W-2 Forms | Meaning and Definition

What are W-2 Forms?

A W-2 Form, also known as a Wage and Tax Statement, is a document that an employer needs to send to their employees as well as the IRS (Internal Revenue Services) in January. It declares an employee’s salary/ wage and tax, holding back information for the year that just passed. This form is a crucial document needed for preparing state tax and federal tax returns. These forms are solely provided to employees. Those who engage in self-employment or are independent contractors get a statement for earning on a Form 1099 instead of a W-2 Form. W-2 Forms are also provided by third-party providers who offer sick pay to the worker in a given tax year or a financial year. 

What is there on a W-2 Form?

It indicates the wages, salary information, and tips of an employee for the previous tax year, that is, from January 1 to December 31. Moreover, it also mentions the amount of state, federal, and other taxes like social security contributions, medicare, etc., an employer deducted from the employee paychecks.

In case the employer offered allocations from uncharted deferred compensation schemes, or dependent care advantages, they would also be counted and mentioned on the W-2 form. On top of this, Form also includes identification details of the employee like address, name, and social security number, as well as identification details of the employer such as name, state ID number, EIN number, and address.

These forms are sent by the employers to employees on or before January 31 every year. An employee can get it directly and quickly from the employer. However, if needed, the form can be received from the IRS or Social Security Administration as well.

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