Understanding Tax Forms: What is a W-2?

  

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A W-2 is a required tax form that employers send to employees and the IRS at after the year ends. Employees then use information on the W-2 form to fill out their income tax forms. 

On the W-2 form, the employer inputs information about the employee's earnings and tax payments from the previous year. The employee uses this information about income and taxes paid when filing taxes, and the IRS also gets a copy to ensure the correctness of filed tax forms. 

The 2012 form includes the following boxes:

• a: Employee's Social Security number
• b: Employer identification number (EIN)
• c: Employer's name, address and ZIP code
• d: Control number
• e: Employee's first name, initial, last name and suffix
• f: Employee's address and ZIP code
• 1: Wages, tips and other compensation (total from the previous tax year)
• 2: Federal income tax withheld
• 3: Social security wages
• 4: Social security tax withheld
• 5: Medicare wages and tips
• 6: Medicare tax withheld
• 7: Social security tips
• 8: Allocated tips
• 9: Blank
• 10: Dependent care benefits
• 11: Nonqualified plans
• 12 (Sections a-d): Deferrals
• 13: Check-boxes for statutory employee, retirement plan and third-party sick pay
• 14: Other
• 15: State and employer's state ID number
• 16: State wages, tips, etc.
• 17: State income tax
• 18: Local wages, tips, etc.
• 19: Local income tax
• 20: Locality name

These boxes can change, depending on current legislation. Some of these boxes may be left blank by the employer if they are not relevant to the specific employee. For example, the "Allocated tips" box may be left blank for an employee who did not earn tips. Boxes 18 and 19 might also be left blank for employees whose local areas do not collect taxes. 

Timeline

For work done between January 1 and December 31 of any given year, the employer is legally required to send out W-2 forms by January 31 of the next year. This deadline gives employees plenty of time to file their taxes by the April income tax deadline. 

Exceptions

There are some exceptions to typical W-2 requirements:

• In some situations, an employer can file for an extension and send out the form later than January 31. 
• Self-employed individuals and independent contractors do not receive this form each year. Only wage and salary employees must receive this form. If an employer hires a self-employed contract worker for a specific project, the employer will probably have to send the contract worker and the IRS a 1099 form instead. 

Form Help

Today, many employers use payroll software programs that make it possible to print W-2 forms on IRS-required paper supply on the employer's desktop printer. Many bookkeeping programs have options to help fill out required tax forms, and Social Security also provides filing instructions and free software to help check the correctness of information on the forms. 

If the task of filling out these forms for employees seems daunting, check out the free help that Social Security provides or look into a bookkeeping program to make the task easier. Employees who need help using W-2 forms to fill out tax forms can also find free or inexpensive software programs to use.