A W-2 employee is a person in a formal employment relationship with a U.S. company or organization, who annually receives a W-2 tax document that outlines their earnings and the taxes deducted by the employer for tax return purposes.
W-2 employees are considered "employees" rather than "contractors" or "freelancers," and are entitled to certain benefits and protections under US law, such as health insurance, paid time off, unemployment, and workers' compensation insurance. Note that this definition is specific to the United States and may not apply to employment practices in other countries.
Key characteristics of a W-2 employee include:
- Employer-employee relationship: They are hired by a company and have a formal employment contract or agreement.
- Regular wages and benefits: They receive a regular salary or hourly wage and are often eligible for employee benefits like health insurance, paid time off, and retirement plans.
- Taxes Withheld: Employers withhold income taxes, Social Security, and Medicare from their paycheck and pay these taxes to the government on their behalf.
- W-2 Tax Form: They receive a W-2 form at the end of the year that reports their earnings and withheld taxes, which they use to file their tax return.
What is a tax form W-2?
Form W-2(Wage and Tax Statement) is a tax form that reports the amount of money your employer paid you and the amount of income tax that was withheld from your wages.
An employer provides a completed W-2 form for every employee on their payroll, but not for independent contractors (contractors use Form 1099-NEC instead). The employee uses the information on the W-2 to help file their tax return with the Internal Revenue Service (IRS).
What are W-2 employee benefits?
W-2 employee benefits refer to the non-monetary compensation an employer provides for W-2 employees on their payroll. A significant advantage of W-2 employment is relying on your employer to cover a portion of your taxes. Here’s a list of the most common mandatory and optional employee benefits:
- FICA taxes, which refer to Medicare and Social Services taxes
- Worker’s compensation
- Unemployment insurance
- Health insurance, sometimes even as a private plan, depending on the size of the employer
- Family and Medical Leave Act(FMLA) protection, which refers to unpaid leave, but most employers allow some form of paid time off
- Disability insurance
- Retirement plans
How can I get a W-2 form?
Employers provide you with a copy of your W-2 each year. The deadline is January 31st each year. If you are unable to obtain a copy from your employer, you can also contact the Internal Revenue Service (IRS) for assistance. The IRS has a process in place for employees to request copies of their W-2 forms if they have not received them from their employer.
Are there multiple copies of W-2s?
Yes, copies of your W-2 form will go to you, your employer, and the IRS.
- Copy A: You send to the Social Security Administration (SSA) by the year’s tax deadline
- Copy B: You keep on hand until you file it as part of your federal income tax returns
- Copy C: You keep it in your records (for at least three years)
- Copy D: Your employer keeps it for their records
- Copy 1: Your employer files it with your state, city, or local department if asked to do so
- Copy 2: You keep this copy and file it with your state, city, or local tax authority if asked to do so
What if I have W-2s from multiple employers?
You will receive a W-2 from each employer you had during the previous tax year. Receiving W-2s from multiple employers isn’t a problem: wherever you file your W-2 will have fields for additional W-2s.
What if I get multiple W-2 from the same employer?
Receiving multiple W-2 forms from the same employer is uncommon: check with your employer if this occurs because it might be an error. There are a few exceptions when receiving multiple W-2s from the same employer is intentional and accurate, such as if the business was acquired and the EIN changed during the prior year. But if the forms are identical (including the EIN), the forms are likely duplicates. You can file one and discard the other.
W-2 equivalent for non-US employees
W-2 tax form is for US tax filing. If you’re a foreigner working for a US company, you may receive a Form 1042-S. You should still report this income on your tax return.
If you work remotely and outside of the US, you usually pay taxes in your home country, not the US. However, in most cases, the US employer may be required to deduct US tax from your pay. It's helpful to check if there's a tax treaty in place between the US and your country, which will help you avoid being taxed twice on the same income.
