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How to Prepare W-2 Forms
The Internal Revenue Service requires every organization to submit a W-2 form on behalf of their workers. 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. Nevertheless, if you cannot tell if your worker is an independent contractor or an employee, then you should log into the IRS website and fill the IRS form that determines the status of the individual in your organization.
Once you know the worker's status, the next step you need to do is to obtain the W-2 forms from the IRS site. Make sure you have the employee's payroll information. You should have your employees' name, address, social security number and identification card number.Further to that, make sure you have the total wages the employee is entitled to, total federal income tax deducted, cumulative social security tax withheld, total Medicare tax withheld and any other state or city income tax withheld.
Apart from having the employees' details, you also need to have your employers' details at hand. This includes your business name and address as well as your business ID number which is assigned by the IRS that is used to identify your business for taxation purposes.
As soon as you gather all these information, the IRS requires you to fill the six W-2 forms which are intended for various individuals.By parties, I mean the SSA, City tax department, your worker and the business owner. You should provide Copy A to the SSA, Copy 1 to the State tax branch, Copies B, C and 2 to the worker and keep Copy D for the business.
Conversely, when creating the W-2 reports, it is advisable to have a control number for each worker. 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 assign a control number to each employee by yourself or your payslip preparation software can create this number electronically. In any case, be sure to include scripts and symbols in your control numbers.As such, you can have a control number like E1F3 to stand for one employee.
Remember that the W-2 requires you to fill all these facts in the correct spaces provided. For that reason, make sure that you read the W-2 form carefully before you start filling it. Furthermore, for legibility purposes make sure you fill the form using a black pen.
Once you are through with filling the W-2 form, you need to fill Form W-3 which supports the information on 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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