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Form W-2 Wage and Corporate tax: What It Is and How to Read It


What is W2?

W2 is a form prepared, filed with the IRS and shared to all the employees. The structure of the form.

Why does an employer prepare W2?

As per IRS, an employer needs to prepare the form W2 for all the employees who work in the year.

When does the employer need to prepare W2?

The due date to prepare, file and share is 31st January every year.

How can W2 be submitted to the IRS?

W2 can be submitted to the IRS by paper or e filing. If the employer has to file more than 250 W2s, then it is compulsory to e-file only. Please keep in mind that W3 also needs to file when paper filing of W2 is made.

Does W2 need to file with the state also?

Every state has its own rules regarding the filing of W2. Some states may require to file W2 separately to them.

What is the course of action for the employee when it receives W2 from the employer?

W2 is essentially the report/statement showing the wage income of the employee which covers all the wage income and deductions relating to it so it will be used when filing the taxes of the employee in 1040 of him/her. It will be shared with your tax prepare for the reference as there might be chances that you may receive a notice from the IRS if there is variation in the amount shown by you in your personal return and W2 filed by the employer.

What if W2 is incorrectly filed/missed by the employer?

Call the IRS toll free at 800-829-1040 or make an appointment to visit an IRS Taxpayer Assistance Center (TAC). The IRS will send your employer a letter requesting that they furnish you a corrected Form W-2 within ten days.

How to file W2 by the employer?

The filing of W2 is really easy. You just need to read the instructions of the W2 from. The employer should file W2 with the help of a website which provides the services of filing W2 so there is very low chances of an error. They also provide the support to file W2 to the state also if required.

Can W2 be revised?

Yes, W2 can be revised if there is a mistake while filing the same. To make corrections in W2 filed, W-2c form needs to be used. The instructions to file W2c also available on the link shared on the above question.

Is there any penalty on the late/incorrect filing of W2 to the employer?

Yes, the employer needs to pay a penalty on the late/incorrect filing. The penalty will increase based on the days expired after the due date. It is advisable to complete it as quickly as possible to avoid further penalty. The penalty will not be levied if the employer has reasonable cause. If the employer files the correction of W2 before the due date(31st January) then penalty will not be levied.

How To Calculate Taxes On Corporations?

A corporation, sometimes known as a C Corp, is a specific business structure that benefits owners from limited liability protection. Because corporations are considered separate legal entities, they are legally distinct from their owners, and a corporation’s conduct and financial obligations are not the owners’ responsibility (hence limited liability).

However, because companies are considered to be independent legal entities, they are subject to payment of double taxes. The corporation and its owner are responsible for paying company profits taxes. Regarding some business forms, such as sole proprietorships, taxes are paid directly by the owner, meaning that earnings are only subject to taxation once.

If you own a corporation, you must file a tax return using Form 1120, the Corporate Tax Rate in the USA. And don’t forget to include a record of your income on your tax return.

In most cases, taxes are levied against corporations at the federal and state levels. A corporation must make tax payments on its taxable income at a rate determined by the federal government and each state.

If you choose to organise your business as a corporation, you must know the tax rates applicable to corporations.

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