An employee is usually subject to the business’ instructions about when, where, and how to work. Independent contractors typically choose their own methods. Employees generally are reimbursed for out-of-pocket expenses, such as office supplies. Independent contractors typically are not. Employees are usually engaged with the expectation that they will be working indefinitely with the business. Independent contractors, however, are free to seek out different business opportunities and advertise their services openly. Employees are guaranteed a regular wage (hourly, weekly, etc. ). By contrast, independent contractors are usually paid a flat fee. An employee may be provided with benefits such as health insurance, a pension plan, sick pay, or vacation pay. Independent contractors aren’t. You should make the determination between employee and independent contractor when you first hire the individual.
Visit here to order: https://www. irs. gov/businesses/online-ordering-for-information-returns-and-employer-returns. Alternately, you can file electronically. Register at the Social Security Administration (SSA) website. [2] X Trustworthy Source US Social Security Administration Independent U. S. government agency that administers Social Security and related information Go to source Avoid printing off forms from the internet. Copy A of the form must be printed with red ink so that SSA can scan it. [3] X Trustworthy Source Internal Revenue Service U. S. government agency in charge of managing the Federal Tax Code Go to source If you don’t want to order forms from the IRS, then you can get forms from an office supply store or a local accounting firm.
Employees will supply their contact info and Social Security Numbers upon hiring, via form W-4, the Employee’s Withholding Allowance Certificate, but wage and tip information will come from your payroll register’s figures. You will also need your business’ state tax ID number. Check with your state’s Department of Revenue if you still have trouble identifying this number. They will provide a listing of the types of taxes paid at the state level.
Box A is located at the very top of the form and should read “Employee social security number. " Use black ink and a font size that is legible. The IRS recommends 12 point Courier font. [4] X Research source Fill in the 9-digit Social Security Number with its respective dashes, as follows: 123-45-6789
The EIN is a 9-digit number with a dash separating the first two numbers from the remaining seven. For example: 12-3456789
For example: Johnson Technical Corps850 Tech DriveSuite 400Antioch, CA 94531
You can either generate the number manually, or your payroll preparation software can generate this number electronically. Your control number may contain both letters and numbers, such as A1B2.
For example: David Johnson123 Elm StreetConcord, CA 94520
For Box 1, you will need to specify the total wages, tips, and other compensation given to your employee that are subject to federal income tax during the previous year. In Box 2, identify the total amount withheld in federal income tax. In Box 3, insert the employee’s total wages subject to the Social Security tax. For Box 4, indicate the total employee Social Security tax withheld. Don’t include your share as an employer. In Box 5, insert the employee’s total Medicare wages and tips. In Box 6, enter the total Medicare tax withheld from the employee. Don’t include your share as an employer. For Boxes 7 and 8, you must specify the employee’s Social Security tips and allocated tips, respectively.
For example, your company could provide a daycare center for employees. Alternately, you could have reimbursed expenses for dependent care through a flexible spending account. [9] X Research source Any amounts over $5,000 should also be included in Box 1.
Codes “A” and “B” refer to uncollected Social Security or Medicare tax on tips, respectively. Codes “D-H” refer to contributions to retirement plans, such as 401(k) or 408(b). Code “L” indicates reimbursements you paid to employees for business expenses that came out of their own pockets. Codes “M” and “N” refer to uncollected Social Security and Medicare tax on group-term life insurance. Code “W” specifies contributions made to the employee’s Health Savings Account. “AA” are designated Roth contributions under a 401(k) plan. “BB” are designated Roth contributions under a 403(b) plan. Code “DD” refers to the amount of non-taxable employer-sponsored health coverage.
Check “Statutory Employee” for independent contractors you are treating as employees for certain tax purposes. These independent contractors must fall within certain categories created by statute and meet certain conditions in order to be classified as statutory employees. [14] X Research source Check the box titled “Retirement Plan” if your employee participates in certain plans. See Publication 590-A. Select “Third-party Sick Pay” if you are a third-party sick pay payer who is filing Form W-2 for an insured’s employee or if you are an employer reporting sick pay payments made by a third party.
100% of a vehicle’s annual lease value state disability insurance taxes withheld union dues nontaxable income educational assistance payments
In Box 15, specify your two-letter state code and your business’ tax ID number. You can retrieve this information from your state’s Department of Revenue. Input the state wages in Box 16, state income tax withheld in Box 17, any local wages in Box 18, local income tax withheld in Box 19, and locality name in Box 20. Notice that there is space for two states and two localities on the form. If an employee has wages in more than two states or localities in one year, you must complete an additional W-2.
Your employer name and employer identification number must be supplied in order for your W-2 to be tracked by the SSA. Have your W-2 ready because you will be reporting the same totals on your W-3 as well.
Payer. Most businesses will check box 941, since the 941 form is what most employers use to report quarterly wage and tax information. [17] X Research source Employer. Most will check “none apply. ” The other boxes apply to non-profits and the federal government. Establishment number. This box applies to businesses with separate establishments under one entity.
To prepare for a W-3 form, you must add up wages in each category of the W-2 and use them to complete the W-3. The totals for each item on the W-3 must equal the totals for all of the corresponding items on the W-2 form. Be sure you use Form W-3 for the correct year. [19] X Trustworthy Source Internal Revenue Service U. S. government agency in charge of managing the Federal Tax Code Go to source Use the form for the year the income was taxable, not the year you are filing the form. This goes for the W-2 form as well.
Be sure your printed forms align with the pre-printed format, which can be verified on multiple websites. [20] X Research source Do not download “Copy A” of the W-2 or W-3 forms separately. The Social Security Administration only accepts red-ink versions or approved substitute versions of these forms. You can be penalized if you don’t provide a form that can be scanned. [21] X Trustworthy Source Internal Revenue Service U. S. government agency in charge of managing the Federal Tax Code Go to source Remember to use the form for the year the income was taxable, not the year you are filing the form.
Remit Copy 1 to your state’s department of revenue. [24] X Trustworthy Source Internal Revenue Service U. S. government agency in charge of managing the Federal Tax Code Go to source
To file paper forms, use the following address: Social Security AdministrationData Operations CenterWilkes-Barre, PA 18769-0001 If using “Certified Mail” to file, mark the ZIP code as 18769-0002. If using an IRS-approved delivery service, add “Attn: W-2 Process, 1150 E. Mountain Dr. " to the address and mark the ZIP code as 18702-7997. Do not send checks, cash, money orders, or other forms of payment. Employment tax forms, remittances, and Forms 1099 must be sent to the IRS. You can also file the forms online.
