View source for Form W-2

{{Short description|IRS tax form}}
[[File:Form_W-2,_2016.pdf|thumb|right|Form W-2, 2016|page=2]]

'''Form W-2''' (officially, the "'''Wage and Tax Statement'''") is an [[IRS tax forms|Internal Revenue Service (IRS) tax form]] used in the United States to report wages paid to employees and the [[Tax withholding in the United States|taxes withheld]] from them.<ref>See generally {{usc|26|6051}}, 26 C.F.R. sec. 31.6051-1 and sec. 31.6051-2.</ref> Employers must complete a Form W-2 for each employee to whom they pay a salary, wage, or other compensation as part of the employment relationship. An employer must mail out the Form W-2 to employees on or before January 31 of any year in which an employment relationship existed and which was not contractually independent (see below). This deadline gives these taxpayers about 2 months to prepare their returns before the April 15 income tax due date. The form is also used to report [[Federal Insurance Contributions Act tax|FICA taxes]] to the [[Social Security Administration]]. Form W-2 along with Form W-3 generally must be filed by the employer with the Social Security Administration by the end of February following employment the previous year. Relevant amounts on Form W-2 are reported by the Social Security Administration to the [[Internal Revenue Service]]. In US territories, the W-2 is issued with a two letter territory code, such as W-2GU for [[Guam]]. Corrections can be filed using Form W-2c.

The use of the form has led to the phrase "W-2 employees" to refer to those who receive Form W-2, in contrast to [[independent contractors]] and other "1099 workers" whose income is instead reported on [[Form 1099]].<ref>{{cite web|first=Sean|last=Peek|title=W-2 vs. 1099 Contractors: Tax Differences Explained|url=https://www.uschamber.com/co/run/finance/employee-taxes-for-w2-vs-1099-workers|website=United States Chamber of Commerce|access-date=April 13, 2023|archive-date=April 13, 2023|archive-url=https://web.archive.org/web/20230413003525/https://www.uschamber.com/co/run/finance/employee-taxes-for-w2-vs-1099-workers|url-status=live}}</ref>

==Significance for employee's tax return==
Form W-2 includes wage and salary information as well as federal, state, and other taxes that were withheld. This information is used by the employee when they complete their individual tax return using [[Form 1040]].<ref name="turbo_w2">{{cite web |url=https://turbotax.intuit.com/tax-tools/tax-tips/IRS-Tax-Forms/What-is-a-W-2-Form-/INF14812.html |title=What is a W-2 Form? |access-date=January 25, 2016 |date=2015}}</ref>

When an employee prepares their individual tax return for a tax year, the withholding amount from Form W-2 is subtracted from the tax due. It is possible to receive a refund from the IRS if more income was withheld than necessary.<ref name="turbo_w2" />

Since the IRS receives a copy of the W-2 from the employer, if the amount reported on the W-2 does not match the amount reported on Form 1040, the IRS will note the discrepancy and may reject the form. In addition, if an individual does not pay the required amount of taxes, the IRS will also know this.<ref name="turbo_w2" /> In this way, the IRS uses Form W-2 as a way to track an employee's tax liability, and the form has come to be seen as a formal proof of income. The [[Social Security Administration]], court proceedings, and applications for federal financial aid for college all use Form W-2 as proof of income.<ref name="Ambar" />

The employee receives three paper copies of Form W-2: one as a personal record, one for the federal tax return filing, and one for the state tax return filing.<ref name="Ambar" /> Form W-2 must be attached to one's individual tax return; this is to substantiate claims of withholding.<ref name="turbo_w2" />

Employees are required to report their wage, salary, and tip income even if they don't receive a Form W-2 for this income.

