How to Prepare W-2 Forms
Every employer is mandated by the Internal Revenue Service to file a W-2 form for their employees. On this form, the employer must fill how much money they paid an employee and how much money was withheld from each worker.
For that reason, if you are preparing a W-2 form, it is crucial to know if the individual is a worker or an independent contractor so that you can safeguard your enterprise. Nonetheless, if you are unsure whether your worker is an employee or a freelancer, you do not have to worry as the IRS site will guide you in determining the worker’s status once you fill an IRS form.
As soon as you identify which category your worker belongs to, the other thing you ought to do is to visit the IRS website so that you can request for the W-2 form.Ensure that you have your worker’s payslip details before you start filling the W-2 form. You should have your employees’ name, address, social security number and identification card number.More so, ensure you obtain the employee’s total income wages, Social Security wages, Medicare wages and any other tax deducted from the employee.
Apart from having the employees’ details, you also need to have your employers’ details at hand. This includes your business name and address as well as your business ID number which is assigned by the IRS that is used to identify your business for taxation purposes.
Once you have that information, the next thing you need to do is to fill the six forms attached to the W-2 form which you must submit to all the parties involved. Here, the parties involved are the SSA, State tax unit, your employee and yourself. The SSA gets Copy A, and the State tax department gets Copy 1, your employee gets Copies B, C and 2 and you must keep Copy D for your record.
But before you fill these forms, make sure you generate a control number for your employee. The control number enables you to keep track of each employee as you fill out the multiple W-2 forms since each employee’s control number is different. You can choose to create the control number manually, or you can generate it electronically. In any case, be sure to include scripts and symbols in your control numbers.As such, you can have a control number like E1F3 to stand for one employee.
Remember that the W-2 requires you to fill all these facts in the correct spaces provided. For that reason, make sure that you read the W-2 form carefully before you start filling it. Moreover, make sure you use a legible black font when filling these forms.
As soon as you are done with W-2, it is vital to fill another form known as W-3 which backs up the W-2 form.W-2 forms and W-3 forms are supposed to be presented at the same time to the SSA. Filling the W-3 form will not be a hard task as it virtually contains the same data in the W-2 form.Lastly, from the IRS website, make sure you print out the W-2 and W-3 Forms.