How to read a W-2 earnings summary

A W-2 earnings statement from an employer is a key document for completing your taxes. It’s a snapshot of how much an employer has paid you throughout the year, how much tax they’ve withheld from your paycheck, and other payroll withholdings that can affect your tax obligation.

At first glance, it may seem like a complicated IRS form consisting of boxes, codes and numbers. But a W-2 form isn’t as hard to figure out as it may seem. Whether this is your first W-2 or you want to take a stab at doing your own taxes for the first time — or both — it’s important to understand how to read the form and what to do with the info on it.

And it’s important to note that if you had other types of earnings or income — for example self-employment income — information about those earnings should be reported on other IRS forms and not on your W-2.

• What is a W-2 earnings summary?
• How many W-2 forms might I receive?
• How do I read a W-2?
• What should I do with a W-2?
• What if my employer refuses to issue a W-2 form?

What is a W-2 earnings summary?

If an employer pays you (as an employee) at least $600 in compensation (cash or another type) for the year, it is required to file a Form W-2 on your behalf. Or, if your employer withheld income, Social Security or Medicare tax from your paycheck, it is required to file a Form W-2 — even if they paid you less than $600 during the tax year. Additionally, there are other situations in which an employer may be required to file a W-2 on your behalf.

Each tax year, employers should complete the form and send it to you and the appropriate tax authorities. The IRS requires employers to send W-2s to the Social Security Administration and employees by Jan. 31 each year. Some employers may send your W-2 sooner — and some take longer if they send the forms by mail — but the latest you should receive your W-2 is in early February. We’ll talk a little later about what to do if you don’t get yours.

A W-2 includes a lot of information, including …

• Your Social Security number
• Your employer’s employer identification number
• Names and addresses for both you and your employer
• How much compensation the employer paid you
• Taxes withheld from your paycheck(s)
• Adjustments to your income such as a 401(k) deferral made through payroll withholding

The information on your W-2 helps determine your taxable income and shows the amount of tax you’ve already paid through withholding.

Keep in mind: It’s important to hang onto your W-2 form. If you lose it, issuing a new one can take time and may delay your ability to file taxes on time. If your W-2 falls into the wrong hands or gets stolen, the information on it could be used by identity thieves. Always store your W-2s in a safe and secure location.

How many W-2 forms might I receive?

You may receive more than one W-2. If you had more than one wage-paying job in the past tax year, you can expect to receive a W-2 from each employer — provided the employer paid you more than $600 or paid you any amount and withheld tax. You’ll need all these W-2s to file your taxes accurately.

You’ll receive three copies of each W-2 you’re issued. Copy B is to be filed with your federal tax return. Copy 2 is filed with your state or local return. Copy C is for your personal records. If you’re wondering if there’s a Copy A, there is — but you don’t have to do anything with it. Your employer should send that copy to the Social Security Administration. And there’s also a Copy D that employers should keep with their records.

As soon as you receive a W-2, it’s important to check the information on it. Check both your federal and state copies — and if the spelling of your name, your Social Security number, withholding amounts or any other information is incorrect, contact the employer who issued the W-2 right away.

What if you’re self-employed?

If you’re self-employed, you’ll likely get a tax form called a 1099-MISC from certain people or organizations you worked for independently. You’ll need this to complete your tax return.

How do I read a W-2?

Each section on your W-2 contains important information related to your taxes. Here is a box-by-box guide of Copy B — the one you’ll file with your federal tax return — and what each section means.

Box A: Your Social Security number, which the IRS uses to identify you.

Box B: The employer identification number, or EIN, which the IRS uses to identify your employer.

Box C: Your employer’s name, address and ZIP code.

Box D: An employer may choose to include a code in this section to identify your individual form. It may be left blank.

Box E: Your legal name.

Box F: Your address and ZIP code.

Box 1: The total amount of taxable wages, reported tip income and other taxable compensation the employer paid you in the last tax year, but not including any money you had deferred from your pay for qualifying benefits like a 401(k) plan or IRA.

Box 2: The amount of federal income tax the employer withheld from your wages for the tax year.

Box 3: The total wages paid that are subject to Social Security tax. Because certain income may be subject to Social Security tax but not income tax, don’t be alarmed if it’s higher than Box 1.

Box 4: The Social Security tax withheld on wages and tips reported to your employer. For 2019, the maximum amount of wages that Social Security tax can be withheld on is $132,900 — this amount is called the Social Security wage base limit. That means you shouldn’t pay Social Security tax on wages you earn in excess of that amount. The Social Security tax rate is 6.2% for employees (your employer pays another 6.2% on your wages), so the amount in this box shouldn’t exceed $8,239.80 ($132,900 x 0.062).

Box 5: The total wages and tips reported to your employer, which are subject to Medicare tax. Unlike Social Security tax, there is no wage base limit for Medicare tax. That means this number may be larger than in Box 1 or Box 3.

Box 6: The amount of Medicare tax withheld for the tax year. There is no Medicare wage base limit, so the Medicare tax rate of 2.9% — 1.45% from employees and 1.45% from employers — applies to all earnings.

