Form W-2, the Wage and Tax Statement, is the annual form employers send to each employee and the Social Security Administration showing the year's wages and the taxes withheld. Employers must furnish W-2s to employees and file them with the SSA by January 31.
Key takeaways
- W-2s cover employees only; independent contractors receive a Form 1099-NEC instead.
- Both the employee copy and the SSA filing are due January 31.
- Employers filing 10 or more information returns in total must file W-2s electronically.
- Box 12 codes report items such as 401(k) deferrals, HSA contributions, and the cost of health coverage.
How Form W-2 works
Payroll builds the W-2 from a full year of pay data. Box 1 shows wages subject to federal income tax, which excludes pre-tax deferrals and premiums. Box 3 shows Social Security wages, capped at the wage base, and box 5 shows Medicare wages, which have no cap. Box 2, 4, and 6 show the tax withheld for each. Box 12 uses letter codes to report retirement deferrals (D for 401(k)), employer HSA contributions (W), and the cost of employer health coverage (DD) (IRS, About Form W-2).
Copy A goes to the SSA, which shares the data with the IRS. Copies B, C, and 2 go to the employee, and Copy 1 goes to the state or local tax agency if required. You can deliver employee copies electronically if the employee consents. Since 2024, employers that file 10 or more information returns of any type in a year must e-file.
Form W-2 example
An analyst earned $80,000 in salary, deferred $6,000 to a traditional 401(k), and paid $2,400 in Section 125 medical premiums. Her W-2 shows:
| Box 1, wages, tips, other compensation | $71,600 |
|---|---|
| Box 3, Social Security wages | $77,600 |
| Box 5, Medicare wages | $77,600 |
| Box 12, code D | $6,000 |
Box 1 is lower than box 3 because the 401(k) deferral is excluded from income tax wages but not from FICA wages. The medical premium is excluded from all three. This is the single most common reason employees ask why their W-2 doesn't match their salary.
Why Form W-2 matters for employers
The W-2 is the end of the payroll year, and every error made earlier shows up here. Corrections require a Form W-2c and sometimes amended quarterly returns, and penalties for late or incorrect forms increase the longer they go uncorrected.
Clear communication helps too. Send a short note when W-2s are ready and explain the difference between box 1 and gross salary. Our W-2 availability email template does exactly that. Most payroll platforms publish W-2s in the employee portal, and employees can import them into tax software, which cuts reprint requests dramatically.
Common Form W-2 mistakes to avoid
Mailing W-2s late because of a January payroll rush
Plan year-end close in December so W-2s are reviewed before January 31.
Reporting health coverage in box 1
Employer health coverage cost goes in box 12 code DD for information only. It isn't taxable.
Missing taxable fringe benefits
Add personal use of company vehicles, gift cards, and group-term life over $50,000 before year end.
Using a W-2 for a contractor
Contractors get Form 1099-NEC. Issuing a W-2 suggests they are employees.
Form W-2: questions people also ask
When are W-2s due?
Why is box 1 on my W-2 lower than my salary?
What is a W-2 employee?
What should an employee do if their W-2 is wrong?
Can employers issue W-2s electronically?
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HRTally glossary entries are written by people who have run US payroll, benefits, and HR operations, then checked line by line against primary sources such as the IRS, Department of Labor, EEOC, and Bureau of Labor Statistics. Dollar limits and rates are for 2026 unless stated. We review every entry at least twice a year and whenever a rule changes. This page explains general rules and isn't legal or tax advice; state law can differ. Read our editorial standards.
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<blockquote>Form W-2, the Wage and Tax Statement, is the annual form employers send to each employee and the Social Security Administration showing the year's wages and the taxes withheld. Employers must furnish W-2s to employees and file them with the SSA by January 31.</blockquote><p>Source: <a href="https://www.hrtally.com/hr-glossary/form-w-2/">HRTally HR Glossary, Form W-2</a></p>
Written by the HRTally Research Team
Our guides are written and reviewed by people with hands-on US HR, payroll, and HR technology experience. Legal and tax facts are checked against primary sources, such as the Department of Labor, IRS, EEOC, and USCIS, and linked at the end of each guide. Vendors never review or pay for our editorial content.