Completing a W-2 Form with Ease

In the blink of an eye, 2023 will be in the rearview mirror. The end of a calendar year and the start of a new one brings annual deadlines and tasks for employers. At the top of the list is preparing W-2 forms for employees. For many small business owners, this can be an overwhelming time. Understanding the details and deadlines now will help you be prepared when tax season arrives. 

What is a W-2 Form?

Employers must issue a W-2 form to all employees who earned $600 or more in a tax year. The form provides a breakdown of how much was earned during the tax year and the taxes withheld based on those earnings. If an employee made less than $600, they should receive a W-2 if taxes were withheld, like Medicare tax or social security tax. Employees use their W-2 form to file their personal taxes.

The deadline to issue W-2 forms from the 2023 tax year is Wednesday, January 31, 2024. Employers should aim to get their W-2s out before this deadline in case any revisions need to be made. 

Employers are required to produce six copies of the W-2 for each employee. Three go to the employee, two go to the government, and the employer keeps one for their records. You can order W-2 forms from the IRS via mail or online here.

What’s New for the 2023 Tax Year?

The IRS recently changed the threshold for the number of W-2 forms which an employer must file electronically. For the 2023 tax year, any employer who is filing at least 10 returns are required to file them electronically. 

Steps to Complete Your Employees’ W-2 Forms

The W-2 starts with the following basic information:

1. Employee’s social security number
2. Your identification number (EIN)
3. Your name, address and zip code
4. The control number, if used for payroll purposes
5. The employee’s name and address

Following this basic information, there are 20 boxes to complete. Here is what should go into each box.

1. Your employee’s total annual income from both wages and tips. Make sure to include any taxes you withheld but not any IRA deductions.
2. The total federal income tax withheld.
3. The income amount used to determine the social security tax. The amount may differ from box one because you include deductions, but not tips.
4. The total social security tax withheld.
5. The income amount used to determine the Medicare tax. This amount may differ from box one and three because there are no caps on taxable earnings for Medicare. You can include earnings from tips here.
6. The total Medicare tax withheld.
7. The total amount of tips that an employee reported to you.
8. The actual amount in tips that they received.
9. N/A. This section used to be for a pay-as-you-go option for the Earned Income Tax Credit, but since they eliminated that option in 2011 this box can be left blank.
10. The amount of deductions an employee used for childcare expenses, if any.
11. The amount an employee withdrew from a 457(b) plan or non-qualified retirement plan. 
12. Codes and amounts applicable based on the employee’s benefits and/or additional payments. You can find the 26 code options, which range from A-Z and AA-EE, on the back of the W-2 form.
13. Three boxes that you can mark to show that the employee is A) part of your retirement plan, B) took sick pay from a 3^rd party, and C) is a statutory worker.
14. Use this box for any miscellaneous deductions not mentioned in previous boxes, like union dues or tuition reimbursement.
15. Your state and employer state ID number if required by your state.
16. Employee earnings that are subject to state income tax.
17. The total state income tax withheld.
18. Employee earnings that are subject to local income tax.
19. The total local income tax withheld.
20. The name of the local tax municipality that the taxes were given.

Need extra help?

The IRS creates a general instruction form each year for employers to reference when filling out their W-2s. You can also talk to an accountant or tax preparer like Gift CPAs if you have any specific questions. The professionals at Gift CPAs will be happy to answer any questions you may have. 

Get Connected Today

Contact Gift CPAs for more information on our full scope of accounting and business services. We have years of experience working with small businesses to help with bookkeeping, taxes and other business needs. Make an appointment to meet virtually or at one of our five locations in Harrisburg, Mechanicsburg, Myerstown, Ephrata or Lancaster!