Services: 10 Mistakes that Most People Make

How to Prepare W-2 Forms The Internal Revenue Service mandates..

Services: 10 Mistakes that Most People Make

How to Prepare W-2 Forms

The Internal Revenue Service mandates every business owner to create a W-2 form for their staff members.When creating this report, the employer must show the salaries and tax deductions received by each worker.

So, if you want to create a W-2 form, it is essential to know the status of your employee whether he or she is an independent contractor or is a permanent employee to keep your business out of trouble. Nonetheless, if you are unsure whether your worker is an employee or a freelancer, you do not have to worry as the IRS site will guide you in determining the worker’s status once you fill an IRS form.

After that, order the W-2 forms from the IRS website. Make sure you have the employee’s payroll information. Some of the payslip details comprise the name of the worker, his or her ID number, location and the social security number. In addition to that, make sure you have the total income the employee earns and total taxes withheld which include the Social Security taxes, income taxes and Medicare taxes beforehand.

Apart from having the employees’ details, you also need to have your employers’ details at hand. You must disclose your organization name and whereabouts as well as your business ID number that is provided to you by the IRS so that they can monitor how much tax your business pays.

With that in mind, the W-2 form is filled in six copies which you are supposed to give different people. Here, the parties involved are the SSA, State tax unit, your employee and yourself. The copies are distributed as follow; Copy A goes to SSA, Copy 1 goes to the City tax unit, Copies B, C and two are given to the worker, and Copy D is for the business.

But before you fill these forms, make sure you generate a control number for your employee. The control number enables you to keep track of each employee as you fill out the multiple W-2 forms since each employee’s control number is different. You can opt to guess a control number and allocate it to any employee, or you can prepare it automatically.In any case, be sure to include scripts and symbols in your control numbers.For instance, you can decide to use A1B2 for employee number 1.

Keep in mind this information is filled in the boxes provided on the W-2 forms. So, ensure that you follow the instructions given. Furthermore, for legibility purposes make sure you fill the form using a black pen.

As soon as you are done with W-2, it is vital to fill another form known as W-3 which backs up the W-2 form.The W-3 is prepared and proffered to the SSA accompanied by the W-2.Filling the W-3 form will not be a hard task as it virtually contains the same data in the W-2 form.Finally, visit the IRS website and obtain copies of the W-2 and W-3 forms.

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