This number is used within the payroll department to identify and file this specific W2 form. If your company's payroll department doesn't use control numbers then this box will be blank.
(e) The employee's full name. The name here should be the same as the name on your social security card.
(f) The employee's mailing address.
Numbered Boxes on a W2 Form
(1) The employee's total earnings for that year within the company.
(2) The amount the employee paid in federal income taxes that year.
(3) The amount of the employee's income that is subject to social security tax.
(4) The amount of social security taxes withheld that year.
(5) The amount of the employee's income that is subject to Medicare taxes.
(6) The amount of Medicare taxes withheld that year.
(7) The amount of tips an employee reported to their company for that year.
(8) The amount of tips a company attributed to their employee for that year.
(9) This box is no longer in use but used to be for the verification code pilot program.
(10) The amount a company has paid on an employee's behalf for dependent care assistant programs.
(11) The amount a company paid an employee in any nonqualified deferred compensation plans.
(12) This box is an area for employers to use W2 Box 12 Codes for other miscellaneous items.
(13) This box indicates if an employee is a statutory employee, if an employee participated in the company retirement plan this year, or if an employee received sick pay.
(14) This box is another section for miscellaneous items.
(15) The company's state and state identification number. This is like the company's tax ID number with the state.
(16) The amount of taxable income for filing state taxes.
(17) The amount of state taxes withheld that year.
(18) If applicable, the amount of taxable income for any other local, city, or state taxes.
(19) If applicable, the amount of taxable income withheld this year for any other local, city, or state taxes.
(20) The name of the local, city, or other state taxes applicable to box 18 and 19.
What Do W2 Codes Mean?
In box 12 there are different codes used to indicate different miscellaneous items that are also necessary to report on the W2 form. These codes mostly include extra compensation or benefits the employee received.
If you are a traditional employee then odds are you are classified as a W2 employee and need to use a W2 form to file taxes each year. This distinction is important for employees to know so that they can understand their rights and obligations as a W2 employee.