Every employer engaged in a trade or business who pays remuneration, including non-cash payments of $600 or more for the year for services performed by an employee must file a Form W-2 for each employee from whom:
- Income, Social Security, or Medicare tax was withheld.
- Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee's Withholding Allowance Certificate.
History
Use of Form W-2 was established by the Current Tax Payment Act of 1943 as part of an effort to withhold income at source. The first Form W-2s were issued to employees in 1944.
In 1965, the form's name was changed from "Withholding Tax Statement" to "Wage and Tax Statement".
In 1978, the form's appearance changed to its modern style of numbered boxes.
As with the US tax code and other forms, Form W-2 has become more complicated over time.
What is the "W-2 Form"?
The W-2 form is the form that an employer must send to an employee and the Internal Revenue Service (IRS) at the end of the year. The W-2 form reports an employee's annual wages and the amount of taxes withheld from his or her paycheck.
A W-4 is a form that individuals complete for withholding purposes, whereas a W-2 form is for employers to fill out. The employer must provide the employee their W-2 form by the deadline set by the IRS. Tax documents are filed for the previous year. For example, if you receive a W-2 Form in January of 2017, it reflects your income in 2016.
Role of the Employer
An employer legally must send out W-2 Forms to each of its employees to whom they paid a salary, wage, or other form of compensation. The employer must send the employee the W-2 Form on or before January 31st each year so the employee has ample time to file his or her taxes before the deadline on April 15.
Components of the W-2 Form
Each W-2 has the same fields, no matter what employer. W-2 Forms are divided into state and federal sections, since employees must file taxes on both levels. There are fields that provide the employer's information, including the company's Employer Identification Number (EIN) (federal) and the Employer's state ID number. The remaining fields mostly focus on the details of the employee's income from the previous year.
