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Understanding and Reviewing Form W-2

Square Payroll generates, files, and mails Form W-2 to each each of your employees in January. We will mail Form W-2 to the mailing address provided for each of your employees. In addition, these forms are available in draft format all year in the Payroll > Tax Forms tab of your Square Dashboard to give you time to review the forms for accuracy throughout the year.

Although Square Payroll files Form W-2s on your behalf, you and your employees are responsible for confirming and ensuring the information in the Form W-2s is accurate. See year-end information for additional questions related to preparing for annual payroll tax filings.

1. Download your draft Form W-2s

To access your draft 2020 Form W-2s from January 1, 2020 to December 28, 2020:

  1. Visit Payroll > Tax Forms in your Square Dashboard.

  2. Click the Generate Draft W-2s button and select the Year

  3. Click Download to download a .zip file of the draft Form W-2s.

  4. Extract the Form W-2s from the downloaded .zip file (read below for instructions on doing so on a Mac or Windows computer).

Note: Square Payroll will begin processing draft Form 1099-NEC on December 28, 2020. 

To access your draft 2020 Form W-2s from December 28, 2020 to January 8, 2021:

  1. Visit Payroll > Tax Forms in your Square Dashboard.

  2. Click Download on the “Wage and Tax Statements” line item to download a .zip file of your Form W-2s.

  3. Extract the Form W-2s from the downloaded .zip file (read below for instructions on doing so on a Mac or Windows computer).

Note: You have until January 8, 2021 to make changes to your employees’ full names, SSNs, and home addresses before the Form W-2s are filed with the Social Security Administration (SSA).

Extract your Form W-2s from a .zip file on a Mac

On most Mac computers, you will find the .zip file containing your W-2s in your Downloads folder. To access the file, you can either open the Downloads folder directly or search in your finder for “W2.zip”. Once you locate the .zip file, double click on it. Your computer will automatically extract the data from the .zip file, creating a folder which contains PDF copies of your W-2s.

Extract your Form W-2s from a .zip file on Windows

The steps for extracting your .zip file depend on which version of Windows you are running. To locate the file, search for “W2.zip” or look for the file in the Downloads folder of My Computer. Follow the links for .zip extraction instructions onWindows 8 or 10.

2. Verify your draft Form W-2 data

You and your employees are responsible for ensuring that the information on Form W-2 is correct. The draft Form W-2s are available all year by going to Payroll > Tax Forms in your Square Dashboard. You will have until January 8, 2021 (01/08/2021) to review the draft forms for accuracy before they are filed and mailed. We recommend reviewing the draft Form W-2s information periodically throughout the year. Changes to your employees’s information, business information, and processed payroll runs will be reflected immediately upon re-downloading the draft Form W-2s.

We know that Form W-2 can be a bit daunting to read. Below is additional information on the fields in Form W-2 that should be reviewed.

Employee Information

Employee’s information can be updated by going to Payroll >Payroll Team and clicking on their profile. Please check for these common errors:

  • Full Name: Check for misspelled names and avoid using nicknames or shortened name, titles before or after a name, and name changes not reported to the Social Security Administration (SSA).

  • Social Security Number (SSN): Check for incorrect or typo’d SSNs.

  • Home address: Ensure this reflects the employee’s current address. The Form W-2 will be mailed to this address.  

You can also learn more about Form W-2 information verification by visiting the SSA website.

Business Information

If the information in the Payroll > Settings > Business Infoneeds updating, please contact usfor assistance updating your taxpayer address. Changes to your taxpayer name and taxpayer numbers may require additional troubleshooting.

  • Taxpayer address

  • Federal or state tax numbers

Employee Wages

As you continue to process payroll throughout the year, the wages will update accordingly on the draft Form W-2 when the pay run is sent/processed, not after queuing the run. The wages reflected on the draft Form W-2 are a combination of:

Reviewing and understanding Form W-2

Below is information on the fields in Form W-2:

  • Box a: Employee Social Security Number (SSN).

  • Box b: Employer Identification Number (EIN).

  • Box c: Employer name, address, and zip code.

  • Box e: Employee name.

  • Box f: Employee mailing address.

  • Box 1: Wages, tips, and other compensation — Total calendar year taxable wages, tips, and other compensation paid to the employee.

  • Box 2: Federal Income Tax Withheld — Total calendar year federal income tax withheld from employee wages.

  • Box 3: Social Security Wages — Total calendar year employee wages subject to employee social security tax, not including social security tips.

  • Box 4: Social Security Tax Withheld — Total calendar year employee social security tax withheld, including social security tax on tips.

  • Box 5: Medicare Wages and Tips — Total calendar year employee wages and tips subject to Medicare tax.

  • Box 6: Medicare Tax Withheld — Total calendar year employee Medicare tax withheld

  • Box 7: Social Security Tips — Total calendar year employee tips reported.

  • Box 10: Dependent care benefits — Total dependent care benefits that your employer paid to you or incurred on your behalf (including amounts from a section 125 (cafeteria) plan). Any amount over $5,000 is also included in box 1.

  • Box 11: Nonqualified plans — This amount is reported in box 1 if it is a distribution made to you from a nonqualified deferred compensation or nongovernmental section 457(b) plan.

  • Box 12:

    • D—Elective deferrals to a section 401(k) cash or deferred arrangement. Also includes deferrals under a SIMPLE retirement account that is part of a section 401(k) arrangement.

    • E—Elective deferrals under a section 403(b) salary reduction agreement

    • G—Elective deferrals and employer contributions (including nonelective deferrals) to a section 457(b) deferred compensation plan.

    • W—Employer contributions (including amounts the employee elected to contribute using a section 125 (cafeteria) plan) to your health savings account.

    • AA—Designated Roth contributions under a section 401(k) plan.

    • BB—Designated Roth contributions under a section 403(b) plan.

    • DD—Cost of employer-sponsored health coverage. The amount reported with Code DD is not taxable.

    • EE—Designated Roth contributions under a governmental section 457(b) plan.

  • Box 13: If the “Retirement plan” box is checked, special limits may apply to the amount of traditional IRA contributions you may deduct.

  • Box 14: Other — Employers may use this box to report information such as state disability insurance taxes withheld.

  • Box 15: State Employer Identification Number.

  • Box 16: State, wages, tips, etc. — Total calendar year state taxable wages, tips, and other compensation paid to the employee.

3. Distribute Form W-2

Square Payroll will mail Form W-2 to each of your employees by January 31, 2021 (01/31/2021). Instructions are included with the form.

Note: We will not resend Form W-2 if an employee does not receive it (due to invalid address or other reasons).

  • If your employee has an invalid mailing address and your business has a valid mailing address, their Form W-2 will be returned to your business. You are then responsible for providing them with their copy of Form W-2.

  • If your employee has an invalid mailing address and your business has an invalid mailing address, you are responsible for downloading the Form W-2s and providing them to your employees.

  • In the instance that your employee’s Form W-2 is returned to your business, ensure that your taxpayer address in Square Payroll is accurate. You can see what address is on file or update the taxpayer address for your business in the Business Info section of your online Payroll Dashboard.

  • You can access a copy of your Form W-2s under the Payroll > Tax Forms tab in Square Dashboard. Form W-2s are not available in the Square Payroll app.

  • Employees with online accounts can also access a copy of their Form W-2 under their Tax Forms tab or Square Team app.

Learn more about: Payroll

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