Page 155 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
• Send Copy A of all completed W-2 forms to the Social
Security Administration by the end of January.
• Send a copy of all completed 1099 forms to the IRS with a
transmittal Form 1096 by the end of January.
• Verify that all Forms W-2 and W-3 sum up to the totals listed
on the Form 941, or be aware of the differences between the
two sets of numbers.

The W-2 Form

The W-2 form contains the information needed by employees to file
their annual income tax returns with the government. It itemizes the
various types of income paid by the employer to the employee during
the past calendar year. If an employee works for several employers dur-
ing a year, then each one must provide a completed W-2 form. Also, if
an employer changes payroll systems during the year, it is not uncom-

mon to issue a separate W-2 form from each system for that period of
the year during which each payroll system was recording compensation
paid to employees.
An employer can send W-2 forms to its employees either in a paper
or electronic format. However, if it uses the electronic format, it must
first obtain permission from each employee to do so, which may be
withdrawn with 30 days notice. No matter which format is used, the

W-2 form must be sent to employees no later than January 31 follow-
ing the year for which the form is being provided. Copies of these
completed forms must also be sent to the IRS, along with a transmittal
form. An example of the W-2 form is shown in Exhibit 5.2.
The employer fills out the form by listing the employer’s name,
address, and identifying information in the upper left corner of the
form, followed by the same information for the employee in the lower
left corner.The right side contains many numbered blocks in which the

128