===Tip income===

Employees are required to report their tip income to their employers (usually using Form 4070). Tips are subject to income withholding. There are various other requirements when handling tips for tax purposes.<ref name="irs_tips">{{cite web |url=https://www.irs.gov/Businesses/Small-Businesses-%26-Self-Employed/Reporting-Tip-Income-Restaurant-Tax-Tips |title=Reporting Tip Income - Restaurant Tax Tips |access-date=January 28, 2016 |archive-date=February 2, 2016 |archive-url=https://web.archive.org/web/20160202120223/https://www.irs.gov/Businesses/Small-Businesses-%26-Self-Employed/Reporting-Tip-Income-Restaurant-Tax-Tips |url-status=live }}</ref>

==Filing requirements==

Form W-2 must be completed by the employers and be in the mail to be sent to employees by January 31. The deadline for filing electronic or paper W-2 Forms to the Social Security Administration (SSA) is also January 31.<ref>{{Cite web|url=https://www.ssa.gov/employer/filingDeadlines.htm|title=Deadline Dates to File W-2s|website=www.ssa.gov|language=en|access-date=2019-11-14}}</ref> 

If over 250 instances of Form W-2 are being filed for the year, electronic filing is required.<ref name="tc801">{{cite web |url=https://www.irs.gov/taxtopics/tc801.html |title=Topic 801 - Who Must File Information Returns Electronically |access-date=January 24, 2016 |publisher=Internal Revenue Service |archive-date=May 14, 2017 |archive-url=https://web.archive.org/web/20170514102616/https://www.irs.gov/taxtopics/tc801.html |url-status=live }}</ref>

The form consists of six copies:

*Copy A – Submitted by the employer to the Social Security Administration. (In addition, the employer must also submit Form W-3, which is a summary of all Forms W-2 completed, along with all Copies A submitted.  The Form W-3 must be signed by the employer.)
*Copy B – To be sent to the employee and filed by the employee with the employee's federal income tax returns.
*Copy C – To be sent to the employee, to be retained by the employee for the employee's records.
*Copy D – To be retained by the employer, for the employer's records.
*Copy 1 – To be filed with the employer's state or local income tax returns (if any).
*Copy 2 – To be filed with the employee's state or local income tax returns (if any).

Employers are instructed to send copies B, C, 1, and 2 to their employees generally by [[January 31]] of the year immediately following the year of income to which the Form W-2 relates, which gives these taxpayers about {{frac|2|1|2}} months before the [[April 15]] income tax due date. The Form W-2, with Form W-3, generally must be filed by the employer with the Social Security Administration by the end of February.

===Filing modalities===

Traditionally Form W-2 has been completed by paper. [[Tax compliance software]] such as [[TurboTax]] allow the form to be completed electronically.<ref name="investopedia_w2">{{cite web |url=http://www.investopedia.com/terms/w/w2form.asp |title=W-2 Form |access-date=January 25, 2016}}</ref> For paper filing, Form W-2 can be ordered from the IRS website.

When filing by paper, Copy A of the form cannot be printed from the IRS website. In other words, the official form ordered from the IRS must be used.<ref name="actual_form_w2">{{cite web |url=https://www.irs.gov/pub/irs-pdf/fw2.pdf |title=Form W-2 |access-date=January 28, 2016 |publisher=Internal Revenue Service |archive-date=January 27, 2016 |archive-url=https://web.archive.org/web/20160127072636/https://www.irs.gov/pub/irs-pdf/fw2.pdf |url-status=live }}</ref>

==Penalties==

Late filings within 30 days of the due date incur a penalty of $30 per form. After 30 days but before August 1, the penalty increases to $60 per form (capped between $200–500 depending on the size of the business). After August 1, the penalty increases to $100 per form (capped between $500–1500 depending on the size of the business).<ref name="chron">{{cite web|url=http://smallbusiness.chron.com/penalties-employers-late-w2s-22027.html|title=What Are the Penalties to Employers for Late W-2s?|last=Myers|first=Cynthia|date=7 September 2011|access-date=January 25, 2016|archive-date=2 February 2016|archive-url=https://web.archive.org/web/20160202130622/http://smallbusiness.chron.com/penalties-employers-late-w2s-22027.html|url-status=live}}</ref>

