Form W2

Form W-2, Wage and Tax Statement shows the annual wages of an employee and the amount of federal income tax, social security tax and medicare tax withheld. The employee's name, social security number and address are also shown on the W2. Form W-2 is prepared by employers at the end of the year and sent to the Social Security Administration. The filing deadline is February 28th.

W-2's are filed with Form W-3. Mail the red copies of the W-2s and the red copy of the W-3 to the social security administration and give your employee form W-2, Copy B and a Copy2 for his state tax return and a copy for his records. The W-3 has the mailing address to send the red forms. The W-3 is a transmittal form and shows the total wages and withholding taxes for all employees for whom the employer is sending W-2's.

The social security administration enters the employee information from the W-2 in their computers and sends the information to the IRS. The IRS compares the totals on the W-3 to the employer Forms 941 filed during the year. It is recommended that you reconcile the gross wages and withholding taxes from the four Form 941s to the totals shown on the W-3.

There is a $15 penalty for late filing of the Form W-2 as well as omitting any required information, such as social security number or address.

For Imore information on filing W-2's from the Social Security Administration, visit their website at: http://www.socialsecurity.gov/employer/

Payroll, payroll taxes and workers compensation are facts of life for businesses with employees.  While employees may be absolutely critical to the success of your business, they consume valuable resources that increase your cost of doing business. Make a mistake in calculating payroll withholding taxes and/or paying payroll taxes and you have angry employees and the IRS to deal with.

As you proceed with your business planning, you would be wise to consider purchasing a payroll software program to help process your payroll. Take a look at our payroll software program page to get an idea what types of features and reporting capabilities are important before you buy.