How to Draft W-2 Forms: Everything You Need to Know

Components of a Standard W2 Form

As mentioned, writing W-2 forms means focusing on a selection of boxes the IRS provides. There are over a dozen boxes, each with its definition and corresponding purpose. Here are all of them:

• Wages, tips, and other compensation: This box reports the total taxable salaries, tips, and further compensation earned by the employee during the year.
• Federal income tax withheld: This item shows the total national income tax the employer withheld from the employee’s paychecks during the year.
• Social Security wages: This box displays the employee pay subject to Social Security tax for the year. It does not include tips or other compensation not subject to Social Security tax.
• Social Security tax withheld: This section reports the amount of Social Security tax the employer withheld from the employee’s paychecks within the year.
• Medicare wages and tips: This item shows the total amount of wages and tips subject to Medicare tax for the year.
• Medicare tax withheld: This box reports the amount of Medicare tax withheld from the employee’s paychecks during the taxable year.
• Social Security tips: This box displays the total amount of tips the employee received, subject to Social Security tax for the year.
• Allocated tips: This section reports the number of tips the employer issued to the employee during the year.
• Advance EIC payment: This box shows any advance payments of the earned income credit (EIC) the employee received within the taxable year.
• Dependent care benefits: This item reports the total dependent care benefits the employer paid to the employee during the year.
• Nonqualified plans: This section displays the total amount of compensation deferred under nonqualified deferred compensation plans.
• State wages, tips, etc.: This box shows the total taxable salaries, tips, and other compensation subject to state income tax.
• State income tax withheld: This box reports the state income tax withheld from the employee’s paychecks within the year.
• State: This box shows the abbreviated name of the employee’s home state.
• Employer’s state ID number: This box displays the employer’s state identification number.
• State wages, tips, etc.: This item reports the total taxable salaries, tips, and other compensation subject to local income tax.
• Local income tax withheld: This box shows the amount of local income tax withheld from the employee’s paychecks during the taxable year.

As the person in charge of accomplishing W-2 forms, you must carefully and accurately input the information into these boxes to avoid any delays and errors. You must also pull the data from each employee’s records, as the information required differs from worker to worker.