W-2 Form

Written By:
Paul Tracy
Updated August 12, 2020

What is W-2 Form?

A W-2 form is a tax form required from employers that reports wages paid and taxes withheld to the Internal Revenue Service (IRS), local state tax authorities and the Social Security Administration.

How Does W-2 Form Work?

Every calendar year, employers must fill out and deliver a W-2 form to every employee who worked for the company during the year. The W-2 form must be received by the employee by February of the following year. A copy also goes directly to the IRS.

There are 20 boxes on a W-2. They disclose wages, tips, and other compensation; federal and social security taxes withheld; wages subject to certain taxes; tips received; distributions from certain retirement or deferred compensation plans; contributions to those plans; and other benefits and payments received or paid.

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Why Does W-2 Form Matter?

A W-2 form applies only to wages earned by those who qualify as employees. Other forms of income, for example income earned by independent contractors and dividend income, generate a 1099 form.  Taxes are automatically deducted incrementally from every pay stub for W-2 income.  Taxes are not automatically deducted from 1099 income when earned, so they must be paid in April of the following year when tax returns are filed.

For many Americans, the W-2 is the primary report for taxes, reflecting the majority of a person's income for the year.  A person can generate multiple W-2 forms in a given year as every employer and each state worked in requires a W-2.

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