Definition
The yearly wage and tax statement your employer sends you and the government, showing pay and taxes withheld.
What it means
Form W-2, the Wage and Tax Statement, reports an employee's pay and withholding for the year. Employers must give it to employees and file it with the Social Security Administration by January 31. Box 1 shows wages subject to federal income tax, which may be lower than your salary because of pre-tax deductions such as 401(k) contributions and some health premiums. Box 2 shows federal income tax withheld, Boxes 3 to 6 show Social Security and Medicare wages and taxes, and Boxes 15 to 20 show state and local information. Box 12 uses codes for items such as retirement contributions (code D for a 401(k)) and employer health coverage costs. If your W-2 is missing or wrong, ask your employer first; the IRS can help after a certain date.
Example
A worker earning $55,000 who put $5,000 into a traditional 401(k) sees $50,000 in Box 1 but $55,000 in Box 3, because 401(k) deferrals are still subject to Social Security tax.
Illustrative numbers only. Your situation will differ.