- [Instructor] Let me walk you through the different parts
of a W-2, this is important just in case an employee
asks questions about the W-2 and you need to explain it
to them.
So every W-2 looks more or less like this.
Sometimes they'll be divided up into separate sections,
sometimes they'll all be in a single piece of paper.
But in general, they're several parts that you'll care
about here.
To begin with, you'll have the employer identification
number, this is your EIN.
If you're a very small business, you might have your
social security number on there.
In general that's a bad idea, you want to have an EIN
there just for your own privacy's purpose.
Second, you'll have your employer's name, address,
and zip code so that's you as the business owner.
The name, address, and zip code for the business.
Then down below you'll have the employee's first name
and middle initial, their last name, and then their
address and zip code all fairly straightforward right?
From here you start getting into the details
about the employee's compensation.
So you'll have their total wages including tips,
then you have the amount of wages that are applicable
to social security.
In general for modestly paid employees, those two sums
will be the same.
If you have a very highly paid employee, then they
might cap out the social security wage limit,
which is just under $120,000 as of 2018.
Medicare wages and tips will generally be the same
again and those are kind of the three basic areas
that you're most likely to see for wages.
From here your employee will have the federal income
taxes withheld from their paycheck, their social security
tax withheld, and their medicare tax withheld.
These are critical.
You've got to make sure you've calculated these
correctly otherwise you're going to have to issue
a revised W-2, that's going to really upset the employee,
it's a lot of extra paperwork, et cetera.
So make sure this is all imported correctly from your
payroll software.
Down below, you'll have your state information.
Now some states don't have state income taxes,
Florida, Tennessee, New Hampshire, Wyoming, Texas, et cetera
generally don't have state wage level income taxes.
But, most states do, 42 43 of the states as I recall
do have state level income taxes.
So you'll need to have your employer's state ID number
that's the registration number that you've gotten
from the state when you registered with them, along with
the wages paid to an employee living in that particular
state, and the income tax that you've withheld
from them.
If the employee lives in the same state where they work,
your state wages will simply be their total wages.
The only time this differs is if they move partway
through the year or something similar.
Now you understand what the different components
in the W-2 are.