This article is part of a larger series on How to Do Payroll.
The IRS Form W-2 is important for both employers and employees. Employees use the forms to report payroll taxes paid, and the IRS uses them to determine how much it’s owed in taxes, if any, or if employees are due a refund. Employers must fill these out and supply them to employees, the IRS, and some state tax agencies no later than Jan. 31 of the year following the previous tax year. We’ll cover the basics of how to fill out a W-2 Form in this article.
Download W-2 Form. Note: You should submit this copy of the form to your employee so that they can file with their state, city, or local tax agency. You cannot use this to file with the federal government. You must order forms or file online.
Instructions for Employers on Filling Out a W-2 Form
There are several copies of Form W-2, but they are all the same. So, once you fill one out, you can copy the information to the rest. Use black ink, or if typing, Courier font, 12-point if possible. Check that you include decimal points. Do not use dollar signs.
- Box a: Enter the employee’s Social Security number. (New for 2021: You may truncate this on employee Copies B, C, and 2, but you must use the full SSN on Copy A.) There are six copies of the W-2, that are each required to be submitted to a different recipient. We break this down in more detail later.
- Box b: Enter your business EIN.
- Box c: Enter your business name and address. Use the same information as on your Forms 941, 941-SS, 943, 944, CT-1, or Schedule H (Form 1040 or 1040-SR). Do not use commas or periods in return addresses.
- If you are an agent handling taxes for another business and have an approved Form 2678, Employer/Payer Appointment of Agent, you enter your information instead of the employers.
- Box d: If you use control numbers for payroll purposes, you can enter them here. Otherwise, leave it blank.
- Box e and f: Enter the employee’s name as shown on their Social Security card (which should be on their W-4). If their name will not fit, use full last name and first and middle initials. When entering the address, do not use commas or periods.
- Box 1: Enter the total wages earned for the year, including tips, taxable benefits, employer contributions to long-term care benefits, and more. See the IRS Form W-2 instructions for an exhaustive list. Do not include elective deferrals, such as contributions to a 401(k). This is found on Pages 16-17.
- Box 2: Enter the total federal income taxes withheld for the year, including the 20% excise tax withheld on excess parachute payments, if applicable.
- Box 3: Before filling this out, separate Social Security tips and allocated tips. Then enter the total wages paid before payroll deductions that are subject to employee Social Security tax, excluding Social Security and allocated tips. Do include signing bonuses, employee and employer contributions to health savings accounts, and other income as listed in the instructions.
- The total of boxes 3 and 7 cannot exceed $142,800.
- The number in this box can be more than the number in box 1, as you don’t take any deductions out here.
- Box 4: Enter the total employee Social Security tax withheld. For 2021, it should not exceed $8,853.60.
- Box 5: Enter the total wages and tips subject to Medicare taxes. This is the total of boxes 3 and 7 and has no upper limit.
- Box 6: Enter the total amount of Medicare tax withheld. If your employee made over $200,000 and paid additional Medicare, include it in this number. Do not include your share.
- Box 7: Enter the tips your employee reported, even if you did not collect Social Security tax for them. The total of boxes 3 and 7 cannot exceed $142,800.
- Box 8: If you operate a restaurant, show tips allocated to employees. This amount should not be included in boxes 1, 3, 5, or 7.
- Box 9: This box no longer applies. Leave it blank.
- Box 10: Enter any deductions your employee gets for child care, including the fair market value of a daycare facility sponsored by you.
- Box 11: If your employee received payments from a nonqualified plan (such as a retirement plan) or a nongovernmental section 457(b) plan, enter that amount here. If they get more than one, enter the total here. Do not include any deferred amounts reported in boxes 3 or 5.
- Box 12a-d: Enter the following codes as applicable. You can enter them in order, but do not need to skip a box if a code does not apply. See the IRS Form W-2 instructions for details; the codes are on Page 30.
- Code A: Uncollected Social Security or RRTA tax on tips
- Code B: Uncollected Medicare tax on tips
- Code C: Taxable cost of group-term life insurance over $50,000
- Codes D through H, S, Y, AA, BB, and EE: Elective deferrals and ROTH contributions
- Box 13: Check the boxes that apply. See the IRS Form W-2 instructions for details; the information is on Page 22.
- Statutory employee: Their earnings are subject to Social Security and Medicare taxes but not federal income tax.
- Retirement plan: If the employee was an active participant in a pension, annuity plan, SIMPLE retirement, or other qualified retirement plans.
- Third-party sick pay: Check if you are a third-party sick pay payer filling out the form for an insured employee or if you are reporting sick pay payments made by a third party.
