How Long Are Employers Required To Keep W2 – Every year around this time, mailboxes across America are filled with tax forms. Sometimes these tax forms go to tax professionals, not open. Otherwise, taxpayers can open these forms entirely and enter the information, field by field, into tax preparation software. In both cases, it is not unusual for taxpayers to have no understanding of the meaning of numbers, letters and other information on these forms. It’s about change.
This week I will go over some of the main tax forms for you. The more you know, the less scary some of these patterns can be.
How Long Are Employers Required To Keep W2
Form W-2 is issued by an employer to an employee. This is of some importance and not only for tax purposes. Employers have certain reporting, retention and insurance requirements for their employees that are slightly different than independent contractors.
What Is A W 2 Form?
The threshold for issuing a W-2 form is based on dollars – nothing important. Not during work. did not get the position. Only dollars (or dollar equivalent) received. The magic amount is $600. All employers who pay at least $600 in cases (or the cash equivalent, including tax benefits) must issue a W-2 form. If any taxes are withheld, such as Social Security or Medicare, a W-2 form must be issued regardless of the amount the employee pays.
Copy A is sent to the Social Security Administration (SSA) along with Form W-3 (Form W-3 notifies the employer of the total amount of Form W-2). The deadline for employers to get this information to the SSA is February 28. 1 copy is given to the relevant state, city or municipality. The employer keeps a copy D.
As an employee, you will receive three copies of your W-2 form. These 3 copies must be submitted by January 31 each year. Copy B is for use on your federal income tax return and is generally filed with your federal income tax return (unless you are filing electronically, in which case you must give it to a preparer but it is not usually sent to the IRS). Copy 2 is for use in the state, city or local government tax report and is filed with the relevant tax authority. Copy C is for your registration (you should keep Copy C for at least three years after registration or the date you file your return, whichever is later).
The left side of the form is for reporting taxpayer information; The right side of the form is used for financial reports and codes. Below is the form that reports local and state tax information.
Form W 2 Wage And Tax Statement: What It Is And How To Read It
The box. Your Social Security Number (SSN) is listed in box (a). You should check this to make sure it is correct. If it is incorrect, you will need to request a new W-2 form from your employer. Errors can slow down the submission process.
Box b. Your employer’s EIN is reported in box (b). An EIN is roughly the same as your employer’s SSN.
Box c. Your employer’s address is entered in box (c). This is your employer’s registered office which may or may not be where you work. Don’t let it throw you off.
Box d. A control number is an internal number used by your employer or hiring department. If your employer does not use a control number, field (d) will be blank.
Personal Tax Preparation — Ms. Business 101
Box e and f. These appear as one large block on your W-2 form. Your full name is entered in box (e). It should reflect the name on your Social Security card (the SSA isn’t crazy about suffixes, even if you use them, so you shouldn’t see one on your W-2 form unless it’s on your Social Security card). If your name does not match what appears on your Social Security card, you may need a new W-2 form; Ask your employer if you are not sure. Your mailing address is listed in box (f) and should reflect your mailing address – which may be a PO Box – without punctuation (per USPS preference). If your address on the W-2 form is incorrect, let your employer know: You don’t need a new W-2 form, but your employer must update its records.
The boxes you are most interested in are boxes (a), (e) and (f), as marked with the pink circle:
Box 1 shows all taxable wages, tips, bonuses and other compensation, as well as taxable allowances. It does not include discretionary retirement plan deferrals, pre-tax benefits, or payroll deductions. Because the number (marked with a red arrow in my example below) does not include these amounts, it is not uncommon for this amount to be less than the amounts in boxes 2 and 3. That is the taxpayer number.
Box 2 reports the amount of federal income tax you withheld from your wages for the year. This amount (marked by the purple arrow in my example below) is determined by the election on your W-4 form based on additional exemptions and deductions. If you think this number is too low or too high, you will need to amend your W-4 form next year.
What Is Irs Form W 2?
Box 3 shows your total taxable income. This number is calculated before the deduction of wages, which means that the amount in field 3 may be higher than the number given in field 1, as in my example. It can be lower than the amount in box 1, if you are a high earner, because the total of boxes 3 and 7 (see below) cannot exceed the maximum basic social security salary. For 2013, that amount is $113,700. If you have more than one job, due to social security contributions, the rate of pay still applies.
Box 4 shows the total collected insurance premiums for the year. Unlike federal income taxes, Social Security taxes are calculated at a flat rate. The percentage is 6.2%. Then the amount in cell 4 should be equal to the amount in cell 3 equal to 6.2%. Since you should not withhold more taxes than the maximum salary of 6.2%, the amount in box 4 should not exceed $7,049.40. In my example, the number is $50,000 x .062, or $3,100.00.
Box 5 shows wages subject to Medicare tax. Medicare taxes generally have no upfront tax credits and will include most tax benefits. That, combined with the fact that unlike Social Security income, there’s no threshold for Medicare taxes, means the number in box 5 can be higher than the amount shown in box 1 or box 3. In fact, it can be more that big number. . Your W-2 form.
Box 6 shows the amount of Medicare tax withheld for the year. Like Social Security taxes, Medicare taxes are calculated on a flat rate basis. The rate is 1.45%. For most taxpayers, this means that the number in box 6 equals the number in box 5 which equals 1.45% (in my example indicated by the green arrow from $50,000 x 1.45% = $725). However, under a new law that began in 2013, employers must deduct an additional .9% Medicare tax from wages paid to individuals with wages above $200,000, regardless of record status or wages paid by other employers. Because your employer doesn’t know your full financial picture, it’s possible under the new law that you may have to pay more Medicare taxes than your withholding, depending on your filing status, benefits and self-employment income.
Everything You Need To Know About The W2 Form
You will find tips that are reported to your employer in box 7. If this box is blank, it means that you have not reported tips to your employer (this does not mean that you do not have to report these tips to the IRS). .
The tip reported in box 8 is the tip that your employer expected for you. These recommendations count as income for you.
There will be nothing in box 9. The reporting requirements for this box expired a few years ago and the box has not yet been removed from the form (see image).
In box 10, your employer will report the total amount of benefits paid to you under the care assistance plan. Amounts paid under a qualified plan under $5,000 are considered tax-free benefits. This number will include reporting the value of all care benefits, including amounts that exceed the $5,000 exclusion (if the value exceeds $5,000, the excess is reported in boxes 1, 3, and 5).
Can You File Your Taxes Without A W 2? Here’s What To Do
Box 11 is used to report the amount distributed to you from your employer’s nonqualified deferred compensation plan (this amount is taxable). This is not to be confused with the amount contributed
Box 12 is the kitchen sink on the W-2 report. Here you will see all kinds of codes. Not all income entered in box 12 is taxable. This is a short summary