What is W-2 form?

Your W-2 shows how much you earned and how much tax was withheld from your paychecks during the year. You need it to file your taxes. Employers are legally required to send W-2 forms to their employees and the Social Security Administration (SSA) by January 31st of the year following the tax year. It is a vital document for completing federal, state, and local income tax returns.

The W-2 details several key items: Box 1 lists total taxable wages and tips, Box 2 shows federal income tax withheld, Box 3 and 5 report wages subject to Social Security and Medicare taxes, and Box 4 and 6 show the amounts withheld for those taxes. It also details retirement plan participation and contributions to health accounts.

For W-2 employees, employers automatically withhold federal income tax, Social Security tax (6.2%), and Medicare tax (1.45%) from each paycheck. The employer also pays an equal share of FICA taxes. This automatic withholding helps employees meet their tax obligations throughout the year.