What is the W-2 Form
The W-2 form is the form that an employer must send to an employee and the Internal Revenue Service (IRS) at the end of the year. The W-2 form reports an employee's annual wages and the amount of taxes withheld from his or her paycheck.
BREAKING DOWN W-2 Form
A W-4 is a form that individuals complete for withholding purposes, whereas a W-2 form is for employers to fill out. The employer must provide employees with their W-2 form by the deadline set by the IRS. Although W-2 Forms have traditionally been filled out on paper, and many people consult tax specialists to make sure everything is correct and that they're getting the highest possible deductions. Websites such as TurboTax allow people to electronically file their taxes without consulting an accountant, even those who have never filed taxes before.
Tax documents are filed for the previous year. For example, if you receive a W-2 Form in January 2018, it reflects your income for 2017.
Role of the Employer
An employer legally must send out W-2 Forms to each of its employees to whom they paid a salary, wage or other form of compensation. This does not include contracted or self-employed workers, who must file taxes with different forms. The employer must send the employee the W-2 Form on or before Jan. 31 each year, so the employee has ample time to file his or her taxes before the deadline (April 15 in most years).
Components of the W-2 Form
Chances are you've been issued a W-2 Form at some point in your life. Each W-2 has the same fields, no matter what the employer. W-2 Forms are divided into state and federal sections, since employees must file taxes on both levels. There are fields that provide the employer's information, including the company's Employer Identification Number (EIN) (federal) and the Employer's state ID number. The remaining fields mostly focus on the details of the employee's income from the previous year.
The fields on a W-2 Form provide room for all types of income. There is a box that states the total amount of money the employee made from that employer in the year in question, which is the same for federal and state. Other fields indicate the amount of taxes that was withheld from the employee's paychecks, separated by federal income tax, Social Security wages, Social Security tax, and more. There are also fields that show how much money in tips the employee reported for the year, which applies to any jobs that allow the employee to collect tips.
For a detailed video on the components of a W-2 Form, watch the video W-2 Forms.
Similar Tax Documents
While a W-2 is the most common tax form, there are others that apply only to specific situations. Contracted employees must fill out a W-9 Form when they start working for a company, and they are given a 1099 Form by the company for which they provided service, but only if they completed $600 worth of work or more. Students receive a Form 1098 if they paid interest on college tuition or a student loan that year.