The Fill-Out Process for Form W-2

Form W-2 reports an employee’s total earnings for the year, as well as the amount of federal, state and other taxes withheld from his or her paycheck. As an employer, preparing your employees’ Form W-2s is one of your most crucial responsibilities, especially since the penalties for incorrect or late filing can be quite steep. If you kept accurate records and properly managed your payroll throughout the tax year, you shouldn’t have too much of a problem filling out this form.

Step 1 – Boxes A through F

Box A is where you enter your employee’s Social Security number, which you can find on your employee’s Form W-4. Use Form W-4 to also fill out boxes E and F – your employee’s name and home address.

Put down your Employer Identification Number (EIN) in box B. The IRS uses this nine-digit number to identify your business for tax purposes.

Then, enter your business’s name and address in box C.

For box D, create a control number. This number is unique to each employee and helps keep track of all your Form W-2s. You can generate a control number manually or automatically via your payroll software. Additionally, you can use both letters and numbers.

Step 2 – Boxes 1 through 10

For box 1, enter the total amount of wages, tips, and other compensation your employee earned during the tax year. This amount doesn’t include contributions made to a pre-tax retirement plan.

For box 2, put down the total amount of federal tax you withheld from your employee’s paychecks. You should have already remitted this amount to the IRS via estimated quarterly payments.

Box 3 is where you enter your employee’s total wages subject to the Social Security tax. For the 2017 tax year, the first $127,200 of your employee’s wages is subject to Social Security tax. For box 4, specify the amount of Social Security tax withheld. This is 6.2 percent of the amount in box 3.

For box 5, indicate your employee’s total wages subject to Medicare tax. Unlike Social Security tax, Medicare tax has no wage limit. Therefore, you put down your employee’s gross income. For box 6, insert the amount of Medicare tax withheld, which is 2.9 percent of the amount in box 5.

If you run a food and beverage business, put down the number of tips your employee reported in box 7. Then, insert the amount your employee actually received in box 8.

Unless you’re participating in the W-2 Verification Code Initiative, leave box 9 blank.

If your employee received any deductions for childcare or other dependent care expenses, put down that amount in box 10.

Step 3 – Boxes 11 through 14

For box 11, if necessary, insert the amount your employee withdrew from a 457(b) plan or a non-qualified retirement plan.

If you paid your employee any fringe benefits such as contributions to a health savings account, enter the amounts and specific codes – which you can find in the Form W-2 instructions – in boxes 12a to 12d.

If your employee received sick pay from a third party, participated in your company’s retirement plan, and/or is a statutory worker, check the corresponding boxes in box 13.

For box 14, specify if your employee received any additional deductions including union dues, tuition assistance, after-tax contributions to a retirement plan, etc.

Step 4 – Boxes 15 through 20

If your business is situated in a place subject to state and local taxes, you must fill out this section.

For box 15, insert the state abbreviation and your state ID number. If you don’t know this number, you can retrieve from your state’s Department of Revenue.

Box 16 is where you enter the total amount of your employee’s wages subject to state income tax, then put down the amount of state income tax withheld in box 17.

For boxes 18 and 19, follow the same procedure as boxes 16 and 17, but for local taxes. Then for box 20, specify the locality name or code corresponding to boxes 18 and 19.

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