What is Form W-2?
A W-2 is the Wage and Tax Statement, the form on which a US employer reports what it paid an employee during the year and the taxes withheld from those wages. According to the IRS, every employer that pays an employee for services must file a W-2 for that employee when income, Social Security or Medicare tax was withheld, or when income tax would have been withheld had the employee claimed no exemption from withholding. The IRS lists the current 2026 forms on its site.
The employer sends copies to the Social Security Administration and to the employee. The employee copy must be furnished by January 31 for the previous calendar year. The employer also files the forms with the SSA, together with the transmittal Form W-3, by the same date. Employees attach a copy to their federal return if they file on paper, and use the figures to complete state returns.
The boxes matter to an employer, because every one must match payroll records. Box 1 shows wages, tips and other compensation subject to federal income tax. Box 2 is the federal income tax withheld. Boxes 3 and 4 show Social Security wages and the Social Security tax withheld, and Boxes 5 and 6 show Medicare wages and the Medicare tax withheld. Box 12 holds coded items, for instance 401(k) deferrals, and Box 13 marks statutory employees, retirement plan participation and third-party sick pay. Boxes 15 to 20 report state and local wages and tax.
Box 1 is often lower than gross pay, because pre-tax deductions, such as 401(k) contributions and some health premiums, reduce it, while the Social Security and Medicare wages can be higher. This is the most frequent reason an employee asks why the numbers on their W-2 do not match their total salary. A W-2 is also different from a 1099: employees receive a W-2, and independent contractors receive a Form 1099-NEC.
If a mistake is found after filing, the employer corrects it on Form W-2c. Employers must also keep copies of W-2 records for at least four years. Late, missing or incorrect forms can lead to penalties per form, so payroll should reconcile the year-end totals with the four quarterly Forms 941 before filing.
In practice
An employee earns $60,000, contributes $3,000 to a traditional 401(k), and has $4,200 of federal income tax withheld. In January the employer prepares the W-2. Box 1 shows $57,000, because the 401(k) deferral is excluded from federal taxable wages, while Box 3 and Box 5 show $60,000, since the deferral is still subject to Social Security and Medicare. Box 2 shows $4,200, Box 4 shows $3,720 (6.2%), Box 6 shows $870 (1.45%) and Box 12 shows code D for $3,000. The employer checks these totals against its Form 941 filings, files the W-2 and W-3 with the SSA and gives the employee their copy before January 31.
Frequently asked questions
What is a W-2?
A W-2 is the Wage and Tax Statement in which an employer reports an employee's yearly wages and the taxes withheld. Employees use it to file their tax returns.
What is the wage and tax statement also known as?
It is also known as Form W-2. The wage and tax statement is the official name of that form.
When must employers send out W-2s?
Employers must give employees their W-2 and file the forms with the Social Security Administration by January 31 for the previous calendar year.
Why is Box 1 on my W-2 lower than my salary?
Box 1 excludes pre-tax deductions such as traditional 401(k) contributions and some health insurance premiums. Social Security and Medicare wages in Boxes 3 and 5 can be higher.
Who gets a W-2 and who gets a 1099?
Employees get a W-2, while independent contractors get a Form 1099-NEC. The classification depends on the working relationship.
What if there is an error on a W-2?
The employer files a corrected Form W-2c and gives the employee a copy. Payroll should reconcile the totals with Forms 941 before filing to prevent errors.