Know the Details of a W-2 Form
Taxes are the method each government uses to generate its revenues. Direct remittance of taxes to the government is done by an individual or companies. There is also another category of taxes which are included in the prices of goods we buy. When an employee gets employed by a firm, they are required to sign agreements with the employer. The agreement for the employer to remit taxes on behalf of the employee is one of the agreements between an employer and the employee.
When a company pays taxes on behalf of its employees, the W-2 form has to be given. The W-2 form is given by an employer to both the employee and the government. Here, the information of the employee’s earnings are given. The company has to prepare a form for each of its employees. As an employer, you, therefore, need to know the information to include in a W-2 form for your employees and the government.
The W-2 Form is divided into three major categories. Mistakes such as wrong tax amounts and risk of penalties are the reasons why the information in this form should be filed correctly. The categories are the description of employee and employer terms and relationship, earning and tax information and finally any other relevant additional information. The employers task is reduced because there are standard forms available hence no need to make new ones. To get the forms, you may download them or get them from your tax agent.
The first section of the W-2 form involves information about the employee and employer. All the necessary information of the employee must be provided here. There are boxes allocated for all the information required for the employee. In the boxes, information provided should include the social security number of employee, the address of both the employer and employee, full names of the employee, employee work number as well as their payroll number. To avoid issues like double taxation and form duplication, the employer should fill this section correctly.
The other step is filling of the financial details by the employer. This is the most important section of the W-2 form. Details of this section are the earnings made by the employee during the entire year. Full details of the employee’s payment as the employee got paid per month are all included in this section of the form. The employer includes details of the employee about wages such as how much tax they have remitted on behalf of the employee as well as the total earnings of the employee. The allowances the employee gets from the company are however not part of this information if they are not included in the employee’s salary. There is then an extra space for filling in any extra information that may be relevant to the tax issue.