W-2

A W-2 is the US Wage and Tax Statement an employer gives each employee for the calendar year. It reports wages and the federal income tax, Social Security and Medicare withheld, plus state and local amounts. Copies go to the employee and, with a Form W-3 transmittal, to the Social Security Administration by January 31.

Glossary / W-2 · Also called Form W-2, Wage and Tax Statement

How it works

The employee files their tax return from it, and the SSA passes the federal figures to the IRS. Box 1 is wages subject to income tax, which can be lower than gross pay when pre-tax deductions such as 401(k) contributions apply. Box 2 is federal income tax withheld. Boxes 3 and 4 are Social Security wages and tax, and boxes 5 and 6 Medicare wages and tax.

Businesses that file 10 or more information returns in total in a year must file W-2s electronically, usually through the SSA's Business Services Online. A W-2 is for employees only; independent contractors get a 1099-NEC instead.

Worked example: Why box 1 and box 3 differ

An employee earns $65,000 and contributes $5,000 to a traditional 401(k). Box 1 wages are $60,000, because the 401(k) deferral is excluded from income tax. Box 3 Social Security wages and box 5 Medicare wages are $65,000, because the deferral is still subject to FICA.

Box 4 is 6.2% × $65,000 = $4,030 and box 6 is 1.45% × $65,000 = $942.50. Box 12 shows the $5,000 with code D.

In AcboBooks

AcboBooks produces each employee's W-2 from the year's paychecks and writes the SSA's EFW2 electronic file, which you upload through Business Services Online. It does not file with the SSA for you.

Related terms

Related on this site

Sources

Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.

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W-2