W-2 Form
Quick Definition
An annual tax document from employers reporting an employee's wages, taxes withheld, and benefits information.
Key Takeaways
- Employers must issue W-2s by January 31 for the prior tax year
- Keep W-2s for at least 3-7 years for IRS audit purposes
- Box 1 wages may differ from your salary due to pre-tax deductions (401k, health insurance)
- If you don't receive your W-2, contact your employer first, then the IRS if unresolved
What Is W-2 Form?
The W-2 (Wage and Tax Statement) is an IRS form that employers are required to send to each employee and to the IRS by January 31 of each year. It reports the employee's annual wages, tips, and other compensation, as well as the amounts withheld for federal, state, and local income taxes, Social Security tax, and Medicare tax. The W-2 also reports employer-sponsored health insurance costs, retirement plan contributions, and other tax-relevant information across multiple boxes. Employees use the W-2 to file their annual income tax returns. Key boxes include Box 1 (taxable wages), Box 2 (federal income tax withheld), Box 3 (Social Security wages), Box 5 (Medicare wages), and Box 12 (various coded entries for retirement contributions, health insurance, etc.).
W-2 Form Example
- 1Box 1 shows $75,000 in wages while Box 3 shows $75,000 in Social Security wages — Box 12 code D shows $10,000 in 401(k) contributions that reduced Box 1.
- 2An employee receiving W-2s from two jobs must combine both when filing taxes and may owe additional tax if total withholding was insufficient.
- 3Box 12 code DD shows $15,000 in employer-sponsored health insurance costs — this is informational only and not taxable income.
Related Terms
1099 Form
A family of IRS tax forms used to report various types of income other than wages, salaries, and tips.
Net Pay
The actual amount of money received in a paycheck after all deductions including taxes, insurance, and retirement contributions.
Marginal Tax Rate
The tax rate applied to the last dollar of income earned, determined by the taxpayer's tax bracket.
Standard Deduction
A fixed dollar amount that reduces taxable income for taxpayers who do not itemize deductions.
FAFSA (Free Application for Federal Student Aid)
The federal form used to determine eligibility for financial aid including grants, loans, and work-study programs.
401(k)
An employer-sponsored retirement savings plan with tax advantages, often including employer matching contributions.
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