taxes

W-2

A tax form issued by employers reporting an employee's annual wages and the taxes withheld, required for filing personal income tax returns.

Example

“Her employer mailed the W-2 by January 31st, showing $85,000 in wages and $18,000 in federal taxes withheld.”

Memory Tip

W-2 = employee tax form. Shows what you earned and what was withheld. Required for tax filing.

Why It Matters

The W-2 form is essential for filing your annual income tax return because it documents your earnings and tax withholdings throughout the year. Without accurate W-2 information, you cannot properly calculate your tax liability or determine if you are owed a refund.

Common Misconception

Many people believe that receiving a W-2 means they do not need to file a tax return, but actually the W-2 is just one document that must be reported when you file. You still need to complete your tax return even if your employer has already withheld taxes.

In Practice

Suppose you earned 50000 dollars in wages during 2023 and your employer withheld 8000 dollars in federal income taxes throughout the year. Your W-2 would report both the 50000 dollars in wages and the 8000 dollars withheld, and you would use this information when filing your 1040 tax return to determine if you owe additional taxes or deserve a refund.

Etymology

Named after IRS Form W-2. The wage statement that begins the tax filing process.

Common Misspellings

W2w-2W 2W-2 form

Related Terms

1099 FICA

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W-2