Key takeaways:

• A W-2 is a tax form that employers issue to full-time employees at the end of the year, reporting the employee's taxable income and taxes withheld.
• Issuing W-2 forms is crucial for ensuring compliance with tax laws and regulations for full-time employees abroad.
• It's important for employers to be aware of the specific requirements for issuing W-2 forms in the country in which the employee is based.

What’s a W-2, and when do I need to use one?

A W-2 is a tax form that is issued by an employer to an employee at the end of the year. The form reports the employee's taxable income, including salary, bonuses, and other taxable benefits, as well as the taxes withheld from the employee's pay. The W-2 is then used by the employee to complete their individual tax return and report their taxable income to the government.

For employers, it's important to understand the W-2 form because it is a key tool for reporting an employee's taxable income. By issuing a W-2 to each of their full-time employees, employers can ensure that their employees are accurately reporting their taxable income and that they are in compliance with tax laws and regulations.

If you’re hiring employees abroad, whether or not they’ll need a W-2 depends on a couple of factors:

• Are they employed as an employee, not a contractor?
• Are they employed by a US-based office of your company—not a foreign subsidiary?

If the answer is yes to both of these questions, you likely need to issue a W-2 to your employee.

By understanding what a W-2 is and the specific requirements for issuing W-2 forms in the country in which the employee is based, employers can ensure that they are accurately reporting taxable income and that they are in compliance with tax laws and regulations.

Hiring contractors? Thera can save you a ton of time

You don’t need to issue W-2 forms to your contractors. But, if you are hiring contractors, you’re probably spending too much time on their payroll, contracts, and tax documents. Which is why we built Thera, which saves you 90% the time you spend on contractor paperwork each month.

With Thera, you can compliantly hire your contractors in 150+ countries, onboard them in minutes, and pay them all at once (in a click). It’s global contractor payroll, finally simplified.

Sound interesting? Click here to book a demo.