Form W-2
Also called Wage and Tax Statement
The annual form employers give employees and the IRS showing wages paid and taxes withheld for the year.
What it means
Form W-2, the Wage and Tax Statement, summarizes a year of employment with one employer. It reports taxable wages, federal and state income tax withheld, Social Security and Medicare wages and taxes, and coded amounts for items such as retirement plan contributions and employer-paid health coverage.
Employers must send W-2s to employees by January 31 of the following year, and copies also go to the Social Security Administration. Someone who worked multiple jobs receives a W-2 from each. W-2 employees have taxes withheld, unlike independent contractors, who generally receive a Form 1099.
Example
For example, a worker paid $60,000 who contributed $3,600 to a traditional 401(k) would typically see about $56,400 in the federal taxable wages box, since pre-tax 401(k) deferrals are excluded there, while the Social Security wages box would show $60,000.
How it’s used
- Filing an annual tax return
- Applying for a mortgage or loan
- Checking that withholding and benefits were recorded correctly
Good to know
- Comparing the W-2 with the final pay stub of the year can catch errors before filing.
Related terms
Educational information only, not financial, tax or legal advice. Rules, limits and rates change; check the IRS, your lender or plan, or a qualified professional before acting.