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The W-2, also known as the wage and tax statement, is a form that employers must send to every employee. It details the employee’s wage and salary information, including how much tax was withheld from their pay. As you work with your accounting services on these forms, know what to do and common mistakes to avoid.

Do:

File it by the end of January.

Tax code requires that the W-2 is filed with the Social Security Administration by January 31 of the following year. You must also send a copy to your employees by the end of January. If an employee quits before the end of the year and requests a W-2 earlier, your accounting services have 30 days to provide it.

Send the right copies to the correct places.

st charles accounting servicesThe W-2 is a multi-part form. Your accounting services can assist you in sending these to each of the right places. Copy A is for the Social Security Administration. Copies 1 and 2 are for the city and state tax authority. Copies B and C go to the employee; the employee will file Copy B with their federal tax return and keep Copy C for their own records. Copy D is for your records.

Don’t:

Confuse a W-2 with a W-4.

A W-4 is the form that you provide your employees upon their hire. It tells you how much tax to withhold from each of their paychecks. The W-2 is instead a summary, due at the end of every year of employment, outlining their wage and taxes withheld.

Send it to non-employees.

The W-2 is only for employees whom you paid over $600 during the calendar year. Freelancers and contract workers should get a 1099-MISC from you rather than a W-2. The 1099-MISC still outlines how much they were paid, but you were not withholding taxes for them. They are required to pay those themselves.

 

Taxes are complex and highly regulated, and doing something incorrectly could have severe consequences for your business. This is why all of this work should be left to the accounting services at Grayson Accounting in St. Charles, MO. They have more than 25 years of experience with IRS representation, payroll services, bookkeeping, tax help, and more. Learn more online and call (636) 233-7875 to schedule a free initial consultation.

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