How to fill W2 forms when you have Stock Compensation

Form W-2 is the statement you provide employees after the end of each year, with information on their gross pay, Social Security and Medicare pay, federal and state income tax withholding, and tax-related deductions. You must provide this statement to every employee who worked for your company the previous year, by the end of January the following year.

 W-2 forms, along with W-3 form, must be submitted to SSA no later than January 31 of the following year. The deadline for giving W-2 forms to employees is the same as in the past - January 31 of the following year. 

What is a W-2 form?

Form W-2, Wage and Tax Statement, reports information about an employee’s annual wages. You must send a copy to your employees and the Social Security Administration (SSA). The W-2 form lists the wages you paid the employee throughout the year.

Form W-2 shows an employee’s gross wages and withheld taxes. It can also include other information such as deferred compensation, dependent care benefits, contributions to a health savings account, and tip income.

If you paid an employee during the year, you must complete a Form W-2. You must still provide a W-2 form, regardless of whether the employee worked for one day or one year. Legally, you must send out W-2 forms to any employees you paid a salary, hourly wages, or other forms of compensation.

Copies of Form W-2

There are multiple copies of Form W-2 you must distribute. It’s important to know where to send each copy.

• Copy A: Mail or e-file to the SSA, along with Form W-3.
• Copy B: Send this copy to your employee. The employee will file this copy with their federal income tax return.
• Copy C: Send this to the employee for their records.
• Copy D: Keep this copy for your business’s records.
• Copy 1: If required, file with the state, city, or local tax department.
• Copy 2: Send this to the employee. The employee will file this copy (if required) with their state, city, or local tax department.

What’s on Form W-2?

• The standard information on each Form W-2 includes:
• Employee’s Social Security number
• Employee’s personal information, such as their name, address, and zip code
• Your business’s name, address, zip code, and Employer Identification Number (EIN)
• Wages, tips, and other compensation
• Taxes withheld (e.g., Social Security, Medicare, and income taxes)

Where Can I Get W-2 Forms?

You can get W-2 forms from your local office supply store, from your CPA, or online from the IRS. You can also get W-2 forms from a business tax preparation program (some versions of these programs) 

How Do I Prepare Form W-2?

You can prepare W-2 forms manually using a fillable PDF form on the SSA website or with purchased software, or you can use the small business version of tax preparation software, if it has this feature. You can also use a tax preparation service or a payroll service to prepare, file and send W-2 forms. 

Filling out Form W-2

Print Form W-2 on official copies of W-2 forms. You can purchase the forms from the IRS or a local office supply store. A sample of Form W-2 is available for viewing on the IRS website, but you cannot print it.

If you use payroll software, check with your payroll provider about electronic W-2 forms for employees.

While filling out Form W-2, make sure the name, address, and Social Security number for each employee is accurate. Be sure your business’s name, address, and EIN are correct.

You will want to make sure dollar amounts on Form W-2 are reported correctly. Boxes that report money should not include a dollar sign symbol. Use a decimal point to divide the dollars from cents (e.g., 1000.00).

To avoid Form W-2 errors, be sure to carefully review each form before sending to the SSA and your employees.

How Do I Submit W-2 Forms to the Social Security Administration?

You can submit W-2 forms in paper form or online. If you are submitting paper forms, make sure you have the correct version.

You can submit these W-2 forms online using the Social Security Administration's Business Services Online service. To do this, you would submit only the electronic copy of Copy A, keep Copy A and give the other copies to the employee. 

if you submit W-2 forms online to the Social Security Administration, you don't need to submit a W-3 transmission form. 

What are Common Mistakes Made in Completing Form W-2?

Here's a listing of common errors that are made on Form W-2. Before you give Form W-2 to employees, and especially before you submit W-2 forms to the Social Security Administration, take a few minutes to make sure everything is perfect.

One common mistake is nor reporting the cost of health care insurance you provided to employees. This information goes into Box 12

How Can I Correct a W-2 Form?

Now that the deadlines for giving W-2s to employees and to the Social Security Administration are the same, you will have to go through a correction process with the SSA to correct errors on these forms. 

Deadline

The Form W-2 and Form W-3 filing deadline for employers is January 31. If you fail to file on time, the IRS can issue financial penalties.