What is Form W-2: Wage and Tax Statement

What is Form W-2: Wage and Tax Statement
  • Post category:Legal Forms
  • Reading time:7 min(s) read

Each year, employers report to their employees and the Internal Revenue Service (IRS), the U.S. federal tax agency, the taxable income earned by every employee using Form W-2, Wage and Tax Statement. The IRS uses Form W-2 to track the income and tax liability of an employee, as Form W-2 reports taxes withheld from the salary of an employee and Federal Insurance Contributions Act (FICA) taxes, such as Social Security and Medicare.

Employers use Form W-2 for part-time and full-time employees who earned $600 or more during the tax year. 

 

Form W-2, Wage and Tax Statement

Form W-2 is an IRS form that reports, in summary, the annual compensation and deducted taxes of an employee.

Employees may use Form W-2 when they file their Form 1040, U.S. Individual Income Tax Return. They will need to input the date found on their Form W-2 into their Form 1040. Nevertheless, employers are the ones required to fill out Form W-2, not the employees.

Each Form W-2 has several copies. Employers must send the appropriate copies to their employees and the Social Security Administration (SSA) no later than January 31 for the previous tax year. Employers can mail or hand-deliver the copies to employees while the SSA requires employers to file electronically through the SSA’s Business Services Online if filing more than 250 forms. When submitting to the SSA, attach a filled-out Form W-3, Transmittal of Wage and Tax Statements.

Take note that employers send Form 1099-NEC, Nonemployee Compensation, to freelancers and independent contractors, instead of Form W-2. Only employees receive Form W-2.

You can get a downloadable copy of Form W-2 from the official IRS website. If you prefer to fill it out electronically, you can use an online document-filler application. An option to hire a tax professional or company to assist you with tax procedures is also available.

 

Copies of Form W-2

Form W-2 has six copies. While they all have the same fields, their recipients differ.

  • Copy A — The employer sends Copy A to the SSA.
  • Copy B — The employer sends Copy B to the employee for federal income tax reporting.
  • Copy C — The employer sends Copy C to the employee for personal records.
  • Copy D — The employer keeps Copy D for its records.
  • Copy 1 — The employer sends Copy 1 to the appropriate state, city, or local tax department, if applicable.
  • Copy 2 — The employer sends Copy 2 to the employee for filing with the state, city, or local department, if applicable.

 

Reading Form W-2

The lettered boxes of Form W-2, Boxes A through F, show the identifying information of the employee, while the numbered boxes, Boxes 1 to 20 show financial information.

Box a shows the Social Security Number (SSN) of the employee. The employee should double-check his or her SSN, as an incorrect one can cause a delay in the processing of the tax return.

Box b shows the nine-digit Employer Identification Number (EIN) the IRS assigned to the employee.

Box c shows the legal address of the employer.

Box d shows the control number the payroll department of the employer uses. This box may or may not be blank.

Box e shows the legal name of the employee as it appears in his or her Social Security records.

Box f shows the address, including the ZIP code, of the employee.

Box 1 reports the total amount of taxable wages or salary of the employee. The total should include reported tips, bonuses, and other taxable compensation.

Box 2 reports the federal income tax amount withheld from the employee during the tax year.

Box 3 reports the total amount of wages of the employee subject to Social Security tax.

Box 4 reports the total amount of Social Security taxes withheld from the paychecks of the employee.

Box 5 reports the amount of the wages of the employee subject to Medicare tax.

Box 6 reports the total amount of taxes withheld from the paycheck of the employee for Medicare tax.

Box 7 reports the total amount of Social Security tips the employee reported to the employer subject to Social Security tax.

Box 8 reports the total amount of tip income allocated to the employee by the employer.

Box 9 is no longer used.

Box 10 reports any amount the employer paid to the employee for dependent care benefits.

Box 11 reports any amount distributed to the employee from the non-qualified deferred compensation plan or non-government pension plan of the employer.

Boxes 12a to 12d report different types of compensation and benefits. They will show a single or double-letter code and a dollar amount. The following are the codes:

  • A — Uncollected social security or RRTA tax on tips
  • B — Uncollected Medicare tax on tips
  • C — Taxable cost of group-term life insurance over $50,000
  • D — Elective deferrals to a section 401(k) cash or deferred arrangement (plan)
  • E — Elective deferrals under a section 403(b) salary reduction agreement
  • F — Elective deferrals under a section 408(k)(6) salary reduction SEP
  • G — Elective deferrals and employer contributions (including nonelective deferrals) to a section 457(b) deferred compensation plan
  • H — Elective deferrals to a section 501(c)(18)(D) tax-exempt organization plan
  • J — Nontaxable sick pay
  • K — 20% excise tax on excess golden parachute payments (not applicable to Forms W-2AS, W-2CM, W-2GU, or W-2VI)
  • L — Substantiated employee business expense reimbursements
  • M — Uncollected Social Security or RRTA tax on taxable cost of group-term life insurance over $50,000 (former employees only)
  • N — Uncollected Medicare tax on taxable cost of group-term life insurance over $50,000 (but not Additional Medicare Tax) (former employees only)
  • P — Excludable moving expense reimbursements paid directly to a member of the U.S. Armed Forces
  • Q — Nontaxable combat pay
  • R — Employer contributions to an Archer MSA
  • S — Employee salary reduction contributions under a section 408(p) SIMPLE plan
  • T — Adoption benefits
  • V — Income from exercise of non-statutory stock option(s)
  • W — Employer contributions to an employee’s health savings account (HSA)
  • Y — Deferrals under a section 409A nonqualified deferred compensation plan
  • Z — Income under a non-qualified deferred compensation plan that fails to satisfy section 409A
  • 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
  • EE — Designated Roth contributions under a governmental section 457(b) plan
  • FF — Permitted benefits under a qualified small employer health reimbursement arrangement

Box 13 reports if the employee is not subject to federal income tax withholding or participated in an employer-sponsored retirement plan or third-party sick pay:

  • Statutory employee — The employee’s earnings are subject to Social Security and Medicare taxes but not federal income tax withholding.
  • Retirement plan — The employee participated in your retirement plan during the year.
  • Third-party sick pay — The employee received sick pay under your third-party insurance policy.

Box 14 reports any additional tax information relevant to filing Form W-2.

Box 15 shows the state and the state identification number of the employer.

Box 16 shows the total taxable wages the employee earned in the state.

Box 17 shows the total amount of income taxes withheld from the paychecks of the employee.

Box 18 shows the wages subject to local, city, or other state income taxes.

Box 19 shows the total taxes withheld from the paycheck of the employee for local, city, or other state income taxes.

Box 20 shows the name or code of the local area the wages of the employee the employer reported to.