A W-2 is a tax form filed by an employer and provided to employees containing information about wages and tax withholdings. The W-2 is required for any employee paid over $600 during the year or if any amount of income, Social Security, or Medicare tax was withheld from their payment. Independent contractors and self-employed individuals will not receive a W-2 from their employers since taxes aren’t withheld.
Filing and receiving a W-2
Form W-2 is filed with the IRS by an employer. The deadline is Jan. 31 every year, and a copy of the W-2 must also be furnished to the employee.
The W-2 contains wage information as well as tax withholding information. Employees use that information to file their own income tax returns with the government by tax day, which is typically April 15.
The information on a W-2 is also used by the Social Security Administration to determine your eligible wages for the year.
What information is on a W-2?
Form W-2 contains information about wages, tax withholdings, and any other compensation.
The top of the form includes areas for wages subject to income tax, Social Security tax, and Medicare tax, as well as how much tax was withheld from compensation throughout the year.
The middle portion includes areas for additional compensation, such as contributions to an employer-sponsored retirement plan. You may also find additional information about compensation.
The bottom portion includes information about state and local taxes.
You should look over your W-2 carefully to make sure everything looks as expected. If anything looks awry, inform your employer as soon as possible. They’ll have to submit a corrected W-2 to the IRS and provide you with a copy.
How to use your W-2 to file your taxes
The W-2 is one of the most important documents you need in order to file your taxes.
It provides the numbers you need to give the IRS for your wages, which likely make up the bulk of your income for the year. It also includes the amount you paid in income taxes that were withheld from your paycheck. Those two things combined play the biggest role in determining how much you owe or receive as a refund with your tax return.
If you receive a big tax refund or owe a lot of money to the IRS, you may need to adjust your withholdings. That’s done by filing form W-4 with your employer, detailing your marital status, family details, and other income sources. You may also need to pay quarterly estimated taxes if you have significant income outside of that detailed on your W-2, such as capital gains or self-employment income.
Capital Gains Tax
How to read W-2
Form W-2 is relatively straightforward to read. The standard form contains 20 boxes of wage and tax withholding information as well as information about the payor (your employer) and the payee (you).
Boxes A-F
These boxes on the left of the form contain identifying information about your employer and yourself. That includes your Social Security number (box A), your employer’s EIN (box B), and the names and addresses of both.
Box 1
This contains your total income subject to income tax. This number includes wages minus any tax-deferred payroll deductions like 401(k) or HSA contributions.
Box 2
This contains the amount of income tax withheld from your paychecks throughout the year and paid directly to the IRS from your employer. You can adjust this number for next year by submitting a new W-4 to your employer.
Boxes 3 and 5
This contains your total income subject to Social Security (box 3) and Medicare (box 5) taxes. These numbers may be different from box 1 if you contributed to a workplace retirement account or received other benefits not subject to Social Security and Medicare tax, like employer-subsidized health insurance. Social Security earnings are also capped every year while Medicare is uncapped, so box 5 may be higher than box 3.
Boxes 4 and 6
This is the amount paid to the federal government in Social Security (box 4) and Medicare (box 6) taxes. These numbers show your half of Social Security and Medicare taxes paid. Your employer pays the other half.
Box 7 and 8
If part of your compensation comes from tips, you’ll see how much you received in tips directly (box 7) and how much your employer allocated to you (box 8).
Box 9
No longer in use.
Box 10
This is how much you received in dependent care benefits such as childcare from your employer.
Box 11
This shows the amount of deferred compensation you received this year from work performed in a previous year. This usually comes from a nonqualified retirement plan, one that doesn’t provide any special tax benefits other than deferring compensation into years when you may have a lower tax rate.
Box 12
This shows any additional compensation not subject to income tax. You’ll find contributions to employer-sponsored retirement plans in this box as well as HSA contributions made from payroll deductions and a number of other benefits.
Box 13
This has three sub-boxes. The first indicates if you were a statutory employee not subject to federal income tax withholding. The second indicates if you participated in an employer-sponsored retirement plan. This can impact your ability to deduct IRA contributions. The last indicates if you received third-party sick pay, such as payment from an insurance plan.
Box 14
This box contains extra information about compensation your employer deems relevant, such as fringe benefits, a vehicle lease, state disability insurance taxes withheld, union dues, uniform payments, health insurance premiums deducted, nontaxable income, education assistance payments, or voluntary after-tax contributions to a workplace retirement plan.
Boxes 15-20
These contain information about state and local taxes, including how much of your income is subject to taxes and how much was withheld from your paycheck.
Understanding everything on your W-2 can make it easier to spot inaccuracies, get them corrected, and file your tax return quickly and accurately.
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