The penalty for a single incorrect Form W-2 is $250 per receiving party (capped annually at $3 million); this means a single incorrect Form W-2 to both the employer and the IRS incurs a penalty of $500. The penalty for intentionally failing to file is $500.<ref name="lexicology">{{cite web |url=http://www.lexology.com/library/detail.aspx?g=dab5213a-aca5-4271-98b5-853a4af84e4a |title= Penalties for incorrect W-2, 1099s just doubled |access-date=January 25, 2016 |date=July 22, 2015 |author=Sharon B. Bauman |author2=Alan M. Brunswick |author3=Esra Acikalin Hudson |author4=Sandra R. King |author5=Stanley W. Levy |author6=Mandana Massoumi}}</ref>

Further penalties exist for illegible forms and for filing by paper even past the 250 form limit.<ref name="chron" />

==History==

Use of Form W-2 was established by the [[Current Tax Payment Act of 1943]] as part of an effort to withhold income at source. The first Form W-2s were issued to employees in 1944.<ref name="Ambar">{{cite web |url=https://www.americanbar.org/publications/insights_on_law_andsociety/15/winter-2015/getting-to-know-irs-w2-form.html |title=Getting to Know the IRS W-2 Form |access-date=January 25, 2016 |publisher=American Bar Association |archive-url=https://web.archive.org/web/20180112104632/https://www.americanbar.org/publications/insights_on_law_andsociety/15/winter-2015/getting-to-know-irs-w2-form.html |archive-date=January 12, 2018 }}</ref>

In 1965, the form's name was changed from "Withholding Tax Statement" to "Wage and Tax Statement" (current name).<ref name="Ambar" />

In 1978, the form's appearance changed to its modern style of numbered boxes.<ref name="Ambar" />

As with the US tax code and other forms (such as the [[Form 1040#History|1040]]), Form W-2 has become more complicated over time.<ref name="Ambar" />

The penalty for incorrect forms was increased in 2015.<ref name="lexology">{{cite web |url=http://www.lexology.com/library/detail.aspx?g=dab5213a-aca5-4271-98b5-853a4af84e4a |title=Penalties for incorrect W-2, 1099s just doubled |access-date=January 25, 2016 |date=July 22, 2015 |author=Sharon B. Bauman |author2=Alan M. Brunswick |author3=Esra Acikalin Hudson |author4=Sandra R. King |author5=Stanley W. Levy |author6=Mandana Massoumi |archive-date=February 6, 2016 |archive-url=https://web.archive.org/web/20160206004225/http://www.lexology.com/library/detail.aspx?g=dab5213a-aca5-4271-98b5-853a4af84e4a |url-status=live }}</ref>

== Phishing scheme involving W-2s ==
In March 2016, the [[Internal Revenue Service|IRS]] issued an alert concerning a new type of [[Spear phishing|phishing]] email attack which attempts to lure human resources, accounting, or payroll staff into disclosing the W-2 information of all employees within a company,<ref>{{Cite web|url=https://www.irs.gov/uac/Newsroom/IRS-Alerts-Payroll-and-HR-Professionals-to-Phishing-Scheme-Involving-W2s|title=IRS Alerts Payroll and HR Professionals to Phishing Scheme Involving W-2s|website=Internal Revenue Service|access-date=2016-03-27|archive-date=2016-04-01|archive-url=https://web.archive.org/web/20160401161722/https://www.irs.gov/uac/Newsroom/IRS-Alerts-Payroll-and-HR-Professionals-to-Phishing-Scheme-Involving-W2s|url-status=live}}</ref> presumably intended for use in [[Identity theft in the United States|tax-related identity theft]], which the IRS defines as "...when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund."<ref>{{Cite web|url=https://www.irs.gov/Individuals/Data-Breach-Information-for-Taxpayers|title=Data Breach: Tax-Related Information for Taxpayers|website=Internal Revenue Service|access-date=2016-03-27|archive-date=2016-04-07|archive-url=https://web.archive.org/web/20160407003756/https://www.irs.gov/Individuals/Data-Breach-Information-for-Taxpayers|url-status=live}}</ref>  This may give a cybercriminal enough information to fraudulently file a [[Tax return (United States)|tax return]] on the victim's behalf and direct the [[tax refund]] to the cybercriminal's bank account.  This phishing scheme is particularly characterized by its use of [[spear-phishing]] (emails [[Salutation|sent to specific individuals]]) and [[email spoofing]] to pose as a company executive requesting the W-2 information, thereby increasing the urgency of the response and catching payroll staff off-guard:

