When you work with ShiftMed, you're a W-2 employee—generally considered the most traditional form of employment. But what does that mean exactly?

In short, we send you a W-2 Form to file your taxes. Other workers, such as 1099 contractors, are classified under different forms of employment based on the tax form they use to file their taxes.

As a side note, we mail your W-2 to the address we have on file, so it's important to make sure what we have is current. You can also access your W-2 Form in Paylocity.

A W-2 is an IRS form that your employer provides to you in January. It summarizes your income from the previous year and shows how much you paid in payroll taxes during those 12 months. You need this wage and tax statement to prepare your annual tax return.

For example, the W-2 you received from your employer in January 2022 reflected your income and tax withholdings for 2021. If you work as a W-2 employee at more than one company during a year, you'll receive a separate W-2 Form from each employer.

Your employer also sends copies of your W-2 to the Social Security Administration, Internal Revenue Service (IRS), and your state and local tax authorities as a legal requirement.

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Every wage-earning worker must pay taxes to the IRS. As a W-2 employee, you pay income and payroll taxes every paycheck. (1099 independent contractors pay the same taxes but do so in one lump sum at tax time.)

Basic taxes workers must pay to the IRS:

· Federal Income Tax

· State Income Tax (if applicable)

· Social Security Payroll Tax

· Medicare Payroll Tax

You can learn more about these taxes in our blog post "3 Things You Must Know About Payroll Taxes."

Several variables, such as employment classification, federal income tax bracket, marital status, and state of residence, determine the amount someone pays in taxes.

Federal Income Tax

When you're a W-2 employee, your employer uses an IRS formula and your Form W-4 information to calculate the taxes you must pay to the IRS every paycheck. Your employer submits these taxes directly to the government on your behalf.

When you complete a W-4 Form, you're telling your employer how much federal income tax to withhold from your paychecks. You can update your W-4 at any time. The IRS recommends that you consider completing a new form whenever your personal or financial situation changes.

As a ShiftMed employee, you can update your W-4 in the ShiftMed app whenever you want. Check out this help center article for detailed instructions.

State Income Tax

Not every state has employees pay a state income tax. As of 2022, Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming don't have a state income tax. States with income tax set their own withholding tax rates. For example, some states have a flat income tax, whereas others have a graduated-rate income tax.

If an employee must pay state income tax, their employer withholds the required amount every paycheck and submits that amount to the appropriate state entity.

Federal Insurance Contribution Act (FICA) Taxes

Social Security and Medicare taxes fall under the FICA umbrella, with 15.3% of your wages going toward these federal programs every pay period. You pay half of these taxes (7.65%), and your employer pays the other half (7.65%). (If you were a 1099 independent contractor, you'd have to pay the complete 15.3% out of your pocket.)

App-based staffing agencies can classify healthcare professionals as W-2 employees or 1099 independent contractors. As noted earlier, when you work with ShiftMed, you're a W-2 employee—and it's the best worker classification you can have. Check out our blog post that gives five reasons why being a W-2 employee is better.

Disclaimer: ShiftMed does not provide legal, accounting, or tax advice. This content is for informational purposes only and is not intended to provide legal, accounting, or tax advice. Please refer to a professional advisor prior to acting on the information set forth herein.