Form W-2, also known as the Wage and Tax Statement, is a tax form issued by employers to report an employee’s annual earnings and the taxes withheld during the year. The IRS requires employers to send W-2 forms to employees by January 31st of each year, so they can use the information to prepare their tax returns.
Form W-2 includes important information such as:
- Wages, salaries, and tips earned by the employee.
- Federal income tax, Social Security tax, and Medicare tax withheld.
- Contributions to retirement plans or health savings accounts.
The W-2 form consists of multiple boxes that detail various aspects of the employee’s earnings:
- Box 1: Total taxable income.
- Box 2: Federal income tax withheld.
- Box 3: Social Security wages.
- Box 5: Medicare wages.
- Box 12: Codes for additional compensation or benefits, such as retirement plan contributions or group-term life insurance.
Taxpayers must include information from their W-2 when filing their Form 1040 to report their income and determine if they owe additional taxes or are eligible for a refund. The IRS also receives a copy of the W-2 from employers, ensuring that the income reported on the tax return matches the employer’s records.
Inaccuracies in the W-2 can lead to tax discrepancies, so it is important for employees to review the form carefully and contact their employer if there are any errors.