What Is a W-2 Form? A Complete Guide for Employees
Form W-2 reports the wages you were paid and the taxes withheld. What each section covers, why Box 1 rarely matches your salary and when it has to reach you.
Form W-2 is the document that connects a year of paychecks to a tax return. Your employer prepares one for every employee, furnishes a copy to you and files a copy with the Social Security Administration, which shares the data with the IRS. Because the IRS matches your return against that copy, the W-2 is worth understanding rather than simply forwarding to a preparer.
Who Gets One and When
Employees get a W-2. Independent contractors do not; their payments are reported on an information return instead. Employers are generally required to furnish W-2s to employees by January 31 following the tax year, whether on paper or electronically where you have consented to electronic delivery.
If you worked for three employers during the year, expect three forms. Each reports only the wages that employer paid.
What the Boxes Report
The identification boxes carry your Social Security number and the employer's identification number. Check the SSN first: a wrong digit means your earnings are not credited to your Social Security record.
The money boxes then report taxable wages and the tax withheld against them. Box 1 is federal taxable wages, Box 2 the federal income tax withheld, Boxes 3 and 4 the Social Security wages and tax, Boxes 5 and 6 the Medicare equivalents. Boxes 15 through 20 repeat the exercise for each state and locality that taxed you.
Why Box 1 Is Not Your Salary
This is the question that fills payroll inboxes every February. Box 1 is wages subject to federal income tax, which is gross pay reduced by pre-tax items. Traditional 401(k) contributions reduce Box 1 but not Boxes 3 and 5. Health premiums under a Section 125 plan reduce all three. The Social Security wage base caps Box 3 only. Each box measures wages under a different rule, so they are not meant to agree.
I go box by box, including the Box 12 letter codes and what to do with a form that arrives wrong, in my complete guide to Form W-2 for Online Paystub.
Check It Against Your Final Pay Stub
Take the last pay stub of the year and compare its year-to-date columns with the form. Year-to-date federal withholding should equal Box 2 exactly, and year-to-date Social Security tax should equal Box 4. Any difference is a question for payroll before you file, not after.
