Understanding Form W-2: Reporting Employee Earnings and Taxes

Understanding Form W-2: Reporting Employee Earnings and Taxes

The IRS provides a document called Form W-2, which outlines the income that is subject to taxation and was earned through employment. This form includes taxes deducted from your earnings as well as contributions made by both you and your employer to Social Security.

How Do W2 Forms Work?

The Form W-2 is employed solely for reporting employee earnings that have had taxes deducted. Your employer submits these earnings to you and the IRS on several informational forms yearly. Not only does a W-2 indicate the income you must declare on your tax returns, but it also shows the payments you’ve already made through withholdings. Moreover, Form W-2 notifies the IRS of the income you should claim and verifies the taxes they’ve received. Create your own W2 form easily with free w2 Creator.

Who Uses a W-2 Form?

Individuals must disclose all wages earned from their employment on their yearly tax returns. Employers are required to provide their employees with a Form W-2, regardless of whether they work part-time or full-time.

A W-2 form consists of five copies: A, 1, B, C, 2, and D:2

  • The employer submits Copy A to the Social Security Administration
  • Copy 1 is sent by the employer to the state, city, or local tax department.
  • Attach Copy B to your federal income tax return and retain it with your other tax documents for a minimum of four years if you file your return online.
  • Keep Copy C with your tax documents as well, as it serves as your official copy for at least four years.
  • When filing your state tax return online or by mail, attach Copy 2 and keep the physical copy with your tax documents for a minimum of four years if you file online.
  • Copy D is intended for the employer to retain.

What Is the Purpose of the W2 Form?

  • The W-2 form serves as a means to communicate to the Internal Revenue Service (IRS) the details of an employee’s remuneration, including their wages, taxes, and other relevant information, as provided by their employer.

What To Do If You Don’t Receive W2 Form?

If you haven’t received your Form W-2, inquire with your employer about the mailing date to employees. If necessary, request another physical copy of your W-2. Some employers may require a small fee for providing an additional copy. Alternatively, if you suspect that your employer has not sent out W-2 or is unwilling to provide one, contact the IRS for assistance. Make sure you fill all the essential details:-

  • Your employer’s name, and address
  • Your employer’s contact number
  • Employer identification number (EIN)

If you are no longer employed, it is important to have a general idea of your earnings, the amount of federal income tax withheld by your employer, and the dates that you started and finished working. This data should be accessible on your pay stubs. In addition, you can approach your employer for any necessary corrections on your Form W-2. 


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