Glossary term
Form W-2 - Wage and Tax Statement
Form W-2 is the wage and tax statement employers send employees and the IRS to report annual pay and withholding.
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What Is Form W-2?
Form W-2 is the wage and tax statement employers send to employees and the IRS to report annual wages, tips, taxable compensation, and taxes withheld. Employees use it to prepare their federal and state income tax returns.
A W-2 is different from a pay stub. A pay stub shows pay-period details. Form W-2 summarizes the tax-year information that the employer reports for that employee.
Key Takeaways
- Form W-2 reports wages, taxable compensation, and withholding.
- Employers send W-2s to employees and file copies with the government.
- Employees use W-2 information when preparing tax returns.
- The form can include federal, Social Security, Medicare, state, and local tax information.
- Errors should be corrected by the employer, usually through Form W-2c.
What Form W-2 Reports
Form W-2 includes identifying information for the employee and employer, wages, federal income tax withheld, Social Security wages, Medicare wages, Social Security and Medicare tax withheld, and certain benefit or compensation items.
Boxes can also report retirement plan participation, dependent care benefits, deferred compensation, employer-sponsored health coverage, state wages, and local taxes. Not every box applies to every employee.
Common W-2 Boxes
Box | What It Generally Shows | Why It Matters |
|---|---|---|
Box 1 | Federal taxable wages, tips, and compensation | Starting point for wage income on the tax return |
Box 2 | Federal income tax withheld | Counts toward tax paid during the year |
Boxes 3 and 5 | Social Security and Medicare wages | May differ from Box 1 because of benefit rules |
Boxes 16 and 17 | State wages and state income tax withheld | Used for state tax filing |
Tax Filing Context
Employees should compare Form W-2 with their final pay stub and personal records. Small differences can be normal because certain benefits reduce federal taxable wages but not Social Security or Medicare wages. Large or unexplained differences should be reviewed.
If a W-2 is missing or incorrect, the employee should contact the employer. The IRS has procedures for missing forms, but the employer is usually the first place to fix the issue.
What W-2 Does Not Cover
Form W-2 generally reports employee wages. It is not used for independent contractor payments, which are often reported on Form 1099-NEC. It also does not report all investment income, bank interest, or retirement account distributions.
Taxpayers with multiple jobs may receive multiple W-2s. All should be included on the tax return, even if one job was part time or lasted only part of the year.
Employees should also keep W-2s with tax records after filing. Lenders, financial aid offices, state agencies, or tax preparers may ask for prior-year wage documentation when verifying income or correcting a return.
The Bottom Line
Form W-2 is the main annual tax form for employee wages and withholding. It connects payroll records to the tax return, so employees should review it for accuracy before filing.