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W-2 Form

It’s easy to feel weighed down by the mountain of paperwork you are responsible for in your HR role. The pressure rises when you consider the legal requirements accompanying forms and filing—especially for critical tax forms like W-2s. But before you spend hours, days, or even weeks trying to decode the W-2, we’ve got everything you need to know about the form’s basics, guidelines, and requirements.

What Is a W-2 Form?

The W-2 is an IRS reporting form created to provide employees with their wage and tax information for use in filing their annual returns. The form reports any federal, state, or other taxes withheld from your employees’ paychecks. Employee earnings include income from tips as well as retirement plan details and dependent care benefits.

The form itself is broken into two sections: federal and state. No matter what field or industry your business operates in, the form is always the same.

W-2 vs. W-4 form

At first glance, these two forms – the W-2 and W-4 – might seem similar. The W-4 is a form for employees to communicate their tax withholdings to their employer when they begin employment. The W-2 is a reporting form for employers to share wage and tax information back to their employees at the end of every tax year.

Why Are W-2s So Important?

A W-2 is more than a piece of paper. It’s a critical component of IRS compliance for you and your employees. Here are the biggest reasons W-2s are so important:

  • Employee Tax Return Filing. Employees need an accurate W-2 so they can complete their income tax returns correctly and on time
  • IRS Requirements. Unlike information gathering forms such as the W-4, the IRS requires that you file a copy of the W-2 to the Social Security Administration. You must also send copies to the employee and, in some cases, other localities.
  • Deadlines. All W-2s are due by January 31st following the reporting year unless that date falls on a holiday or weekend, in which case it’s the following Monday. The IRS will issue a fine for any W-2 not filed on time. The longer the delay, the higher the penalty
  • Accuracy. In addition to timeliness, you can receive fines if you submit W-2s that are inaccurate, incomplete, or illegible. If you catch a mistake, you can refile a W-2 with corrections, but you need to notify the IRS of the revisions.

As you can see, knowing who needs a W-2, how to fill it out correctly, and when to file the form is crucial to keeping your business in compliance with IRS policies and protecting it from legal risks associated with mistakes. In the next section, we’ll explore these concepts in-depth so you have all the information you need to be successful.

Who Needs a Completed W-2?

Whether your business is large or small, you must complete a W-2 for any employee who earns more than $600 annually and has taxes withheld from their paycheck.

Independent contractors, freelancers, or gig employees do not receive a W-2. For workers who completed a W-9, you complete a 1099 detailing their yearly earnings. For employees who completed a W-4, you complete a W-2 detailing their yearly payments and taxes.

How to Fill Out a W-2 Form

The form might look complicated, but preparation and ample time should set you up for success every year. You have all the information you need in your employee and payroll records. You’ll also want to have your Employer Identification Number (EIN) and State ID Number.

You can download a PDF of the form from the IRS website. You can print and complete a physical copy or fill them in electronically. Either way, be sure your handwriting or font is legible.

Here is a brief explanation of the two groups of fields you must complete:

Step 1: Lettered Fields

The lettered fields on the left side of the form are for employer and employee identification. Consult your employee’s W-4 and employee records for accurate information.

Step 2: Numbered Fields

The numbered fields are on the right side and across the bottom of the form. These fields are where you will input wages, tax withholdings, tips, retirement plan benefits, dependent care benefits, deferred compensation, and other types of earnings. This section is also where you report income and taxes at the state and local levels.

The most important thing when filling out W-2s is avoiding errors when entering information into the fields. Be sure you double-check your forms for errors or typos. If there are mistakes on the form, you must file a corrected W-2 to the IRS as soon as possible to avoid rising fees.

How to File a W-2 Form

Once you have a completed a W-2, you might be wondering, “what now?” You must file W-2s by January 31st of the year after the tax withholdings. You will need to follow the IRS’s instructions for correctly distributing all six copies of the form.

  • Copy A. Send Copy A (the red copy) to the Social Security Administration by mail or online.
  • Copy 1. If required, send Copy 1 to your state, city, or local tax department.
  • Copies B, C, and 2. Send Copies B, C, and 2 to your employee for their income tax return. You can send these by mail or electronically to save time and money.
  • Copy D. Keep Copy D for your business records for at least four years.

Sample W-2 Form

You may want to familiarize yourself with the form layout and IRS instructions. Here is a copy of the official W-2.

How to Store W-2s

You can store employee W-2s in paper or electronic format. Because they contain sensitive employee information, they should be stored securely either in a filing cabinet or encrypted with a password. You should retain an employee’s W-2 for a minimum of 4 years.

IRS compliance is a critical factor for HR and Payroll, but it doesn’t have to be unnecessarily complicated. When you do your due diligence with employee forms and recordkeeping, completing and filing W-2s correctly and on-time is a hassle-free process.

Questions You’ve Asked Us About W-2 Forms

When do I need to have W-2s completed?
The IRS requires that you provide employees with a completed W-2 by January 31st following the close of the tax year on December 31st. You can request one 30-day extension from the IRS in writing by filling out Form 8809 and mailing it in. You cannot request an extension online.
What are the penalties for not filing W-2s?
The penalty should you neglect to file W-2s is a steep fine applied per unfiled form. The longer the delay, the higher the fine. The lowest fine per form is less than $100, and the highest is just under $300.
Amanda Davis

Amanda Davis

Amanda has spent over 10 years building a career in Human Resources in the non-profit sector. Her roles have included HR assistant, recruitment and onboarding coordinator, and manager of learning and professional development. Although Amanda enjoys her time as an HR consultant now, she prefers to use her experience to strengthen the field through the education and development of its practitioners.

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