What is IRS Form W-2 used for?

By Amy Fontinelle AAA
A:

Any employer who pays an employee $600 or more for the year, including noncash forms of remuneration, must file a form W-2 for each employee who was subject to income and payroll tax withholding. Employers file a copy of form W-2 with the IRS for information-reporting purposes and send a copy to the employee for use in preparing his or her annual tax return (form 1040, 1040A or 1040EZ) and determining total income tax liability. Employers can file form W-2 with the IRS electronically or by mail if they have fewer than 250 subject employees; if they have 250 or more subject employees, employers must file their W-2s electronically. 

On form W-2, employers must report their employer identification number; their name, address and zip code; the employee’s name, address and zip code; the employee’s wages, tips and other compensation; the federal income tax the employer withheld from the employee’s pay (which it should have remitted to the IRS); the amount of the employee’s wages subject to Social Security and Medicare taxes; the amount of Social Security and Medicare taxes withheld; Social Security tips; allocated tips; dependent care benefits that the employer paid to or incurred on the employee’s behalf; nonqualified plan income; and other forms of income, which may or may not be taxable, such as the cost of employer-sponsored health coverage and salary deferrals to 401(k) plans (both nontaxable as of 2014). Employers also report each employee’s state and local income and taxes withheld on form W-2.  

If an employer makes a mistake on form W-2 and catches it after filing the form, they should complete a form W-2c and send copies to both the IRS and the employee to correct the error. Employers should give each employee who is subject to W-2 reporting a copy of the form by the first business day in February (usually February 1). 

RELATED FAQS

  1. If an employee is paid by commission, who is responsible for withholding taxes?

    It depends. An individual who receives commissions can be treated in the same manner as an individual who receives straight ...
  2. How are savings bonds taxed?

    Learn who is responsible for reporting U.S. EE savings bond interest for taxation and when the interest can be reported for ...
  3. What are the Social Security tax caps?

    Learn how the Social Security tax cap works, what percentage of income is deducted for Social Security taxes and the history ...
  4. Are credit card rewards considered taxable income by the IRS?

    Learn about when the Internal Revenue Service considers the financial value of gifts received from credit card reward programs ...
RELATED TERMS
  1. W-2 Form

    The form that an employer must send to an employee and the IRS ...
  2. Section 7702

    The section of the United States Internal Revenue Code that defines ...
  3. Working Tax Credit (WTC)

    A tax credit offered to low-income individuals working in the ...
  4. Proof of Charitable Contributions

    Substantiation required by the Internal Revenue Service for a ...
  5. Corporate Inversion

    Re-incorporating a company overseas in order to reduce the tax ...
  6. Trickle-Down Theory

    An economic idea which states that decreasing marginal and capital ...

You May Also Like

Related Articles
  1. Taxes

    When You Should Change Your Withholding ...

  2. Taxes

    Understanding The U.S. Tax Withholding ...

  3. Taxes

    Tax Withholding: Good For Government, ...

  4. The Affordable Care Act is the largest change to the tax code in 20 years that could affect you when you file that 2014 tax return next year.
    Taxes

    How Might The Affordable Care Act Affect ...

  5. Venezuela has more oil than anyone, and Brazil and Argentina have lots going for them, too, so why can't they get out of their own way economically?
    Economics

    Where NOT To Invest in Latin America

Trading Center