Definition
The W-2 (Wage and Tax Statement) is the form your employer must send you by January 31 each year, summarizing your total wages and all taxes withheld during the previous calendar year. The IRS also receives a copy directly from your employer.
Box 1 shows your taxable wages. Box 2 shows federal income tax withheld — the figure that appears on your tax return as taxes already paid. Boxes 3–6 cover Social Security and Medicare (FICA) wages and withholding. Additional boxes report state and local tax information.
Your W-2 is the document that closes the loop on your W-4: it shows whether your withholding instructions resulted in enough taxes being paid, too many (triggering a refund), or too few (triggering a balance due).
How this affects your W-4
When you receive your W-2, Box 2 tells you exactly how much federal tax was withheld for the year. Comparing that figure to your actual tax liability (from your Form 1040) tells you whether your current W-4 settings are accurate.
If Box 2 is consistently higher or lower than your tax liability by a significant amount, update your W-4 using this calculator to avoid the same result next year.
See how w-2 form affects your withholding
Use the free W-4 calculator to calculate your exact withholding with your specific situation.
Open the W-4 Calculator →