What Is A W2 Form (Explained: All You Need To Know)

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What is a W2 form?

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What Is A W2 Form

A W2 form is an IRS tax form containing relevant information about an employee’s income, taxes withheld on his or her paycheck, and other amounts paid in a given year.

Employees earning an income need the W2 form to file their federal and state taxes.

In essence, the IRS requires that all employers paying salaries or wages to their employees report the amounts paid on a W2 form.

As a result, every year, employers prepare this form and submit a copy to the IRS and the employee.

Generally, employees receive their W2 tax form no later than January 31st of every year so they have enough time to prepare their income tax return.

Also, since employers submit the employee’s W2 form to the IRS, the tax authorities will also have an idea of how much the taxpayer has earned from every employer during the year.

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Why Are W2 Forms Used

The primary reason why W2 forms are used is for employers to comply with tax laws.

In fact, the IRS requires that all employers who have paid a salary or wages to employees during the year issue a W2 form.

In addition, employers are required to file the W2 form with the Social Security Administration (SSA) and the IRS by no later than January 31st of every calendar year.

Typically, employers will file the W2 form with SSA and IRS and provide the employees with a copy so they can complete their personal income tax returns.

The IRS uses the W2 forms to track how much an employee has earned in a given year so they can adequately assess how much is the employee’s overall tax liability.

An employee working for more than one company in a year will receive a W2 form from each employer and will have to report the total sums earned in the year to the IRS.

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Who Receives The W2 Form

Individuals that have worked as an employee for a company in a given year will receive a W2 form.

In other words, only employees who have earned a salary or wages will receive a W2 form from their employers.

For example, Mary works as a teller at a bank earning $40,000 per year.

At the end of the year, her employer will issue a W2 form indicating that she earned $40,000 during the year and indicate any tax deductions or sums withheld on her paycheck.

If you worked as an employee for more than one company in the year, each of your employers will send you a W2 form.

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W2 Form Content

The W2 form is issued for employers to report their employees’ earnings to the IRS and SSA.

Every W2 form will contain information about the total amount the employee has received in wages, federal, state, and other taxes withheld by the employer, other deductions made to pay for health benefits, dependant care assistance, health savings, or other contributions.

You can find the latest version of the W2 form on the IRS website and it looks like this:

As you can see, the W2 contains the following fields:

• Employee’s social security number
• Employer’s identification number (EIN)
• Employer’s name, address, and ZIP code
• Control number
• Employee’s first name, initial, and last name
• Employee’s address and ZIP code
• Wages, tips, other compensation
• Federal income tax withheld
• Social security wages
• Social security tax withheld
• Medicare wages and tips
• Medicare tax withheld
• Social security tips
• Allocated tips
• Dependent care benefits
• Nonqualified plans
• Statutory employee, retirement plan, third-party sick pay
• Employer’s state ID number
• State wages, tips, etc.
• State income tax
• Local wages, tips, etc
• Local income tax
• Locality name

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How To File W2 Form

When employees receive their W2 form, they will need to use the information contained on the form to report their income to the IRS.

Employers are required to provide their employees with the W2 form by no later than January 31st of every year.

Typically, employers will not only send the W2 form to their employees but they will also file it with the IRS and SSA.

When a new employee is hired, they are required to complete a W4 form providing the employer the information it needs to eventually issue the W2.

When employees receive the W2 form, they will need to record the information found on the W2 form on their individual income tax return Form 1040.

Taxpayers can file their tax returns on paper or file everything electronically.

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W2 Form vs W4 Form

What is the difference between a W2 form and W4 form?

A W2 form is an IRS tax document that employers are required to file with the IRS and SSA where they indicate how much the employee has earned during the year and how much money was withheld from the person’s paycheck.

The W2 form is sent to employees every year by their employer allowing the employees to file their individual income tax returns.

On the other hand, a W4 form is a document that new employees complete when they start their new job providing the necessary information to their employer allowing them to make the proper deductions of their paycheck.

The W4 form will include the employee’s Social Security Number, marital status, number of allowances, and dependants, along with how much tax to withhold per paycheck.

The W4 form is completed by the employee when he or she is hired whereas the W2 form is prepared by the employer every year.

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Takeaways 

So there you have it folks!

What is a W-2 form?

In a nutshell, the IRS Form W-2 called “Wage and Tax Statement” is a document that employers prepare every year reporting their employees’ income and how much tax the employer withheld.

The W-2 form tells you how much you earned from your employer in the past year, how much taxes were withheld off your paycheck, and how much you contributed to different types of benefits.

You should receive the W-2 form by no later than January 31st of every year to the extent you earned more than $600 in the year.

The information given to you on Form W-2 will be used to complete Form 1040 individual income tax return.

Now that you know what is the W-2 Form and how it works, good luck with your research!

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