Form W-2, Wage and Tax Statement Checklist for Tax
Year 2018
The 2018 Form W-2 reflects the first complete calendar year under the Tax Cuts and Jobs Act, which introduced revised tax brackets and modified dependent exemptions. Employers must report accurate wages, payroll tax withholding, and certain fringe benefits under the 2018 rules.
Form W-2 Wage and Tax Reporting Steps for Tax Year
2018
Step 1: Verify Employee and Employer Identification Numbers
Confirm the employee’s full legal name matches Social Security Administration records exactly.
Enter the employee’s nine-digit Social Security number in the standard format XXX-XX-XXXX with hyphens.
Verify the employer identification number is correct and matches Internal Revenue Service records. Addressing discrepancies between employee and employer records can delay processing and cause transcript issues.
Step 2: Report Wages and Federal Income Tax Withholding
Enter total wages paid, tips, and other compensation during the 2018 calendar year. The 2018 tax year reflects adjusted withholding rates that differ materially from 2017 due to federal tax law changes enacted for 2018.
Ensure wages reported match payroll records and remain consistent with amounts withheld under the 2018 Form W-4 withholding election. Misreporting wages paid creates discrepancies with the employee’s tax return and the W-2 Copy B provided to the employee.
Report the total federal income tax withheld from the employee’s wages during 2018. The 2018 withholding tables reflect lower tax rates and revised tax brackets implemented for the 2018 tax year.
Include backup withholding, if applicable, and any additional withholding requested on the employee’s 2018 Form W-4. Accurate withholding entries prevent under-withholding or over-withholding disputes when the employee files their 2018 return.
Step 3: Report Social Security Wages and Tax Withheld
Enter wages paid subject to Social Security tax, including tips reported by the employee. The
2018 Social Security wage base limit is $128,400; wages paid above this threshold are not subject to Social Security tax.
Calculate and enter the 6.2% employee social security tax withheld from qualifying wages. Form
W-2 reports only wages paid to employees and payroll tax withheld by employers; self-employment tax is not reported on Form W-2.
Step 4: Report Medicare Wages and Tax Withheld
List total wages paid subject to Medicare taxes, which includes wages paid above the Social
Security wage base. Calculate the standard 1.45% Medicare tax withheld from all qualifying wages paid during the calendar year.
Employers must withhold Additional Medicare Tax of 0.9% on wages paid exceeding $200,000 in a calendar year. This additional withholding is combined with regular Medicare tax withholding and reported together in box 6 of Form W-2.
Step 5: Report Health Insurance Coverage and ACA Compliance
Code DD reporting on Form W-2 box 12 is required for employers who filed 250 or more Forms
W-2 in the preceding calendar year. This informational reporting remains optional for smaller employers and supports employee awareness of health coverage costs.
ACA employer shared responsibility provisions under Section 4980H of the Internal Revenue
Code apply separately to Applicable Large Employers with 50 or more full-time equivalent employees. These employers must report coverage offers using Forms 1094-C and 1095-C, not
Code DD on Form W-2.
Failure to comply with applicable wage reporting requirements may delay the employee’s return processing. Code DD amounts are for informational purposes only and do not affect taxable income.
Step 6: Report Taxable Fringe Benefits and Deferred Compensation
Enter any taxable fringe benefits in box 12 using the appropriate codes. Examples include group-term life insurance in excess of $50,000 or educational assistance above the annual
exclusion. Include any non-qualified deferred compensation distributions vested in 2018 and report them according to Internal Revenue Service instructions.
Verify that statutory fringe benefits excluded from taxation are not reported as taxable wages paid. Examples include dependent care assistance, qualified transportation benefits, and
contributions to Section 401(k) plans.
Correct classification of fringe benefits prevents employee tax disputes and ensures accurate wage reporting to the Internal Revenue Service. Review the 2018 instructions for complete box
12 code definitions and reporting requirements.
Step 7: Complete State and Local Tax Boxes
State and local income tax information is reported directly on Form W-2 in boxes 15 through 20.
Copy 1 is sent to state, city, or local tax departments as required by applicable jurisdiction.
Ensure each box contains accurate wage and withholding amounts for the correct taxing authority. Incomplete or missing information prevents timely processing by the Internal Revenue
Service and state tax agencies.
Step 8: Furnish Employee Copies by January 31
Print or provide Copy B of the W-2 to the employee no later than January 31 following the tax year. The 2018 instructions specify that employees rely on Copy B to reconcile income with their annual tax return.
Ensure the employee receives copies for all states and localities where taxes were withheld if not combined on a single form. Late or missing Copy B distributions can trigger Internal
Revenue Service notices to the employee.
- The 2018 tax year reflects the first full implementation of revised withholding
- The 2018 Form W-4 withholding allowance worksheet changed significantly due to the
- Withholding calculated using 2018 withholding tables differs materially from 2017
- The Social Security wage base for 2018 is $128,400; verify this limit in the 2018 Form
- Code DD reporting on Form W-2, box 12, is required for employers who filed 250 or
- ACA employer shared responsibility provisions under Section 4980H of the Internal
- Form W-3 for 2018 includes revised line entries and revised reconciliation procedures
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 9: File Forms W-2 with Transmittal Form W-3
Submit all Forms W-2 with the completed Form W-3 transmittal to the Social Security
Administration by the filing deadline. Code DD amounts reported in box 12 of Forms W-2 are not totaled or reported on Form W-3.
Verify the total wages paid, withholding, and employee counts on Form W-3 reconcile with the individual W-2 forms. Incomplete or inaccurate transmittals delay Social Security processing and employee transcript availability.
Employers who filed 250 or more Forms W-2 must file electronically with the Social Security
Administration. Smaller employers may use paper wage report forms or choose electronic filing for faster processing.
Key 2018 Form W-2 Updates and Changes
Understanding the changes introduced in 2018 helps ensure accurate wage reporting and compliance with Internal Revenue Service requirements. The following updates reflect Tax Cuts and Jobs Act modifications and clarify ongoing ACA reporting obligations: adjustments, including new tax brackets and lower withholding rates. elimination of personal exemptions under the Tax Cuts and Jobs Act. withholding amounts for the same gross wages paid.
W-2 instructions to prevent over-withholding or under-withholding. more Forms W-2 in the preceding calendar year.
Revenue Code apply to Applicable Large Employers with 50 or more full-time equivalent employees who must report coverage offers using Forms 1094-C and 1095-C. reflecting the Tax Cuts and Jobs Act changes.
Backup Withholding Requirements Under Section 3406
Backup withholding under Section 3406 of the Internal Revenue Code applies when specific conditions are met. Employers must verify whether backup withholding applies and report it correctly on Form W-2.
Backup withholding applies under four conditions:
1. Backup withholding applies when a payee does not provide a taxpayer identification number to the payer in the manner required by the Internal Revenue Service.
2. Backup withholding is required if the Internal Revenue Service notifies the payer that the taxpayer identification number provided is incorrect.
3. A payer must apply backup withholding after receiving notice from the Internal Revenue
Service that the payee is subject to backup withholding due to underreporting.
4. Backup withholding also applies when a payee fails to certify, under penalties of perjury, that they are not subject to backup withholding.
Verify that backup withholding is correctly reported in box 2 if applicable to any employee.
Report backup withholding combined with regular federal income tax withheld during the calendar year.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
