W-2

The tax form employers send employees by January 31 each year showing total wages and all taxes withheld.

A W-2 (Wage and Tax Statement) is the official tax form your employer must send you by January 31 for the prior tax year. It reports your total taxable wages alongside the amounts withheld for federal income tax, state income tax, Social Security, and Medicare. You use it to file your personal tax return and verify that withholdings match what you actually owe.

The IRS requires employers to file W-2s for every employee — not contractors. If you're a W-2 employee, your employer already paid half of your Social Security (6.2%) and Medicare (1.45%) taxes on your behalf. This is a significant distinction from 1099 contract work, where self-employed individuals pay the full 15.3% self-employment tax themselves with no employer contribution.

You'll receive a W-2 from every employer you worked for during the tax year, even if you only worked there briefly. Your Box 1 wages are almost always lower than your nominal salary because pre-tax deductions — 401(k) contributions, health insurance premiums, HSA contributions — reduce your taxable income before the W-2 is calculated.

Key Boxes on a W-2

  • Box 1: Federal taxable wages — gross pay minus pre-tax deductions like 401(k), HSA, and health insurance premiums.
  • Box 2: Federal income tax withheld — the amount already sent to the IRS on your behalf.
  • Box 3 & 4: Social Security wages and employee tax withheld (6.2%, up to the annual wage base).
  • Box 5 & 6: Medicare wages and tax withheld (1.45%; an additional 0.9% applies above $200K single/$250K married).
  • Box 12: Coded entries for 401(k) contributions (code D), employer HSA contributions (code W), and other items.
  • Box 16–17: State wages and state income tax withheld — may have multiple state entries if you worked across state lines.

W-2 vs 1099

  • W-2 = employee. Your employer withholds taxes and pays half of FICA; you get access to employer-sponsored benefits.
  • 1099-NEC = independent contractor. No withholding, no employer FICA match — you pay 15.3% self-employment tax yourself.
  • Some workers are misclassified as 1099 when they should legally be W-2 — this benefits employers but harms workers.
  • You can be a W-2 employee at one job and receive a 1099 for freelance side income in the same tax year.

What To Do If There's a Problem

  • Missing W-2 by mid-February: contact your employer, then the IRS if unresolved (Form 4852 lets you estimate using pay stubs).
  • Error on your W-2: request a corrected form (W-2c) from your employer before filing.
  • Multiple states: if you worked remotely from a different state than your employer, you may have multi-state W-2 entries.

Example

Your W-2 shows Box 1 wages of $95,000 even though your salary is $120,000 — because your 401(k) contributions ($20,000) and health insurance premiums ($5,000) are pre-tax deductions that reduce your taxable wages.