If you’re unaware of what is meant by a W-2 employee, a W-2 employee is an individual who is legally employed by an employer in the United States. All W-2 employees receive a W-2 tax form every year to record their taxes and income. W-2 employees are entitled to benefits as governed by the laws and regulations. W-2 employees receive health insurance, paid time off, etc which isn’t provided to contractors.
What is a W-2 Form?
The W-2 form is used by employers in the United States to report the income, tax, and other compensation paid to employees during a fiscal year. Employees use the information on the W-2 form to file their federal and state income tax returns. The W-2 form is critical for both employees and employers because it provides a record of an individual's earnings and tax withholdings for the year. The W-2 form is provided by employers to all employees but not to independent contractors.
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What benefits do W-2 employees get?
W-2 employees get certain benefits from their employers. These benefits are usually recorded on an employee’s W-2 tax forms. Some of the common benefits that W-2 employees receive are as follows:
- Health and dental insurance
- Retirement savings plan
- Paid time off
- Unemployment insurance
- Disability insurance
- Worker’s compensation
Contribution to Medicare and Social Security through FICA.
How can I obtain a W-2 form?
Employers must provide W-2 forms to employees by December 31st of each year. If you haven’t received your W-2 form from your employer or are unable to contact them, you can request a copy of your W-2 form by contacting the Internal Revenue System (IRS). It's important to keep in mind that you will need a W-2 form to file your taxes, so it's best to make sure you have received it promptly.
Who receives copies of the W-2 form?
Typically there are multiple copies of W-2 forms. When an employer issues a W-2 form to an employee, they are required to send copies to several different entities, including the Social Security Administration, state tax agencies, and the employee themselves.
Copy A of the W-2 form is typically sent to the Social Security Administration before the deadline by the employer. Copy B remains with the employee until filing as a part of the Federal income tax return. Copy C is retained by the employer. Copy 1 is filed by your employer to the appropriate state, and city tax agency if required.
What is the W-2 equivalent for non-US employees?
The W-2 form’s equivalent for non-US employers working and living in the United States is form 1042-S. Generally, if a non-US employee receives payments from an employer based in the US, the employer agent must issue a Form 1042-S to the employee and the IRS. Non-US employees must fill out the form and file their income with the IRS.
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When hiring across the United States, it is vital to understand what is a W-2 employee, what is 1099 vs W-2, and how to accurately calculate and submit your business taxes and stay compliant while calculating, withholding, and paying employee taxes. Making mistakes with the IRS can lead to severe consequences. If you employ talent globally, following each country's tax laws and legislation can be overwhelming.
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Frequently Asked Questions
What does it mean to be a W-2 employee?
Being a W-2 employee means that you are legally employed by an employer in the United States and you receive a W-2 form from your employer at the end of each year to report your earnings and taxes paid. As a W-2 employee, you are entitled to certain benefits such as health insurance, retirement benefits, paid time off, etc.
Is a W-2 employee salaried?
A W2 employee is what we typically consider to be a salaried employee. They work for one employer, engage in employee benefit programs, and work according to the organization's needs and schedules.
Do all employees get a W-2?
Any employee working for an organization (rather than a contractor, for example) must receive Form W-2, regardless of the duration an employee works or how he is paid, such as salary, wages, or bonuses.