- Box 14: Use this section for other information you want to leave your employee, such as a company car’s lease, disability insurance taxes withheld, union dues, educational assistance payment, and more. See the IRS Form W-2 instructions for a complete list. This box is on Page 22.
- Box 15 through 20: Enter information about state or local taxes. Use the 2-letter state abbreviations and the employer state ID number. If reporting more than one state, separate them with the broken line.
Need to learn more about W-2 forms, like how they work, who should fill them out, when, and who can help? Choose what information you need to know below.
How W-2 Forms Work
Wage-earning employees (as opposed to contractors) who earn more than $600 should get a W-2 at the beginning of the year. The form breaks down an employee’s wages, withholdings, FICA (Federal Insurance Contributions Act) taxes, and other income and deductions you processed under payroll during the previous year. They use this to file their own taxes, either paying or getting a refund.
In the meantime, employers send copies of the form to the IRS through the Social Security Administration (SSA). The federal government uses this form to track taxes withheld in order to determine how much in taxes it should be receiving. As an employer, you also use portions of this form to fill out your Form 941 or Form 944 since your employer taxes include Social Security and Medicare payments that equal the FICA taxes your employees owe.
If you need to know more about other payroll forms employers are required to file, check out our guide on employer payroll forms.
Who Is Required to Fill Out a W-2 Form?
If you paid at least one employee’s wages (cash or noncash), you may need to fill out a Form W-2. (This includes relatives you employ.) You must send a W-2 Form if any of these conditions apply to the employee:
- You withheld income or FICA taxes, regardless of how much your employees earned.
- You would have had to withhold the taxes if the employee had not claimed exemption from withholding on Form W-4.
- You paid $600 or more to the employee that year, even if you did not withhold any income or FICA taxes.
When Should W-2 Forms Be Submitted?
W-2s are annual forms that go to the government and your employees. Employees should be sent their Copies B, C, and 2 by Jan. 31 of the year following the tax year—so, for 2021, employees need the forms by Jan. 31, 2022. Copy A of the Form must be filed electronically or by mail with the SSA by Jan. 31 as well.
Getting an Extension on the Deadline
You can get an extension for filing with the SSA by submitting a complete application on Form 8809, Application for Extension of Time To File Information Returns. For an extension to send W-2 forms to employees, send a letter to the IRS. You need legitimate reasons for the delay. See the Form W-2 Instructions, pages 6 and 7 for details.
How Should W-2 Forms Be Submitted
You can file electronically by registering to use SSA’s Business Services Online. This is a free service for employers, CPAs, accountants, and enrolled agents for filing W-2s and W-2Cs. It also lets you verify the names and Social Security numbers of current and former employees. If you file online, the office creates the W-3 automatically for you.
Alternatively, you can mail in your forms. You can download the forms, fill them out, and print them to mail to employees. However, if you download it from the website, you cannot use Form A, which is in red, for the SSA. Rather, you should order the official returns from the IRS.
There are multiple forms that need to be mailed to different recipients:
- Copy A: To the Social Security Administration at Social Security Administration Direct Operations Center, Wilkes-Barre, PA, 18769-0001.
- Copy 1: To the state, city, or local tax department(s) to whom you pay taxes.
- Copy B, C, and 2: To the employee for their own tax filing.
- Copy D: For your records; You must keep it for at least four years.
If you have a payroll service or an accountant, they may fill these forms out for you. Many payroll programs offer tax filing for an additional fee; others will fill out the forms, but you need to mail them. Most of the information comes from your payroll program.
If you’re in the market for affordable payroll software, consider Gusto. You can set your payroll to run automatically, and the system will prepare and send your employees’ W-2 forms before the January 31 deadline. Sign up for a free 30-day trial to see if it works for you.
Sending W-3 Forms With Form W-2
The IRS Form W-3, Transmittal of Wage and Tax Statements, should be attached to Form W-2. It should always be accompanied by Form W-2, even if you only send one. The government uses it to track salaries, wages, commissions, and more that employers pay throughout the year as well as total FICA taxes withheld.
How Is a W-2 Different From a W-3?
The main difference between a W-2 and W-3 is that the W-2 is employee-specific, while the W-3 has the total amounts you withheld for all employees. You only file one W-3, no matter how many W-2s you file.
The IRS Form W-2 is not only important for the federal government and you but also for your employees. They need it to fill out their personal income taxes and get them filed on time. As an employer, you need to fill out and file the W-2s by Jan. 31 of each year. Payroll software can help with ensuring your information is accurate.