How to Complete a W-2 When I Don't Withhold an Employee's SS & Medicare Taxes
Federal law requires employers to furnish each of their workers with an Internal Revenue Service Form W-2 at the end of each year. W-2s are statements of earnings and withholdings employees need to complete their income tax returns. If an employer has not withheld taxes, it must still generate W-2s and state all information correctly, including the lack of withholding. However, employers who don't withhold Social Security and Medicare taxes should beware -- they may be in violation of the Federal Insurance Contributions Act and the Federal Labor Standards Act.
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Instructions
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1
Complete the boxes with an employee's identifying information, including Social Security number, first name, middle initial, last name and address. These are items a, e and f respectively.
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2
Enter your company's name, employer identification number and address into boxes b and c.
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3
Fill-in Box D with the control number for the W-2 filing. This is the number of the account your company established with the IRS for transmitting taxes withheld from an employee's paycheck. If you don't have a control number, you or your accountant should contact the IRS to establish one.
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4
List the gross wages paid to your employee for the year in Box 1.
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5
Disclose the total federal taxes you withheld from your employee's pay in Box 2.
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6
List the total gross wages subject to Social Security and Medicare taxes in boxes 3 and 5. Usually, these numbers are the same as the gross wages listed in Box 1. You must include this information even if you did not withhold Social Security and Medicare taxes.
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7
Enter "0" for items 4 and 6 -- taxes withheld for Social Security and Medicare respectively.
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8
List any tips subject to Social Security taxes in Box 7. These exist only in tipped positions and if employees elect to report their tips to you for Social Security and income tax withholding. Because this isn't common, you will most likely enter "0" for this line.
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9
Disclose any childcare benefits paid to your employee in Line 10.
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10
Enter state and local tax information in boxes 15 through 20. This only applies in states with income tax. You'll need your state employer identification number, the total taxable wages -- which are usually the same as the federal taxable wages listed in Box 1 -- and the amounts you withheld, if any.
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Tips & Warnings
Consult a qualified accountant or tax attorney if you failed to withhold Social Security and Medicare taxes. You may be subject to regulatory penalties by the IRS, Social Security Administration and U.S. Department of Labor.
