- A W-2 form shows your earnings from wages and how much tax you paid in the past year.
- Your employer sends copies of your W-2 to the IRS and to you.
- You use a W-2 to help complete your tax return.
A W-2 form provides information about income you've earned from your employer and the types and amounts of taxes withheld from your paycheck. The W-2 is an important part of filing federal and state taxes.
As an employee, you are the recipient of the IRS Form W-2. Your employer must file these forms for each worker by January 31. Copies are sent to you and the Social Security Administration, which transmits the information to the Internal Revenue Service. The information on the W-2 form will include how much and what types of income you earned, and how much income, Social Security, and Medicare taxes were withheld.
Key information on a W-2
Form W-2s are sent by employers either electronically or by mail. Extensions may be granted in the case of extraordinary circumstances or catastrophe. Employers must e-file if they are required to file 250 or more Forms W-2 or W-2c. Employers must get employee consent to send the W-2s online.
Your Form W-2 is needed to complete your income tax return. Most US citizens and permanent residents need to file a tax return. You may want to file even if you didn't meet the minimum income threshold because you may get money back from the IRS if you don't owe any tax.
The W-2 form is pivotal in determining whether an individual filer is eligible for certain tax credits and deductions and can be helpful for financial planning purposes as well. The form shows how much money you earned from an employer during the year, which is used to calculate your adjusted gross income (AGI).
In addition to being the benchmark for qualification for various credits and deductions, AGI can determine eligibility for retirement account contributions or income-driven student loan repayment programs and be considered in mortgage loan applications.
How to read your W-2
The Form W-2 contains the same requirements for all employers. They will include personal information like your Social Security number, name, and address. It will also display what you earned for the year, and then how much in individual taxes were withheld at both the state and federal levels.
Here's what you'll see on your W-2:
- Box 1: Wages, tips, and other compensation. This includes all taxable income from a single employer for the year in question.
- Box 2: Federal income tax withheld. This includes the amount of federal taxes withheld.
- Box 3: Social Security wages. This shows total wages subject to Social Security tax.
- Box 4: Social Security tax withheld. This is how much was actually withheld for Social Security taxes.
- Box 5: Medicare wages and tips. This shows total wages subject to Medicare tax.
- Box 6: Medicare tax withheld. This is how much was actually withheld for medicare taxes.
- Box 7: Social Security tips. These are discretionary earnings, also known as tips, that an employee receives from customers. The total of box 3 and box 7 should not be more than the maximum social security wage base for the year. Tips reported in box 7 should be reported in box 1, 3, and 5 with taxable wages and other compensation.
- Box 8: Allocated tips. This is where it will display tips allocated by your employer. The allocated tips are not included in box 1 with your wages and reported tips.
- Box 9: Leave box 9 empty. (Previously used to account for a tax credit that is now defunct.)
- Box 10: Dependent care benefits. This is how much you might have spent on and been reimbursed for dependent care expenses through a flexible spending account, or the dollar value of dependent care services provided to you by your employer. Amounts under $5,000 aren't taxable. Amounts over $5,000 ($2,500 in the case of a separate return filed by a married individual) are also included in box 1, 3, and 5.
- Box 11: Non-qualified plans. The purpose of box 11 is for the SSA to determine if any part of the amount reported in box 1 or boxes 3 and/or 5 was earned in a prior year.
- Box 12 codes: Report in box 12 any items that are listed as codes A through HH, such as 401(k)/403(b) deferrals, uncollected Social Security tax on tips, uncollected Medicare tax on tips and taxable cost of group-term life insurance over $50,000.
- Box 13: Statutory employee; Retirement plan; Third-party sick pay. These boxes are checked should they apply in your case.
- Statutory employee. This box is for statutory employees whose earnings are subject to Social Security and Medicare taxes but not subject to federal income tax withholding. An example would be a full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, primarily for one life insurance company.
- Retirement plan. This box is for employees who were an "active participant" (for any part of the year) in the following, for example: A qualified pension, profit-sharing, or stock-bonus plan; an annuity plan; or a simplified employee pension (SEP) plan.
- Third-party sick pay. This box is if you are a third-party sick pay payer filing a Form W-2 for an insured's employee or are an employer reporting sick pay payments made by a third party.
- Box 14: Other. This box, per the name, is used for other money you received and other information an employer wants to give its employees. For example, if an employer included 100% of a vehicle's annual lease value in the employee's income, it must also be reported here or on a separate statement to your employee.
- Boxes 15-20: These are used to report state and local income tax information.
When and how to get your W-2
January 31 is the deadline for employers to file W-2s, so you should receive your copy by mid-February if it's being sent by mail.
Your employer must get your permission to send you your W-2 electronically. Electronic delivery can be faster and more secure than traditional mail delivery.
If you don't get your W-2 by the end of February, you can contact the IRS to locate the missing form. If there is an error on your W-2 form, call the IRS toll-free at 800-829-1040 or make an appointment to visit an IRS Taxpayer Assistance Center (TAC). The IRS will send your employer a letter requesting that they furnish you a corrected Form W-2 within 10 days.
Using your W-2 to file taxes
Your W-2 should provide all the information you need to complete the income portion of your tax return (Form 1040), whether you use online tax software or hire a tax professional. If you worked a non-traditional job, you may also receive one or more 1099 forms.
Most of the time, taxpayers unintentionally leave out important information and documentation while they are filing, according to Karla Dennis, an enrolled agent and founder of KDA Inc.
"You may receive a notice from the IRS because after the electronic submission is fully received, data may be left out or they could have read your return incorrectly," she says.
Dennis notes that the IRS itself sometimes makes mistakes: They may not understand certain specifics so they send a letter, or they could have misapplied payment.
If income reported on the W-2 is greater than the gross income reported on the Form 1040, it is likely to result in an IRS inquiry, said Mark Luscombe, an analyst at Wolters Kluwer's Tax and Accounting Division North America. Similarly, if the taxpayer reports more income tax withheld than reported on the Form W-2, it is likely to result in an IRS inquiry.
"If there is an error on the W-2, it is important to talk to your employer to try to get a corrected W-2 issued," Luscombe said. Otherwise, information on your tax return that does not match the W-2 will likely result in an IRS inquiry.
FAQs about W-2 forms
If you don't receive your W-1 by January 31, contact your employer first. If they are unresponsive, contact the IRS by calling 800-829-1040.
It's not recommended to file taxes without your W-2, since errors can hold up processing of your return and delay your refund. If you're still waiting on your W-2 by the tax deadline, file for an extension.
Yes, keep your W-2s and any other income statements you receive for at least three years after you file your annual tax return. Consider keeping them indefinitely if you have electronic versions that are stored securely.
