Definition
Form W-2 is an IRS tax document that employers in the U.S. must issue annually to employees. It reports an employee's total wages, tips, and other compensation, along with the federal, state, and other taxes withheld throughout the year.
Related Services
Payroll services, tax preparation, accounting, HR compliance, and employee tax reporting. Tax software and payroll providers like ADP, Gusto, and QuickBooks automate W-2 generation and filing.
Problem and Application
Employers are legally required to send W-2 forms to employees and file them with the IRS by January 31st each year. Errors in W-2 filings, like incorrect income or Social Security numbers, can lead to IRS penalties, delayed tax refunds for employees, and compliance risks. Employees use the W-2 to file their annual personal income tax returns.
Conclusion
The W-2 is a critical tax document that ensures employees report income accurately and that employers comply with tax withholding obligations. Timely and accurate W-2 filings are essential for both employer compliance and employee tax filing.
