What’s a W-2 Tax Form?

If you’re like millions of workers, you’re employed as an employee. Assuming this applies to you, you can likely expect to receive an IRS Form W-2 from your employer within the next month or so. This is an important document to help you prepare and file your income tax return due in April. But why is the W-2 so important and is it always required to file your taxes? The goal of this blog post is to address these questions and provide an overview of this ubiquitous tax document.

What is a W-2 Tax Form?

Also known as a Wage and Tax Statement, the W-2 Form is a document that your employer sends you and the IRS that outlines how much compensation you received and how much of that compensation your employer withheld for income and payroll tax purposes.

Do All Workers Receive a W-2?

No, it’s usually only employees that get them. Freelancers and independent contractors will typically get Form 1099 from their client or employer instead. In these situations, the employer won’t normally withhold any of the compensation for taxes. So, it’s up to the independent contractor to pay estimated quarterly taxes to the IRS.

You also need to earn enough compensation before your employer creates a W-2 for you. If you receive $600 or more in cash or noncash payments during the tax year as an employee, only then is your employer legally required to send you a W-2 (and a copy to the IRS).

When Should I Receive My W-2?

Assuming your employer is required to create a W-2, they must send it to you and the IRS by January 31. These can be mailed, but they’re sometimes sent electronically, either by email or made available for downloading from a payroll-related website.

If you don’t get it by the middle of February, you should contact your employer to make sure they sent it and, if so, used the correct email or mailing address.

What if the W-2 is Wrong?

You should contact your employer and have them correct or clarify the information and, if necessary, send you a corrected W-2. If this results in you being unable to file your tax return by the April 15 deadline, you can contact the IRS and ask for an extension.

Alternatively, you can estimate your earnings and tax withholdings yourself, such as by reviewing your pay stubs. You may also need to complete IRS Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (yes, the official name of this form really is that long).

How are W-2 Forms Different from W-4 Forms?

A W-2 summarizes your compensation and taxes. In contrast, IRS Form W-4, Employee’s Withholding Certificate, is something you fill out to give your employer information about your tax filing status. They then use this information to withhold the correct amount of taxes from your paycheck.

What’s IRS Form W-2G?

IRS Form W-2G, Certain Gambling Winnings, is a summary of your reportable gambling winnings that may be subject to income tax. Think of Form W-2G as a W-2 form, except it’s for income that comes from gambling, not your day job.

If your gambling winnings at a casino or other gambling establishment exceed a certain threshold (the exact amount depends on the type of bet you place and how much money you won), then you’ll probably receive Form W-2G the same day you received your gambling winnings. In some cases, you’ll get Form W-2G in late January or early February of the following year (roughly the same time you should be getting your W-2).

Conclusion

In most situations, your W-2 form will be one of the least burdensome of tax documents. When you receive it in February, review it to make sure it’s correct. Then you need to put it in a safe place with your other tax and financial documents until you’re ready to prepare your taxes yourself or hand them over to your tax preparation professional.