* "Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary)."
* "Kindly send me the individual 2015 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review."
* "I want you to send me the list of W-2 copies of employees' wage and tax statements for 2015, I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and email them to me asap."

Large companies such as [[Snap Inc.]],<ref>{{cite web |title=An Apology to Our Employees |url=https://www.snap.com/en-US/news/post/an-apology-to-our-employees |website=Snap Inc. |access-date=5 July 2020 |date=28 February 2016 |archive-date=5 July 2020 |archive-url=https://web.archive.org/web/20200705233543/https://www.snap.com/en-US/news/post/an-apology-to-our-employees |url-status=live }}</ref> [[Fast Company (magazine)|Mansueto Ventures]],<ref>{{Cite web|url=http://www.businessinsider.com/fast-company-employee-data-hackers-email-scam-2016-3|title=Fast Company sent employee data to hackers in the same kind of email scam that targeted Snapchat and Seagate|website=Business Insider|access-date=2016-03-27|archive-date=2016-04-07|archive-url=https://web.archive.org/web/20160407135909/http://www.businessinsider.com/fast-company-employee-data-hackers-email-scam-2016-3|url-status=live}}</ref> and [[Seagate Technology|Seagate]]<ref>{{Cite web|url=http://krebsonsecurity.com/2016/03/seagate-phish-exposes-all-employee-w-2s/|title=Seagate Phish Exposes All Employee W-2's|website=Krebs on Security|date=9 March 2016 |access-date=2016-03-27}}</ref> fell victim to this phishing scheme in early March 2016.

Those in the cybersecurity industry categorize this phishing scheme as a type of CEO Fraud, while the FBI's Criminal, Cyber, and International Operations Divisions classify it as a type of "[[business email compromise]]" or BEC.<ref>{{Cite web|url=https://www.fbi.gov/news/stories/2015/august/business-e-mail-compromise/business-e-mail-compromise|title=Business E-Mail Compromise|website=FBI|access-date=2016-03-27|archive-date=2016-03-28|archive-url=https://web.archive.org/web/20160328145154/https://www.fbi.gov/news/stories/2015/august/business-e-mail-compromise/business-e-mail-compromise|url-status=live}}</ref>

==Analogs in other countries==
{{Unreferenced|date=November 2023|section}}
{| class="wikitable sortable"
|-
! Country !! Form name
|-
| Canada || T4
|-
| Israel || 106 form
|-
| Russia || 2-NDFL
|-
| Poland || PIT-11
|-
| UK || [[P60]]
|-
| India || [[Indian_tax_forms#Form 16|Form 16]]
|-
| South Africa || IRP5/IT3(a)
|-
| Philippines || BIR Form 2316

|}

== See also ==
*[[Form 1040]]
*[[Form W-9]]
*[[Form W-4]]
*[[Form 1099]]
*[[Misclassification of employees as independent contractors]]
*[[Tax withholding in the United States]]

==References==
{{reflist}}

== External links ==
*[https://www.irs.gov/pub/irs-pdf/fw2.pdf Forms W-2]
*[https://www.irs.gov/pub/irs-pdf/iw2w3.pdf Instructions for Forms W-2 and W-3]

[[Category:IRS tax forms|W-2]]
[[Category:1943 establishments in the United States]]