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Global Work Glossary

Who is considered a W-2 employee?

A W-2 employee is an individual in a formal employment relationship with a US company, receiving a W-2 tax document annually, which details their earnings and deducted taxes. This designation signifies certain entitlements and protections under US law, such as health insurance, paid time off, and workers' compensation insurance.

Key Characteristics of W-2 Employees

W-2 employees are distinguished by their employer-employee relationship, regular wages, and benefits, taxes withheld from their paycheck, and receipt of a W-2 tax form at year-end, summarizing their earnings and withheld taxes.

Overview of the W-2 Tax Form

Form W-2, or the Wage and Tax Statement, is provided by employers to employees, reporting income earned and taxes withheld. It is crucial for filing tax returns with the IRS and is not issued to independent contractors who receive Form 1099-NEC instead.

W-2 Employee Benefits

W-2 employee benefits encompass both mandatory and optional non-monetary compensations provided by employers. These benefits include FICA taxes, worker’s compensation, health insurance, FMLA protection, disability insurance, and retirement plans.

Acquiring a W-2 Form

Employers furnish employees with a copy of their W-2 each year by January 31st. If unavailable, employees can request assistance from the IRS, which facilitates the retrieval of W-2 forms.

Multiple Copies of W-2s

W-2 forms consist of various copies, including copies for the employee, employer, and the IRS, each serving distinct purposes such as filing taxes, record-keeping, and reporting to authorities.

Handling Multiple W-2s

Receiving W-2s from multiple employers is common, and there are provisions for including all W-2s when filing taxes. However, receiving multiple W-2s from the same employer may indicate an error, though certain exceptions exist, such as business acquisitions.

W-2 Equivalent for Non-US Employees

Foreign employees working for US companies may receive Form 1042-S instead of a W-2. It is essential to report this income on tax returns, and tax treaty agreements may mitigate dual taxation risks for foreign employees.

In summary, understanding W-2 employees, their benefits, and associated tax documentation is vital for both employers and employees to ensure compliance with tax regulations and entitlements under US law.

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