As the end of the year approaches, there are likely several factors of your business that you are focusing on. Perhaps you are studying your annual revenue and comparing it against some of the goals you began the year with.
One vital aspect of this time of the year that demands your attention is filing a Form W2s for your employees.
Who Files Form W2s?
Although it is not a guarantee, it is highly probable that if you employed people, you will have to file Form W-2 for each person you paid. According to the IRS, if you took part in any sort of trade or business, and you paid out $600 or more—to include noncash payments—you will need to file a Form W2.
On it, you will have to account for everything you paid to that particular employee, even if she was part-time or only worked for a very short time. Even if she was employed for a day but made $600, then a Form W2 would have to be filed. You will also have to account for any Medicare, Social Security, and taxes that were withheld from her paycheck.
It is also important to note that family members sometimes work for other family members. If you paid anyone of any relation more than $600, you need to submit a Form W2.
The “What” And “When”
As far as the “when” is concerned, there are two important dates. Because the W2 covers all the money that was paid out over the course of a calendar year, December 31st marks the end of the tax year.
Following the conclusion of the tax year, you will have to issue a copy of the Form W2 to each of your employees by January 31st, the end of the first month of the new year. For 2020, the deadline will be February 1st.
Everything that is included on the W2 will be used by the employee when she goes to file her own taxes. Any money she received needs to be on her W2. This doesn’t just encompass her annual salary or her accrued hourly wages. If she earned tips, then those will be documented. If she received bonuses or commissions on sales, they will be there on her W2. If it was given to her as compensation for work, then it has a place on her W2.
Throughout the year, when you paid her, you withheld money. The total of all the federal income tax you withheld during the calendar year will be written out to the cent. When she files her taxes, it will be determined if you withheld too much or too little. Then she will either get a refund or a bill to pay out what she owes.
This will also be repeated for any Medicare and Social Security taxes withheld on her behalf. Everything you withhold from her will be based on her W4, something she filled out when you first hired her. In fact, she can’t get paid until she’s completed it.
Here’s A Solution: 123PayStubs
The absolute easiest way to create Form W2 is to have all your ducks in a row prior to ever sitting down to draft it. Take the time to create a pay stub for each time you pay an employee. Medicare, Social Security, and taxes will be calculated for you.
When you use 123PayStubs, you will have the unique ability to not only create an accurate pay stub quickly, but you will also be able to make a W2 and send it to the IRS.