Each year, employers are required to prepare a W-2 Form for their employees. This form shows each employee’s total gross earnings, Social Security earnings, Medicare earnings, and any federal and state taxes that have been withheld from their paychecks. This form also outlines what information employees must include on their income tax form and provides the Social Security Administration and IRS with information to help verify these completed forms each year.
Without the proper identification information, your employer is unable to accurately complete the required tax forms which may cause issues as you file taxes. This is one of many reasons why it is important to provide your employer with the most up-to-date information for your payroll records, including your name and home address.
Name
Ensure that your name is spelled correctly and matches your legal name registered with the U.S. Social Security Administration. For example, do not provide a nickname or shortened name when completing these forms. Additionally, if your name has changed due to marriage, divorce, or other reasons, inform Social Security as soon as possible to request a corrected card. Once you have received the updated card, you may then update your employer of these changes.
Home Address
Have you recently moved homes or states? Confirm that your current address is listed correctly, including the street address and zip code. If you recently moved to a different state, it’s also important to review your state taxes to ensure they accurately reflect the state(s) you have lived and worked in throughout the year.
In addition, businesses must also verify that the company information is accurately recorded, especially for payroll and tax purposes. This includes fields such as the company name, Federal Employer Identification Number (FEIN), and state tax identification numbers.
Company Name
The company name, and any associated “Doing Business As” (DBA) designations, should be accurately provided. In addition, both the company name and address should match those of which the IRS has on file. Luckily, the IRS makes it easy to update any business information including changes to your business name or business mailing address.
Federal Employer Identification Number (FEIN)
Also known as the Employer Identification Number (EIN), the FEIN is a nine-digit number assigned by the IRS to identify business entities. Incorrectly providing this information when completing tax forms may require additional forms to be completed to fix the error.
State Tax Identification Numbers
Identification numbers provided by state agencies MUST match what is listed in your payroll system. These numbers can be located on the filing and rate notifications that are sent at the end of each quarter through the mail. In addition, if your business is subject to local taxes; it is important to confirm these identification numbers are inputted correctly.
Ready to ring in the new year by doing business more efficiently and stress-free? As we say goodbye to 2020, plan time in your busy schedule to review your employee and business payroll information. Doing so will not only help prevent any W-2 errors but will also help you and your employees’ file taxes with confidence.