Every government makes its revenues from taxes. Individuals and companies remit their taxes to the government directly. There is also another category of taxes which are included in the prices of goods we buy. Agreements are signed between employees and employers when the employee gets hired. Among the agreements between an employee and employer is the agreement for the employer to remit taxes on behalf of the employee to the government.
Companies paying taxes on behalf of their employees should give the W-2 form. The W-2 form is given by an employer to both the employee and the government. Details of the employees earning are given here. 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.
Information filled in the W-2 categories is divided into three categories. Incorrectly filled forms may lead to penalties or the employer paying incorrect taxes to the government. The form requires one to provide information such as the employee and employer terms, earning and tax details and finally any crucial information. Standard forms are available and an employer does not, therefore, need to go through the hustle of creating new forms. All you need to do is to download them or get them from your tax agent.
Details of the employee and the employer as well as their relationship is included in the first section of the W-2 form. Detailed description of the employee is required here. The information is to be filled in the allocated boxes. 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. Correct filling of this section is crucial as it eliminates issues such as double taxation and duplication of forms.
The employer then fills the financial information. 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 form W-2, however, does not include allowances the employee gets that are not included in the employee’s salary. The employer is then given a portion in the form to provide any extra information that may be necessary for the tax filing.