Information About the U.S. Wage and Tax Statement
Part of the ‘W series’ of tax forms, IRS Form W-2 is a six-part federal Wage and Tax Statement.
What Is Tax Form W-2 Used For?
Form W-2 is used to report 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 – that are separately reported on Tax Form W-2.
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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 for the employees of that business/company for the prior calendar year.
How to Complete Tax Form W-2: Instructions
The following information provides a line-by-line analysis for each component of Tax Form W-2, based on the IRS Instruction Booklet.
Form W-2: Copies
Tax Form W-2 is a multi-part form and has six parts/copies:
- Copy A:This copy must be submitted to the Social Security Administration by the employer, either electronically or by mail.
- Copy 1:This copy is submitted by the employer to the state, city, or local tax department (if any).
- Copy B:This copy is given to the employee to file with their federal income tax return (Form 1040)
- Copy C:This copy is given to the employee to keep for their records. (To be safe, this copy should be kept for at least four years.)
- Copy D:This copy is kept by the employer for their records. (To be safe, this copy should be kept for at least four years.)
- Copy 2:This copy is given to the employee to file with their state or local income tax returns (if any).
Form W-2: Lettered Boxes
Tax Form W-2 has six lettered boxes (A thru F) that cover employer and employee identification information:
Box A: Employee’s social security number – As it appears on their social security card.
Box B: Employer identification number (EIN) – The number assigned by the IRS that was used on the employer’s federal employment tax return.
Box C: Employer’s name, address, and ZIP code – As it appears on the employer’s federal employment tax return.
Box D: Control number – (Optional) A code number assigned by the company’s payroll processing software to identify individual W-2s.
Box E: Employee’s name – As it appears on their social security card.
Box F: Employee’s address and ZIP code – May be a former address if the employee recently moved.
Form W-2: Numbered Boxes
Tax Form W-2 has twenty numbered boxes (1 thru 20) that cover wages and taxes:
Box 1: Wages, tips, other compensation – This box must show the total taxable wages, tips, and other compensation (e.g., bonuses and group-term life insurance benefits) that the employee was paid during the year, before any payroll deductions.
Box 2: Federal income tax withheld – This box reports the total federal income tax that was withheld from the employee’s paychecks during the year.
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Box 3: Social security wages – This box reports the total amount of wages subject to employee Social Security tax, not including Social Security tips (Box 7) and allocated tips (Box 8). The total of Boxes 3 and 7 cannot exceed the maximum taxable amount of $132,900 (2019 Social Security wage base). Box 3 should also include: signing bonuses, the taxable cost of group-term life insurance over $50,000 (also included in Box 1), the cost of accident and health insurance premiums for 2% or more shareholder-employees paid by an S corporation (if not excludable), employee and nonexcludable employer contributions to an MSA or HSA (that were not made through a cafeteria plan), employee contributions to a SIMPLE retirement account, and adoption benefits.
Box 4: Social security tax withheld – This box reports the total amount of Social Security tax that was withheld from the employee’s paychecks during the year, including Social Security tax on tips. The Social Security tax has a flat rate of 6.2% of wages, up to a maximum taxable amount of $132,900. Therefore, the tax should not exceed $8,239.80 for any individual (6.2% × $132,900 = $8,239.80).
Box 5: Medicare wages and tips – This box reports the total amount of wages and tips subject to employee Medicare tax, which has a flat rate of 1.45% on all earnings. The wages and tips that are subject to Medicare tax are the same as those subject to Social Security tax. This box may also include 401k contributions, deferred compensation, and other benefits. There is no maximum limit for wages subject to Medicare tax, so it is not uncommon for the amount in Box 5 to be greater than the amount in Box 1 or Box 3.
Box 6: Medicare tax withheld – This box reports the total amount of Medicare tax that was withheld from the employee’s paychecks during the year. The Medicare tax has a flat rate of 1.45% on all earnings.
Box 7: Social security tips – This box shows the amount of tip income that the employee reported to the employer. If no tips were reported, this box will have no amount. (Note: These tips should be included in Boxes 1 and 5. And the total of Boxes 3 and 7 should not exceed $132,900.)
Box 8: Allocated tips – This box allows the employer to report any additional tip income that was not reported by the employee in Box 7, if the tips from Box 7 are below the required percentage/amount. The amount shown in Box 8 should not be included in Boxes 1, 3, 5, or 7. If an employee has allocated tips shown on their W-2, they must report those tips using Tax Form 1040.
Box 10: Dependent care benefits – This box reports the total amount of dependent care expenses/services (e.g., daycare facilities) that was paid for or provided by the employer during the year through a dependent care assistance program. Although up to $5,000 of received benefits may be excluded from an employee’s income, the total amount of benefits paid by the employer must be reported in Box 10, whether or not it exceeds $5,000. Any amounts over $5,000 must also be included in Boxes 1, 3, and 5 (within the applicable limitations).
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Box 11: Nonqualified plans – This box reports any amounts distributed to the employee from the employer’s nonqualified deferred compensation plan or nongovernmental pension plan. This amount should be included in Box 1 as part of the employee’s taxable income. Box 11 helps determine if any part of the amounts reported in Boxes 1, 3, or 5 are from a previous year.
Box 12 (a, b, c, d): Codes – This box reports deferrals, contributions, and uncollected taxes with a single or double letter code (from A to HH), followed by a dollar amount. Code letters do not have to correlate with the Box 12 letters (a, b, c, or d), and no more than four items can be reported in Box 12 of Copy A. To report additional items on Copy A, use a separate W-2.
Box 13: Checkboxes – This section offers three checkboxes: Statutory employee, Retirement plan, and Third-party sick pay. Any of those that apply to the employee must be checked-off.
Box 14: Other – This box allows the employer to report any additional tax information, including the value of a vehicle leased to the employee, state disability insurance taxes withheld, union dues, uniform payments, health insurance premiums deducted, nontaxable income, educational assistance payments, a minister’s parsonage allowance and utilities, and certain contributions to a pension plan.
Box 15: State and Employer’s state ID number – This box shows the employer’s state (as a two-letter abbreviation) and the employer’s state identification number (assigned to them by the state). This box can be used for two states, separated by the broken line.
Box 16: State wages, tips, etc. – This box reports the total amount of taxable income the employee earned in that state. This box can be used to report wages from two states, separated by the broken line.
Box 17: State income tax – This box reports the total amount of state income tax that was withheld from the employee’s wages (from Box 16). This box can be used to report taxes for two states, separated by the broken line.
Box 18: Local wages, tips, etc. – This box reports the employee’s total amount of taxable income that is subject to local, city, or other state income taxes. This box can be used to report wages from two localities, separated by the broken line.
Box 19: Local income tax – This box reports the total amount of local, city, or other state taxes that was withheld from the employee’s wages (from Box 18). This box can be used to report taxes for two localities, separated by the broken line.
Box 20: Locality name – This box identifies the locality for which the taxes were withheld.