What Is A W-2 Employee?

What is a W-2 employee?

A w-2 employee is a term used in United states to refer an individual someone who receives w2 form from their employer each year to report their annual incomes and the amount of taxes taxes withheld by the company. Usually when someone is refereed to as the W2 employee it means the employer is responsible for withholding federal and state taxes from the employee wages. The form is provided every year to the employee.

What is a W2 Form?

W-2 form also known as the wage and tax statement, is an official document used in United States by the employer to report an employee annual wage and the amount of taxes withheld from their salary or annual paycheck. Employers in the states are required to provide the w2 form to its employee each year and the employee used it to file their federal and states income tax return.

The W-2 Form includes various details, such as:

Employee information: the form include details like employee name, social security number and address.
Employer information: the form also provide details of employer name, address, Employer identification number (EIN) and control number.
Wage and Tax Statement: This contain:
– Wages, tips and other compensation
– federal income tax withheld
– Social Security Wages
– Social Security Wages
– Medicare wages and tips
– Medicare tax withheld
– Social Security Tips
– Allocated Tips
– Verification Code (Optional)
– Dependent care benefits
– Non Qualified Plans
State and Local Tax information: Similar to federal tax information these boxes represent the state and local income tax withheld form the employee wages. this include: State Employer stated ID number, State wages, tips, state income tax, local wages tips, local income tax.

How can I get a W-2 form?

You can obtain W-2 form from:

Employer: your employer is the primary source of getting the W-2 form as they are required to submit the form to their employee by January 31st of each year.
Payroll System: some employer has installed an online payroll system where employee can assess their W-2 form by themselves and can download it and get it printed.
IRS: You can also contact Internal Revenue Service (IRS) to obtain a W-2 form by submitting your social security number, and details about your employer if you fail to get one form your employer.

When is the W2 Deadline?

In United States there’s no specific deadline for receiving W-2 form. however, the employer need to provide the employee with W2 form before 31st January of each year for the previous tax year. if 31st January falls on weekend or holiday the deadline extends to the next business day. Employees also need to make sure they get the W2 form on time so that they have sufficient time to file their incomes tax on time which is usually April 15th.

What are W-2 employee benefits?

Here are some of the benefits of W2 employee:

FICA (Medicare and Social Security) taxes.
Worker compensation to cover medical expenses of employee who cant work due to job-related injury or illness.
a Federal Unemployment Tax also known as FUTA to provide income support for unemployed individuals or those who lost their job but are willing to work.
Family and medical leave Act (FMLA) protection which grant eligible employee up to 12weeks of job-protected, unpaid leave for family and medical reason.
Disability Insurance.
Retirement Plans.
Some employer also offer educational assistance and parking benefits.

Are there multiple copies of W-2s?

Yes, there are multiple copies of W-2 form and they are distributed to following institutions:

Copy A is submitted to Social Security Administration (SSA) along with the W-3 Transmittal form. This copy is send by employer by the end of February if done on paper and by the end of march if done electronically.
Copy B is sent to employee for their record which they use to file federal income tax return.
Copy C is another copy send to employee which is kept by employee for personal record and not to IRS.
Copy D this copy is retained by employer for their own record- keeping purposes.
Copy 1 is send to State or Local Tax department
Copy 2 is provided by the employee when filing state or local tax return
Copy 3 is kept by employer for their records related to state or local income tax withholding.

Can you have multiple W-2 form?

Yes, its is possible for employee to have multiple w-2 form if they work for multiple employer during the tax year. Each employer is required to submit a separate from to its employee and employee need to ensure that all the information provided in the form is accurate so as to avoid unnecessary legal case in the future.

How to Get Old W2-form?

If you want to have a copy of your old W-2 form you can take the following step:

Contact your former employee: Employee can reach out to their former employer and ask for the W-2 form from them. As it is mandated by law to keep an employee W-2 form for at least 4 year.
Check with Payroll Service Provider: if your employer used any third party payroll service then you can reach out to them directly and providing all the important information related to employment and your social security number they will be able to assist you in retrieving the old W-2 form.
Contact IRS: if an employee is unable to retrieve the w-2 form from its employer they can contact the IRS for assistance. You can request a transcript of the w-2 information by filing form 4506-T and request for transcript of tax return.

How Much Money Do You Need to Make to Get a W-2?

An employee is eligible to receive W-2 form if they have earned at least $600 in cash or cash equivalent during the year. It doesn’t matter how many hours you worked and how long you were employed in the company.

What Is the Difference Between a W-2 and a W-4?

W-4 Form: is also known as ” Employee withholding certificate” is a form that employee need to submit their employer at the start of a new job. this form provide employee Tax ID number, allowances, dependents and any additional amount they want to withheld from their paycheck for federal income tax purposes.
W-2 Form: is a form provide y employer to their employee and IRS at the end of the year which summarizes the employee annual earning and the amount withheld for federal and state income taxes, social security and medical care.

How do W-2 employees differ from 1099 contractors?

1099 Contractors:

They are independent contractors or freelancers hired by the employer to complete a specific task or project and are employed on temporary basis compared to permanent ones.
They are responsible for handling their own taxes and are required to manage their tax obligation including estimated tax during the year.
Unlike Traditional employment 1099 contractors don’t receive any benefits form their employer and are responsible for planning their own health insurance, retirement and other benefits.
1099 contractors are responsible for their own business expenses and are reimbursed by the clients they are eligible for business expenses they incurred from their employer.

W-2 Employee:

They are employees of the company and work under direct supervision of their employer and are subject to employer company laws and regulations.
employers withhold federal and state income taxes, social security tax, Medicare from W-2 employee annual wages.
they are eligible to receive benefits such as medical insurance, retirement plans, paid leaves and other perks from their employer.
Employers are responsible for reimbursing any expenses incurred by the employee and are not typically treated as taxable income

What is the difference between gross income and taxable income on a W-2?

Gross Income:

Gross income is the total amount earned by the employee during the financial year and includes components such as wages, bonuses and tips.
They are reported in box 1 of the W-2 form

Taxable Income:

this is the amount that is subjected to taxation after taking into account all employee deductions and exemption.
They are not reported in W-2 form

What is the significance of the verification code on the W-2 form?

The verification code on W-2 form is provided by IRS as as an optional feature to enhance the security and authenticity of electronic filling. It is an alphanumeric number provided by the employer in Box 9 of W-2 form. This code helps verify the accuracy of the information on electronically filed tax return.