Decoding the significance of Form W-2

Within the complex landscape of tax documentation, organizations and individuals must understand the importance of Form W-2 and its preparation. 

As we embark on this exploration, we’ll unravel the layers of seriousness embedded in the W-2, understanding its significance and why accuracy is not just a matter of compliance but a linchpin for financial stability. 

Continue reading to learn about W-2 and how an experienced PEO company can help simplify W-2 management for clients.  

What is a W-2 form? 

The IRS mandates employers to disclose employee wage and salary information through Form W-2. This form provides information on the deductions made for federal, state, and other taxes from your income, along with detailing employer-provided fringe benefits. 

These benefits include health insurance, dependent care assistance, health savings account contributions, and other relevant elements. As an employee, the information on your W-2 is extremely important when preparing your tax return. [1]

Any employer involved in a trade or business must file a Form W-2 for each employee, including noncash payments of $600 or more annually (or any amount with income, social security, or Medicare tax withheld), regardless of the employee’s relationship to the employer, such as being related. The conditions for mandatory filing involve the following situations: 

• Income, Social Security, or Medicare tax was withheld.
• Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee’s Withholding Allowance Certificate. [2]

How W-2 affects individuals and businesses

For individuals, the W-2 is more than a routine tax document; it’s a critical report of accurate tax filing. The details within this form, including income, taxes withheld, and fringe benefits, are crucial for individuals to file their taxes correctly. Inaccuracies can lead to financial setbacks, penalties, and unnecessary stress during tax season. 

On the business front, the correct and timely distribution of W-2 forms is not just a procedural obligation but a cornerstone of maintaining a positive relationship with employees. Inaccuracies in W-2s can result in disgruntled staff and may lead to legal complications for the business. Therefore, companies must prioritize accuracy in these financial documents to avoid potential lapses and frustration. 

How W-2 accuracy benefits everyone 

Accurate W-2 information is not just a matter of compliance; it’s an investment in the financial well-being of both individuals and businesses. When you provide accurate information, employers contribute to a smooth tax season for their employees and foster a positive work environment. 

W-2 deadline

Information returns are required to be filed starting from the calendar year 2024. The new rules apply to tax year 2023 Forms W-2 because they are required to be filed by January 31, 2024. [3]

How PER can help! 

As a PEO in Orlando, we offer our comprehensive HR solutions to small and mid-sized businesses with a minimum of five employees on their payroll. At PER, we’re committed to streamlining W-2 management for our clients. Active and past employees can access the HR portal provided by PER to conveniently update their information and ensure the seamless receipt of their W-2 forms. Reports are available 24 hours/7 days a week. This user-friendly portal ensures accessibility and empowers individuals to take control of their tax documentation. 

Learn more:

Top eight reasons to partner with a PEO for payroll services

Correctly handling W-2 information is a shared responsibility between employers and employees, with PER serving as a valuable ally in this journey. By understanding the importance of accuracy and adhering to the necessary responsibilities, individuals and businesses can confidently navigate tax seasons, ensuring financial stability and avoiding unnecessary complications. 

Looking for a PEO in the Orlando area?

PER provides outsourced HR services to businesses in various industries, including medical, legal, hospitality, entertainment, real estate, professional services, health and wellness, non-profits, and more. For over 25 years, we have committed to building lasting relationships with clients who find value in our services. Our comprehensive services include payroll management, human resources, benefits administration, workers’ compensation, and more.

Ready to get started? 

Contact us today to learn more!

Sources:

1: Turbo Tax | What is a W-2 Form? 

2: IRS | About Form W-2, Wage and Tax Statement

3: IRS | New electronic filing requirements for Forms W-2