Form W-2

Every employer must issue a Form W-2 to each employee from whom income, Social Security or Medicare tax was withheld, or would have been withheld but for an exemption. Copies go to the employee, the Social Security Administration, and the relevant state or local tax authority. The deadline for both employee delivery and SSA filing is 31 January following the tax year, and employers filing ten or more information returns in total must file electronically.

The boxes matter more than people expect. Box 1 is federal taxable wages, which is lower than gross pay because pre-tax deductions such as 401(k) contributions and Section 125 health premiums are removed. Boxes 3 and 5 are Social Security and Medicare wages, which do not subtract 401(k) contributions and therefore usually exceed Box 1; Box 3 also stops at the annual Social Security wage base. Box 12 carries coded items — D for 401(k) deferrals, DD for the cost of employer-sponsored health coverage, W for HSA contributions. Boxes 15 to 20 handle state and local reporting, and a multi-state employee receives multiple state lines.

A W-2 says the worker was an employee: the employer withheld income tax, paid half of Social Security and Medicare, paid FUTA and SUTA, and owed statutory protections. A 1099-NEC says the worker was an independent contractor paid gross, responsible for their own self-employment tax and quarterly estimated payments. The choice between the two is not an administrative preference — it is a legal classification determined by the degree of control and independence in the working relationship.

Penalties for W-2 failures scale with lateness, from roughly $60 per form corrected within 30 days to over $340 per form for intentional disregard, applied per copy. An employee who spots an error should ask for a corrected Form W-2c rather than adjusting their own return.

Almost every country has a W-2 analogue: the P60 in the United Kingdom, Form 16 in India, the Lohnsteuerbescheinigung in Germany, the T4 in Canada, the payment summary regime in Australia. Each has its own deadline, format and statutory content, and each is the legal employer's responsibility. A distributed team of thirty people across eight countries generates eight distinct year-end reporting regimes.