Form W-2 (Wage and Tax Statement)
Form W-2 is the annual wage and tax statement that employers must provide to employees by January 31. It reports wages, tips, federal/state/local taxes withheld, Social Security and Medicare wages, retirement plan contributions, and health insurance costs.
Exam Tip
W-2 due January 31 to employees AND SSA. Box 1 = federal taxable wages. Box 3/5 = SS/Medicare wages (usually higher). Form 4852 = substitute W-2. W-2c = corrections.
What is Form W-2?
Form W-2 reports an employee's annual wages and the amount of taxes withheld. Employers must furnish it to employees and file copies with the Social Security Administration.
Key W-2 Boxes
| Box | Reports |
|---|---|
| Box 1 | Wages, tips, other compensation (federal taxable) |
| Box 2 | Federal income tax withheld |
| Box 3 | Social Security wages |
| Box 4 | Social Security tax withheld |
| Box 5 | Medicare wages and tips |
| Box 12 | Various codes (401k, health insurance, etc.) |
| Box 13 | Statutory employee, retirement plan, third-party sick pay |
Important Deadlines
| Action | Deadline |
|---|---|
| Furnish to employee | January 31 |
| File with SSA | January 31 (electronic) |
| Corrected W-2 (W-2c) | As soon as possible |
Box 1 vs. Box 3/5 Differences
Box 1 excludes pre-tax 401(k) and Section 125 (cafeteria plan) deductions. Box 3/5 includes 401(k) contributions but excludes Section 125. This is why Box 3/5 is often higher than Box 1.
Exam Alert
Employer deadline: January 31 for both employee copies and SSA filing. Box 1 (federal wages) differs from Box 3/5 (SS/Medicare wages) due to pre-tax deductions. If W-2 is not received, taxpayer should contact employer, then IRS, and file Form 4852 as substitute.
Study This Term In
Related Terms
Withholding (Tax)
Withholding is the portion of an employee's wages that an employer deducts and remits directly to the IRS as prepayment of income tax. Form W-4 determines the withholding amount. Withholding is treated as paid evenly throughout the year.
Self-Employment Tax
Self-employment tax is the combined Social Security (12.4%) and Medicare (2.9%) tax that self-employed individuals pay on net earnings from self-employment, totaling 15.3%.
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