Form W-2 Wage and Tax Statement

Form W–2 Wage and Tax Statement

Form W-2, Wage and Tax Statement, is one of the most important payroll tax forms in the United States. It reports wages, tips, and other compensation paid to employees during the year. It also shows federal income tax, Social Security tax, and Medicare tax withheld from pay.

Employers must provide Form W-2 to employees and file copies with the Social Security Administration. Employees use the information on Form W-2 to prepare federal and state income tax returns. The Internal Revenue Service explains Form W-2 in its official Form W-2 guidance.

What is Form W-2

Form W-2 is an annual wage and tax statement prepared by an employer for each employee. It summarizes compensation and payroll tax withholding for the calendar year.

The form reports wages, salaries, taxable tips, Social Security wages, Medicare wages, and taxes withheld. It may also report other items, such as retirement plan contributions, dependent care benefits, and certain fringe benefits.

Employees rely on Form W-2 to report income on a tax return and to ensure earnings are properly recorded for Social Security benefit purposes.

Who must receive a Form W-2

Employers must issue Form W-2 to each employee from whom they withheld federal income tax, Social Security tax, or Medicare tax. This requirement generally applies regardless of whether the employee is full-time, part-time, or seasonal.

Compensation that is subject to payroll tax reporting must be included on Form W-2. The IRS summarizes employer requirements on its Form W-2 information page.

Employer filing responsibilities

Employers must prepare Form W-2 for each employee and meet strict filing deadlines. Employers must furnish Form W-2 to employees no later than January 31 following the end of the calendar year.

Employers must also file Form W-2 with the Social Security Administration by the same January 31 deadline. Many employers file electronically using the SSA Business Services Online system described in SSA guidance on electronic W-2 filing.

In addition to federal filing, employers may be required to submit W-2 information to state and local tax agencies.

How employees use Form W-2

Employees use Form W-2 to complete a federal income tax return, typically Form 1040. The form is used to report wages, verify tax withholding, and determine eligibility for certain credits.

Form W-2 information is also used for state and local income tax returns when applicable. Employees should review a W-2 carefully upon receipt. Errors in name, Social Security number, or wage amounts can delay processing or create mismatches with IRS and SSA records.

Correcting errors on Form W-2

If a Form W-2 contains incorrect information, the employer must issue a corrected form known as Form W-2c, Corrected Wage and Tax Statement.

Form W-2c is used to correct errors such as incorrect wages, tax withholding, or employee identification information. The IRS explains corrections in its official Form W-2c guidance.

Employers must file Form W-2c with the Social Security Administration and provide a copy to the affected employee.

Deadlines and penalties

The January 31 deadline applies to both furnishing Form W-2 to employees and filing it with the Social Security Administration. This deadline applies to both paper and electronic filings.

Employers that file late, file incorrect forms, or fail to provide required forms may be subject to penalties. The IRS summarizes these rules in its guidance on information return penalties.

Recordkeeping requirements

Employers should retain copies of Forms W-2 and related payroll records. The IRS generally recommends keeping employment tax records for at least four years after the date the tax becomes due or is paid, whichever is later.

Proper recordkeeping supports compliance and helps resolve questions from employees, the IRS, or the Social Security Administration.

Conclusion

Form W-2 is a foundational document in the U.S. payroll and tax reporting system. It helps ensure that employee wages and taxes are reported accurately and that employees can file correct tax returns. Employers must comply with strict reporting and filing requirements, while employees depend on Form W-2 to meet tax obligations.

Understanding how Form W-2 works, who must receive it, and how errors are corrected helps employers and employees avoid delays, penalties, and reporting issues.

M. Spik

Editor
25 years of experience managing tax, accounting, payroll, and employment-related information portals. Editor of Accounting Portal since 2011.
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