What Is Form W-2?
Tax Form W-2 Explained
Form W-2 is the annual "Wage and Tax Statement" that reports your taxable income from an employer to you and to the IRS. The form also includes taxes withheld from your pay, as well as Social Security and Medicare payments made on your behalf by both you and your employer.
All these taxes are withheld from your pay and submitted to federal and state taxing authorities on your behalf. Multiple boxes appear on the form, each citing a certain portion of your earnings and withholding. Each is labeled, but understanding what each of these notations means can make the process of reporting the information on your tax return much easier.
What Is a W-2 Form?
Earnings are reported to the recipient as well to the IRS on a series of informational forms each year. The W-2 is used only for employee earnings from which taxes have been withheld. It informs employees of the income they must claim on their returns and the payments they've already made. It also advises the IRS how much income that employee should be claiming and confirms what they've paid in taxes.
Who Uses a W-2 Form?
Employees are required to report all wages earned from their job on their annual tax returns. Generally, the minimum for receiving any type of income tax reporting document is $600 in earnings paid, but freelancers and independent contractors receive Forms 1000-MISC rather than W-2s. The distinction is whether an employer is withholding taxes from your pay.
You should receive a Form W-2 from your employer whether you're a part-time or full-time worker if you've earned $600 or more from that company during the tax year.
You should receive three copies of your W-2: Copies B, C, and 2 detailing what you were paid and what was withheld.
- Copy A is submitted to the Social Security Administration by your employer.
- Attach Copy B to your federal income tax return if you're mailing it in. Keep it with your other tax documents for at least four years if you're e-filing your return.
- Keep Copy C with your tax documents for at least four years as well. This is officially your copy.
- Attach Copy 2 to your state tax return if you're mailing it in. Otherwise, keep it with your tax documents for at least four years as you would with Copy B.
Where to Get Form W-2
Employers must prepare a Form W-2 for each eligible employee and provide copies to the Internal Revenue Service and to the Social Security Administration. Employers must mail or hand-deliver your Form W-2 to you no later than January. 31 for the previous tax year—for example, by January 31, 2021, for 2020 earnings.
What to Do If You Don't Receive Form W-2
Ask your employer when Forms W-2 were mailed out to employees if you haven't received yours by mid-February. You can also ask for another printed copy of your W-2, but some employers will charge a nominal fee for providing you with an additional copy.
You might want to contact the IRS for assistance at 800-829-1040 if you think it's possible that your employer did not send out W-2s or if your employer refuses to give it to you. Make sure you have certain information at your fingertips:
- Your employer's name and complete address
- Their tax identification number if you know it
- Their telephone number
You should also be able to provide at least an estimate of the wages you earned, the federal income tax that was withheld, and the dates that you began and ended employment if you're no longer working there. This information is available on your paystubs.
The IRS might ask you to file a Form 4852 with your tax return in this situation. This form acts as a substitute for Form W-2.
You can also ask your employer to correct any wrong information on your Form W-2. Your Social Security number might be incorrect, your name might be misspelled, or your wages and withholding amounts might be inaccurate.
How to Read Your W-2 Form
Boxes A through F are all identifying information: your Social Security number, your employer's tax ID number or EIN, everyone's addresses, and their full legal names. Box D is a control number that identifies your unique Form W-2 document in your employer's records.
Ask your company to update its records if your name has changed. It shouldn't be a complication if you've recently moved and your address has changed, as long as your tax return bears your current, correct address.
The numbered boxes on Form W-2 record your financial information.
- Box 1 reports your total taxable wages or salary. The number also includes any tips you reported to your employer, bonuses, and other taxable compensation. Taxable fringe benefits such as group term life insurance are included here, but Box 1 does not include any pre-tax benefits such as savings contributions to a 401(k) plan, 403(b) plan, or health insurance. The number that appears in Box 1 is reported on line 1 of the 2019 Form 1040.
- Box 2 reports how much your employer withheld from your paychecks for federal income taxes. This number is reported on Line 17 of Form 1040.
The 1040 lines noted here apply only to the 2019 tax return. They're not necessarily the same as those that appear on the 2017 and 2018 tax returns because the IRS has redesigned the form twice since 2017.
- Box 3 reports the total amount of your wages that are subject to Social Security tax. This tax is assessed on wages up to $132,900 as of tax year 2019. This "wage base" is adjusted annually to adapt for inflation. Check with your employer if Box 3 shows an amount over the wage base. Tips that you've reported to your employer should not be included in Box 3. They're reported in Box 7.
- Box 4 reports the total amount of Social Security taxes withheld from your paychecks. The figure shown in Box 4 should be no more than $8,239.80 because the Social Security tax is a flat tax rate of 6.2% on your wage income up to $132,900. The wage base times 6.2% works out to $8,239.80. Again, check with your employer if the number that appears here is more.
- Box 5 reports the amount of your wages that are subject to the Medicare tax. There's no maximum wage base for Medicare.
- Box 6 reports how much in taxes was withheld from your paycheck for the Medicare tax, which is a flat tax rate of 1.45% of your total Medicare wages as of the 2019 tax year. Your Medicare tax withholding that shows in Box 6 should be reconciled on IRS Form 8959 if you're subject to the Additional Medicare Tax, an additional .9% if your annual earnings were more than $125,000 and you're married but filing a separate return, more than $200,000 if you're single, a qualifying widow(er), or head of household, or more than $250,000 if you're married and filing a joint return with your spouse.
