Form W-2, officially the Wage and Tax Statement, is an Internal Revenue Service (IRS) tax form that reports the annual wages of an employee and the amount of taxes withheld from his or her paycheck.
If you are an employer, the IRS, the revenue service of the United States federal government, requires you to report the wage and salary information of your employees using Form W-2. You are legally required to send out the form to employees to whom you paid any form of compensation, including a salary or wage, no later than January 31 each year to give them sufficient time to file their income taxes before April 15, the income tax due date. In general, if you paid an employee at least $600, you should provide him or her with the form to fill out.
Employers use Form W-2 to report the Federal Insurance Contributions Act (FICA) taxes of their employees to the Social Security Administration (SSA). The SSA uses the information on Form W-2 of employees to calculate and determine the Social Security benefits they are entitled to.
Form W-2 is different from Form W-4, as Form W-4 or Employee’s Withholding Certificate is the form employees use to inform their employees the amount of tax to withhold from their paycheck every pay period.
Form W-2 consists of six copies. As an employer, you keep a copy and send two to the government. The remaining three copies go to an employee to file with his or her tax returns.
Here are the instructions for each copy:
All copies of Form W-2 have the same fields. To complete the form, you will need information about your business, such as Social Social Security Number (SSN), Employer Identification Number (EIN), business name and address; information about your employee, such as SSN or other tax identification number, name and address; and information about the employee’s earnings. To complete Form W-2 accurately, you need to understand the form.
The lettered boxes require legal, identifying information of the employer and employee.
Box A requires the employee’s SSN. To avoid delays in the processing of tax returns, always double-check the accuracy of the SSN.
Box B requires the nine-digit EIN assigned and used by the IRS to identify the tax accounts of employers.
Box C requires the employer’s name and address, including the ZIP code.
Box D requires the internal control number used by the employer or employer’s payroll department. Leave this box unanswered if not applicable.
Box E requires the employee’s full legal name. The name should be exactly as it appears on the employee’s Social Security card.
Box F requires the employee’s address, including the ZIP code.
The numbered boxes require the employee’s financial information.
Box 1 reports the employee’s total annual taxable wages, tips, and other forms of conversation, minus elective deferrals, such as 401(k) plans, pretax benefits, and payroll deductions.
Box 2 reports the federal income tax withheld from the employee’s pay during the year.
Box 3 reports the total wages subject to the Social Security tax, excluding tips.
Box 4 reports the total amount of Social Security taxes withheld for the year.
Box 5 reports wages and tips subject to Medicare taxes, including tips.
Box 6 reports the amount of Medicare taxes withheld for the year.
Box 7 reports the total amount of reported tips subject to Social Security tax.
Box 8 reports any tip income allocated by the employer to the employee.
Box 9 is no longer used.
Box 10 reports the total benefits provided to the employee under a dependent care assistance program by the employer.
Box 11 reports the total amount distributed to the employee from the employer’s nonqualified deferred compensation or a non-government pension plan.
Box 12a, 12b, 12c, 12d detail several types of compensation and benefits. Refer to the Instructions for Employee page of Form W-2 for the single and double-letter codes you should use.
Box 13 has three boxes: Statutory Employee, Retirement Plan, and Third-Party Sick Pay.
Box 14 reports any information that does not have a specific box on Form W-2.
Box 15 includes the employer’s state and state tax identification number.
Box 16 reports the total taxable wages the employee earned in a specific state.
Box 17 reports the total amount of state income taxes withheld from the employee’s wages reported in box 16.
Box 18 reports wages and tips subject to local, city, or other state income taxes.
Box 19 reports the total taxes withheld from the employee’s wages for local, city, or other state income taxes.
Box 20 should have the name or code of the local area where the employee’s wages are reported to.
If you are filing paper forms, you should mail the W-2 forms, as well as Form W-3, to:
Social Security Administration
Direct Operations Center
Wilkes-Barre, PA 18769-0001
For more than 250 W-2 forms, you are required to e-file, through the SSA’s Business Services Online section. Electronically filing the W-2 forms is free. In addition, the SSA generates Form W-3, sparing you from additional paperwork.