Answers to some of the most common questions concerning Form W-2
Your Form W-2 impacts your federal and state tax filings. It’s therefore imperative that you get your W-2 on time. But what is a W-2? When should you receive it? How do you read a W-2? And what should you do if you find an error on your W-2? Read on for answers.
What is a W2?
IRS Form W-2, Wage and Tax Statement, is used by employers to report employees’ annual wages/salaries, taxes withheld, and other compensation.
Your employer must:
- Give you a W-2 if they paid you at least $600 for the year
- File Copy A with the Social Security Administration
- File Copy 1 with the state or local tax department, if you paid state or local taxes
- Give you Copy B to file with your federal income tax return
- Give you Copy 2 to file with your state or local tax return, if applicable
- Give you Copy C to retain for your records
You must be an employee to get a W-2. If you’re an independent contractor, you should receive a Form 1099-MISC (not a W-2) from each of your clients that paid you at least $600 for the year.
When does a W2 come out?
Your employer has until January 31 to distribute W-2s (for the prior year) to employees. If the deadline falls on a Saturday, Sunday, or legal holiday, your employer must furnish W-2s by the next business day.
Employers that provide online access to W-2s must do so by January 31. Those that don’t supply online access must mail or hand-deliver W-2s no later than January 31.
If don’t receive your W-2 by the deadline, let your employer know so they can resolve the issue.
How to read a W-2 form?
Though your W-2 is essentially about how much money you earned and the amount of taxes you paid, it’s also a detailed document. It shows, for instance, your retirement plan contributions, the amount your employer paid for your health insurance, and nontaxable income you received from your employer.
Here’s a breakdown of relevant W-2 boxes:
Box 1: Total wages — including salaries, tips, and other compensation — subject to federal income tax. Box 1 does not show pre-tax deductions or nontaxable wages.
Box 2: Federal income tax withheld from your wages.
Box 3: Wages subject to Social Security tax. This amount should not exceed the annual Social Security wage limit.
Box 4: Social Security tax withheld from your wages.
Box 5: Wages subject to Medicare tax. No annual wage limit applies to Medicare tax.
Box 6: Medicare tax withheld from your wages. This includes regular Medicare tax, and if applicable, the additional Medicare tax of 0.9% for high-income earners.
Box 7: Tips you reported (to your employer) that were subject to Social Security tax. This amount is also reflected in Box 1 wages.
Box 8: Tips your employer allocated to you. This amount is not shown in Box 1 wages.
Box 10: Dependent care benefits you received from your employer. If you contributed more than the annual pre-tax limit, the excess amount is taxable and includable in Box 1 wages.
Box 11: Taxable amounts distributed to you from your employer’s non-qualified deferred compensation plan.
Box 12: Used to deliver information about various types of compensation and benefits, such as taxable group-term life insurance, elective deferrals to a 401(k) plan, Roth 401(k) contributions, adoption benefits, nontaxable sick pay, and cost of employer-sponsored health coverage. The following chart explains what goes in Box 12, plus accompanying codes:
Image Source: Department of the Treasury Internal Revenue Source
Box 13: Your employer must check whichever applies:
- You’re a statutory employee
- You contributed to your employer’s retirement plan
- You received third-party sick pay
Box 14: Other information your employer wants you to know, such as state disability insurance tax withheld, union dues, tuition assistance payments, health insurance premiums deducted, and uniform payments.
Box 16: Wages subject to state income tax.
Box 17: State income tax withheld from your wages.
Box 18: Wages subject to local taxes, such as city or county taxes.
Box 19: Local taxes withheld from your wages.
What if there’s an error on my W2 form?
If you see a mistake on your W-2 — such as incorrect name, incorrect Social Security Number, incorrect wages, or incorrect taxes withheld — let your employer know as soon as possible. Depending on the error, your employer may need to give you a corrected W-2 via Form W-2c, which you can then use to amend your tax returns if necessary.
Having trouble getting your employer to correct your W-2? Contact the IRS.