What is a W2 Form and What is a W2 Form For?

Oct 25, 2021

pen next to a W2 form

A W2 form is what an employer is required to send to the internal revenue service (IRS) and employees at the end of the year. The W2 is also known as the wage and tax statement and details wages paid and taxes withheld.

The W2 wage and tax form is used for any employee where tax was withheld from earned income by their employer. Income tax withholding includes the FICA tax which covers social security and Medicare. Employees will need to have their form W2 wage and tax statement when filing their income tax returns.

Tax withholding ensures employees’ tax is paid directly to the IRS by their employer. This is different from independent contractors who are given another of the IRS tax forms, form 1099 NEC, and are responsible for paying their own taxes.

Who Provides a W 2 Form

The IRS form W2 is provided by employers, with copies sent to employees and the IRS at the end of the tax year. It details the total amount of your taxable wage as well as taxes withheld from your pay, including the FICA tax (social security and Medicare taxes). This is used by the IRS to track your tax obligations and is required when you are filing your tax returns.

The deadline for filing form W2 is usually the end of January, to give individuals sufficient time for tax preparation by the due date, usually April 15th. The form may be provided as either a hard copy or access given online.

Employers must also submit forms W2 and W3 to the Social Security Administration (SSA). The information on these tax forms is used to calculate your social security entitlements.

Who Gets a W2?

Any employee, earning over $600 in a tax year, where the employer is withholding taxes should be given a W2 form, as the W2 information is required by the individual and the IRS. Independent contractors do not receive a W2, instead, they require forms 1099 MISC or 1099 NEC.

You should receive a W2 from each employer you have worked for over the previous year.

What Is a W2 Form Employee

A W2 form employee is any employee who is not classed as self-employed or an independent contractor for tax purposes, and whom the company pays over $600 to in any given tax year.

The difference Between W 2 and W 3 Forms

A form W3, also known as the Transmittal of Wage and Tax Statements, is a form submitted to the SSA that totals up all data from the W2 forms. The main difference is not in the information provided on the form but in who the form goes to.

What is the Difference Between W2 and Tax Return?

While you will need your W2 to complete your tax returns, a W2 and tax return are not the same thing. Your W2 comes from your employer and a tax return you send to the government.

The W2 reports income earned and taxes withheld for that employment. If you have more than one job you will have more than one W2, one from each employer. You may also have a 1099 form if you have performed work as an independent contractor or earned income other than from employment.

You need the information from all these IRS tax forms to fill out your tax return and calculate how much tax you owe. In some instances, the amount of taxes withheld from employment may be greater than the tax you owe in which case you will be due a refund.

What Does a W 2 Look Like?

A W2 wages and tax statement is a one-page IRS form that has a number of boxes for income and tax, including federal income tax, state income tax, social security, and Medicare taxes. There is also space to record dependent care benefits and deferred income.

literal w2 form from irs website

What Information is Included On Your W2 Form

At the top of the form will be your social security number. On one side of the form, there is then space for your employers’ identification number and address, as well as your name and address.

The rest of the form has space for income, federal taxes and local taxes to be recorded in boxes.

Box 1 is where your taxable income is recorded, this includes income from wages, tips, and other compensation. Other compensation includes taxable benefits paid by your employer. Box 2 shows the federal income tax withheld by your employer.

Box 3 shows how much of your income is subject to social security taxes, and box 4 the tax withheld for social security. Boxes 5 and 6 to the same for medicare taxes.

There are then boxes to report tips, dependent care, non-qualified plans, deductions for retirement plans.

Many employees earn tip income alongside their wages which are also recorded on the W2 form as federal state and local government tax tips.

There is also a box on the form to record any deferred compensation. Employees withholding money in a deferred compensation plan, such as retirement planning, will pay tax on that income when it is paid out rather than when it is earned.

At the bottom of the form, you will find your state ID number and taxes withheld for state and local income tax.

Filing Your Tax Return

Once you have your tax statements you will be able to file your tax return. There are instructions for forms on the IRS website that can help with interpreting the information and understanding which figures you need to include where on your tax return.

Filing your tax return will tell you if you have tax still to pay or are due tax refunds. If you pay self-employment tax you will have been paying estimated taxes during the year but it can be wise to keep some funds aside in a savings account in case the tax calculator determines you owe an additional tax payment at the end of the year.