By Russell Huebsch Updated March 08, 2019
W-2 forms are tax forms maintained by employers and sent to employees and the Internal Revenue Service. Wages for the year and the amount of taxes withheld are reported on the W-2. All employees in businesses large and small must receive a W-2 as long as they earned any amount of money. Failing to provide a W-2 could result in fines and penalties from the IRS.
The Basic Rules
The "General Instructions for Forms W-2 and W-3" states that employers must file Form W-2 to any employee that earned any amount of wages and from which the employer withheld income, social security or Medicare tax. Employers must also file a Form W-2 if they would have withheld taxes had the employee not claimed exemption from withholding on Form W-4, or if the employer paid $600 or more to an employee but did not withhold any tax.
Employee vs. Contractor
The IRS makes a distinction between employees and independent contractors. It is up to the business, however, to determine which designation fits each individual performing work for the business. An individual is generally an employee if you control when, where, and how they perform their tasks for your business, and the employment period is indefinite. An individual is generally an independent contractor if you control only the end result of their services, but they govern the details of how the work is performed.
The contractor's services typically end at the completion of a project or a specified period of service. The business must file Form 1099-MISC for each independent contractor who is paid $600 or more for services rendered.
Handling Undeliverable Forms
Employers must make a conscious effort to deliver a W-2 to an employee, but some W-2 forms are undeliverable. In cases where an employee moves after termination and does not update his address, for example, the W-2 form comes back as undeliverable. In this case, employers should keep the unopened W-2 envelope in their filing system for 4 years.
Penalties for Not Issuing W-2
Failure to file Forms W-2 by the due date results in penalties. The amount is dependent on how quickly after the due date that you file the forms. Forms filed within 30 days of the due date incur a $50 penalty per form. The maximum penalty is $260 per form, but if the IRS determines that your failure is due to intentional disregard of filing requirements the penalty increases to $530 per form.
Electronic Filing of W-2s
Small businesses can reduce the costs of paperwork and streamline the issuance of W-2s to employees by using the Social Security Administration's online W-2 electronic filing form. Not only can employees access their W-2 online, but you have irrefutable proof that you properly furnished W-2s to your employees.
FAQs
An employer must issue you a Form W-2 if you were paid at least $600 in cash or cash equivalent during the year, including taxable benefits. It doesn't matter how many hours you worked, or how long you were employed.
Is there a minimum income to receive a W-2? ›
A copy also goes to the IRS. You should receive a W-2 from every employer that paid you at least $600 during the year.
When must employers issue your W-2 form? ›
January 31st is the deadline to file W-2s using Business Services Online or to submit paper Form W-2. If this date falls on a Saturday, Sunday, or legal holiday, the deadline will be the next business day. January 31st is the deadline to distribute Forms W-2 to employee(s).
Do I need a W-2 if I made less than $600? ›
Workers who receive a W2 from a company with less than $600 in wages are still responsible for reporting it as there is no W-2 minimum amount to file. Description:The employer is required to send you a copy - Part B and C of the W-2 - either by mail or electronically by January 31 following the tax year.
Do you have to file a W-2 if it's under 1000? ›
Every W-2 that you received must be reported on your tax return, even if they are for small amounts. Remember that each one of those W-2's has your Social Security number on it, and that income was reported to the IRS by the employer. You do not want to get in trouble with the IRS for under-reporting your income.
How much can you pay someone without a W-2? ›
If your company withholds income, Social Security or Medicare taxes, you will use a W-2 form for any employees who earned $600 or more for the year.
Do you have to claim a W-2 if it's under $500? ›
Regardless of whether you got paid $5 or $500, income is income, and it should all be reported. Your tax preparer can help you to figure out how much of it is actually taxable. Do you have more questions about 1099 forms? Clergy Financial Resources can help with our Pro Advisor service.
What if a company does not issue a W-2? ›
If you contacted your employer and still don't have your W-2, call us at 800-829-1040. Have your information ready so we can help you: Name, address and phone number. Social Security or individual tax ID number.
What is the penalty for an employer not sending W-2? ›
Fines can range from $60 to $310 per W-2, depending on how late the forms are issued.
Can I sue my employer for not giving me my W-2? ›
If an employer fails to send a W2 or sends it late, the employee cannot directly sue them. 3. The IRS should be contacted if an employer doesn't send a W2 by January 31st, they can issue fines or penalties to the employer.
What Happens If I Don't Report To The IRS? Though all companies will issue you a 1099-K form once you earn or receive $600, you only have to pay tax if it's income from customers or clients.
Is there a minimum income to file taxes? ›
So as long as you earned income, there is no minimum to file taxes in California. It is a good idea to talk with a tax professional to determine your filing status and whether you are required to file or could benefit from doing so anyway.
What is the W-2 filing threshold? ›
Taxpayer First Act (New)
The Internal Revenue Service (IRS) has issued final regulations that reduce the electronic filing threshold from 250 W-2s to 10 informational returns (such as Forms W-2 or 1099), beginning January 2024.
What is the minimum amount to send a W-2? ›
Federal law requires employers to send all employees whom they paid any form of remuneration, including non-cash payments, of $600 or more for the year a W-2 Form.
How much can a 70 year old earn without paying taxes? ›
For retirees 65 and older, here's when you can stop filing taxes: Single retirees who earn less than $14,250. Married retirees filing jointly, who earn less than $26,450 if one spouse is 65 or older or who earn less than $27,800 if both spouses are age 65 or older. Married retirees filing separately who earn less than ...
What is the minimum income to not file taxes in 2024? ›
If you have income below the standard deduction threshold for 2023, which is $13,850 for single filers and $27,700 for those married filing jointly, you may not be required to file a return.
How much do you have to earn to file taxes per W-2? ›
Minimum Income to File Taxes in California
| IF your filing status is . . . | AND at the end of 2022 you were* . . . | THEN file a return if your gross income** was at least . . . |
|---|
| Married filing separately | any age | $5 |
| Head of household | under 65 65 or older | $19,400 $21,150 |
| Qualifying widow(er) | under 65 65 or older | $25,900 $27,300 |
2 more rowsWhat Is the 1099 Form Used for? The 1099 form is used to report non-employment income to the Internal Revenue Service (IRS). Businesses are typically required to issue a 1099 form to a taxpayer (other than a corporation) who has received at least $600 or more in non-employment income during the tax year.
What income is not on W-2? ›
Wages earned as an independent contractor, statutory employee, self-employed worker, gig worker, casual laborer, sole proprietor or other non-employee arrangements. Partnership distributions. Income from trusts and estates. Pensions, annuities and distributions from retirement savings accounts.