You might find that the amount in Box 6 is greater than Box 5 multiplied by 1.45% if you earn a significant income because the Additional Medicare Tax, implemented in 2013, adds that additional 0.9%.
- Box 7 shows any tip income you've reported to your employer. It will be empty if you didn't report any tips. Box 7 and Box 3 should add up to the amount that appears in Box 1 if you don't have any pre-tax benefits, or it might be equal to the amount in Box 5 if you do receive pre-tax benefits. The total of Boxes 7 and Box 3 should not exceed the Social Security wage base. The amount from Box 7 is already included in Box 1.
- Box 8 reports any tip income that was allocated to you by your employer. This amount is not included in the wages that are reported in Boxes 1, 3, 5, or 7. Instead, you must add your allocated tips to your taxable wages on line 1 of your Form 1040, and you must calculate your Social Security and Medicare taxes including this tip income using IRS Form 4137.
You might want to consult with a tax professional if any income shows in Box 8 of your Form W-2 because this can be a complicated process.
- Box 9 was once used to report any advance of the earned income credit, but this tax perk ended in 2011 after the Education, Jobs and Medicaid Assistance Act of 2010. Box 9 should, therefore, be empty and, in fact, it's highlighted in red on the 2020 Form W-2.
- Box 10 reports any amounts you might have 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. Reimbursements and services under $5,000 aren't taxable, but any amount over $5,000 should be reported as taxable wages in Boxes 1, 3, and 5. Dependent care benefits are reported on Form 2441.
- Box 11 reports any payments that were distributed to you from your employer's non-qualified deferred compensation plan or a non-government Section 457 pension plan. The amount in Box 11 is already included as taxable wages in Box 1.
- Box 12 applies to deferred compensation and other compensation. Several types of compensation and benefits can be reported in Box 12, so the IRS has simplified this as much as possible by allowing your employer to enter a single letter or double letter code followed by the dollar amount of your compensation. Ask your employer to determine what the code means.
- Three check boxes appear in Box 13. The first will be marked off if you're a statutory employee. This means that you would report the wages from this W-2—and any other W-2 forms you receive that are marked "statutory employee"—on Schedule C of Form 1040. Your wages aren't subject to income tax withholding so you should see a zero in Box 2, or it should be blank. Earnings are subject to Social Security and Medicare tax, however, so Boxes 3 through 6 should be filled out. These boxes will also be checked if you participated in your employer's retirement plan during the tax year. This might be a 401(k) plan, a 403(b) plan, SEP-IRA, SIMPLE-IRA, or another type of pension plan. Finally, these boxes will be checked if you received third-party sick pay under your employer's third-party insurance policy instead of receiving sick pay directly from your employer as part of your regular paycheck. Sick pay is not included in your Box 1 wages, although it is usually subject to Social Security and Medicare taxes.
Your ability to deduct contributions to a traditional IRA might be limited based on your income if you participated in a retirement plan, so check with a tax professional if this box is checked.
- Your employer might report additional tax information in Box 14. Any amounts reported in Box 14 should include a brief description of what they're for. Union dues, employer-paid tuition assistance, or after-tax contributions to a retirement plan can be reported here. Some employers will report certain state and local taxes in Box 14. Ask your employer if you're not sure what the code in Box 14 stands for.
- Box 15 reports your employer's state and state tax identification number.
- Box 16 reports the total taxable wages you earned in that state. There might be multiple lines of information here, too, if you worked for the same employer in multiple states.
- Box 17 reports the total amount of state income taxes withheld from your paychecks for the wages reported in Box 16. These taxes might be deductible as part of the deduction for state and local income taxes on Schedule A of the federal Form 1040 if you itemize your deductions.
- Box 18 reports wages that are subject to local, city, or other state income taxes.
- Box 19 reports the total taxes withheld from your paychecks for local, city, or other state income taxes. This amount might also be deductible as part of the deduction for state and local income taxes if you itemize your deductions on Schedule A.
- Box 20 provides a brief description of the local, city, or other state tax being paid. The description might identify a particular city or it might identify a state tax such as state disability insurance (SDI) payments.
How to File Your Form W-2
Enter the amounts in each box on the appropriate line of your tax return. Add the boxes together if you're married and filing a joint return and both you and your spouse have W-2s.
- Form W-2 reports earnings from employment and taxes withheld from those earnings to both an employee and the IRS.
- Employees use this information to prepare their annual tax returns.
- You can contact the IRS at 800-829-1040 if an employer won’t or doesn’t give you a Form W-2 by mid-February of the new year.
IRS. "About Form W-2, Wage and Tax Statement." Accessed June 13, 2020.
Social Security Administration. "Deadline Dates To File W-2s." Accessed July 4, 2020.
Social Security Administration. "Maximum Taxable Earnings." Accessed June 13, 2020.
IRS. "Topic No. 751 Social Security and Medicare Withholding Rates." Accessed June 13, 2020.
IRS. "Questions and Answers for the Additional Medicare Tax." Accessed June 17, 2020.
IRS. "Publication 531 (2019) Reporting Tip Income." Accessed June 13, 2020.
IRS. "Employee Reimbursements, Form W-2, Wage Inquiries." Accessed June 13, 2020.
IRS. "General Instructions for Forms W-2 and W-3." Accessed June 13, 2020.