What is a Form W-2?

If you’re a wage-earning taxpayer, chances are you’re already familiar with Form W-2. For paid employees (ie, most taxpayers) the W-2 is one of the most important tax documents.

Form W-2 is an information return document, where employers report an employee’s total wages paid, and taxes paid on those wages. The form is also used to report Federal Insurance Contributions Act (FICA) taxes to the Social Security Administration.

Employers are legally required to complete a Form W-2 for every employee to whom they pay a salary, wage, or other compensation. (This category of workers excludes contractors, whose total earnings are reported via a Form 1099.)

The law requires employers to provide these forms to their employees (and former employees) before January 31st of the following year. In other words, you should have a W-2 from each employer for whom you work in 2015 by January 31st, 2016.

Each W-2 form has 6 copies, some of which go to you, the tax payer, and others of which go to various taxing authorities. The copies are distributed as follows:

  • Copy A – The employer sends this copy to the Social Security Administration. (Side note: employers must also provide the SSA with Form W-3, a summary of all Forms W-2 completed, along with all Copies A submitted.)
  • Copy B – The employer sends this copy to the employee, who files it along with his or her tax return forms.
  • Copy C – Copy C also comes to you, the employee. Copy C is yours to keep for your records.
  • Copy D – Employers retain this copy for their records.
  • Copy 1 – Your employer will submit this copy to your state and/or local taxing authority, if required. Some states don’t require this, but others do.
  • Copy 2 – This copy will also go to you, the tax payer. If and when you file state or local income taxes, you’ll provide this copy to the taxing authorities along with your other tax forms.

For most wage and salary earners, Form W-2 is the only income-reporting document they use. If you’ve held only one job throughout the tax year, your entire income will be on a single Form W-2. If you’ve switched jobs, each employer you worked for during the year must also provide you with a W-2. If you do any contract work on the side, your income will also involve one or more Forms 1099.

So to recap, you should receive copies of Form W-2 sometime prior to January 31. Should you not receive your W-2,  contact the IRS after February 15th, and they can help in the retrieval process.

When you start getting W-2s in the mail, you know it’s time to think about filing your taxes. Use the next couple of weeks to gather any documents you need to file for deductions on Schedule A.

If you use an electronic service to file your taxes, chances are you won’t have to send hard copies to state or federal authorities. Nonetheless, it’s always good to hang on to those extra copies. In the rare event of an audit, or an error in your return, it’s great to have a paper trail.

Should you need help filing your taxes this year, you may want to consider both Turbo Tax and H&R Block.  Their free online tax software can make your tax nightmares disappear.

Topics: Taxes

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