What Is Tax Form W-2?

Elizabeth Rosen
by Elizabeth Rosen, Contributor

Part of the “W series” of tax forms, IRS Form W-2 is a six-part federal Wage and Tax Statement. It reports the wages earned by employees and the taxes that were withheld from their paychecks. It also reports Social Security tax, a.k.a. the Federal Insurance Contributions Act (FICA) tax, to the Social Security Administration. The FICA tax has two components ― the Social Security portion and the Medicare portion ― which are separately reported on Tax Form W-2.

Tax Form W-2 is the responsibility of the employer. Employers are required to complete a W-2 Form for each of their employees, and they must deliver it to each employee by January 31st of the calendar year. Employers must then file the W-2 Forms with the Social Security Administration by the last day of February (if filing by paper mail) or the last day of March (if filing electronically). W-2 Tax Forms will report all the wages and taxes of the employees of that business for the prior calendar year.

Withholding tax (also known as “payroll withholding”) is essentially income tax that is withheld from your wages and sent directly to the IRS by your employer. In other words, it’s like a credit against the income taxes that you must pay for the year. By subtracting this money from each paycheck that you receive, the IRS is basically withholding your anticipated tax payment as you earn it ― sometimes called “pay-as-you-earn” taxation.

Who Must File a W-2 Form

Employers are required to file Form W-2 for each employee. They must report the wages that are paid to each employee from whom:

  • Income, Social Security, or Medicare Tax was withheld; OR
  • Income that tax would have been withheld (if the employee had claimed no more than one withholding allowance, or had not claimed exemption from withholding on their Form W-4)

Additionally, every employer who is engaged in a business that pays remuneration for serviced performed by an employee (including non-cash payments) must file a Form W-2 for each employee -- even if the employee is related to the employer.