Box 7: The tips you reported to your employer. If this box is blank, you either do not receive tips at your job or you could have unreported tips that you will have to declare while filing your taxes.

Box 8: If you work for a large food and beverage operation that pools the tip of all employees, this is where your employer would report the tips allocated to you. These are considered taxable income.

Box 9: A verification code if your employer is participating in an IRS pilot program. It may be left blank if your employer is not participating.

Box 10: The amount of dependent care benefits you elected, if any. For example, if you deferred pretax money into a flexible spending arrangement to pay for dependent care costs, or your employer provided you money for dependent care costs under a dependent care assistance program, that amount would be shown here.

Box 11: The amount an employer paid you from a nonqualified deferred compensation plan. The purpose of Box 11 is for the Social Security Administration to determine if any part of the amount reported in Box 1 or Boxes 3 and/or 5 was earned in a prior year, so it can verify that the correct amount of benefits has been paid.

Box 12: A catch-all for the codes your employer needs to report to the IRS. There are many items your employer should report in this section, such as nontaxable sick pay, moving expense reimbursements for members of the armed forces or adoption benefits provided by your employer. To learn what a particular code means, see the “Box 12 — codes” section that starts on Page 18 of the 2018 General Instructions for W-2 and W-3.

Box 13: Three checkboxes that report the following:

• Statutory employee status: Your earnings are subject to Social Security and Medicare taxes, but not subject to federal income tax withholding.
• Retirement plan: You were an active participant in a retirement plan such as a 401(k) in the past tax year.
• Third-party sick pay: You received sick pay under a third-party insurance provider.

Box 14: A field where your employer reports anything that doesn’t fit in a different area on the form. This might include nontaxable income, union dues, uniform payments and health insurance premiums.

Boxes 15 to 20: State tax and local income tax information reported by your employer. However, just because state information is included on this copy of your W-2, don’t forget you need to attach Copy 1 to any state, city or local tax return you’re required to submit.

What should I do with a W-2?

Now that you have some understanding of what all the information on your W-2 represents, you can use it to complete your federal and state income tax returns. If you’re using an online tax preparation and filing service, you can typically upload your W-2 , which can make filing faster and simpler.

How long should you save your W-2s and other tax records after filing?

The IRS typically recommends that you keep tax records for three to seven years after filing, but that can vary by document type and your personal tax situation. Read “How long should I keep my tax records” to learn more.

What if my employer refuses to issue a W-2 form?

If you believe your employer owes you a W-2 but you haven’t received one by the end of February, there are few steps you can take.

• Start by calling your employer. Verify that it has your correct mailing address. If it hasn’t sent your W-2 — or if it has sent it to a wrong address — you can ask it to send you a copy.
• If you don’t have any luck dealing with your employer, you can call the IRS for help at 1-800-829-1040. The IRS will send a letter to your employer on your behalf. When you call the IRS, be ready to provide your name, address, phone number and Social Security number; your employer’s name, address and phone number; the dates you worked for the employer; and an estimate of how much the employer paid you and how much tax it withheld from your pay. You can use your latest pay stub to get an idea of those amounts.
• If you still haven’t received your W-2 by Tax Day, you have two options. You can request an extension of the filing deadline (usually to Oct. 15), but you should still estimate how much, if any, tax you owe and pay that amount by the deadline. Or, you can use Form 4852, Substitute for Form W-2, estimate your wages and federal taxes withheld as best you can, and submit the form with your federal tax return by the filing deadline. If you find out later that your estimates were wrong, you’ll likely need to file an amended return with corrections later.

If you received a W-2 from your employer, but it’s incorrect, contact your employer immediately to make corrections so you can file on time. If it refuses to make corrections or are taking too long, call the IRS at 1-800-829-1040 or make an appointment to visit an IRS Taxpayer Assistance Center. Ask to initiate a Form W-2 complaint. The IRS will send your employer a letter requesting that it provide you a corrected W-2 within 10 days. The IRS will also send you instructions for using Form 4852 so you can file on time.

The deadline for filing federal income taxes is usually April 15 for most filers.

Bottom line

If you worked as an employee for anyone during the tax year, in most cases your employer should provide you with a W-2 . Knowing how to read a W-2 can help you ensure the information your employer reports to the IRS on your behalf is correct. And that confidence may make you feel more empowered to e-file your own taxes this tax season.

Relevant sources: IRS: About Form W-2, Wage and Tax Statement | IRS: General Instructions for Forms W-2 and W-3 | IRS: About Form 1099-MISC, Miscellaneous Income | IRS: Topic No. 751 Social Security and Medicare Withholding Rates | IRS: How Long Should I Keep Records? | IRS: IRS Can Help Taxpayers Get Form W-2 | IRS: W-2 — Additional, Incorrect, Lost, Non-Receipt, Omitted | IRS: Publication 509, Tax Calendars | Social Security Administration: Contribution and Benefit Base 

Jennifer Samuel, senior tax product specialist for Credit Karma, has more than a decade of experience in the tax preparation industry, including work as a tax analyst and tax preparation professional. She holds a bachelor’s degree in accounting from Saint Leo University. You can find her on LinkedIn.