Adoption benefits.

Amounts paid or expenses incurred by an employer for qualified adoption expenses under an adoption assistance program are not subject to federal income tax withholding and are not reportable in box 1. However, these amounts (including adoption benefits paid from a section 125 (cafeteria) plan, but not including adoption benefits forfeited from a cafeteria plan) are subject to social security, Medicare, and railroad retirement taxes and must be reported in boxes 3 and 5. (Use box 14 if railroad retirement taxes apply.) Also, the total amount, including any amount in excess of the $16,810 exclusion, must be reported in box 12 with code T. For more information on reporting adoption benefits in box 12, see Code T—Adoption benefits , later.

For more information on adoption benefits, see Notice 97-9, 1997-1 C.B. 365, which is on page 35 of Internal Revenue Bulletin 1997-2 at IRS.gov/pub/irs-irbs/irb97-02.pdf. Advise your employees to see the Instructions for Form 8839, Qualified Adoption Expenses.

Agent reporting.

An agent who has an approved Form 2678, Employer/Payer Appointment of Agent, should enter the following in box c of Form W-2.

Each Form W-2 should reflect the EIN of the agent in box b. An agent files one Form W-3 for all of the Forms W-2 and enters its own information in boxes e, f, and g of Form W-3 as it appears on the agent's related employment tax returns (for example, Form 941). Enter the client-employer's EIN in box h of Form W-3 if the Forms W-2 relate to only one employer (other than the agent); if not, leave box h blank.

If the agent (a) is acting as an agent for two or more employers or is an employer and is acting as an agent for another employer, and (b) pays social security wages to an individual on behalf of more than one employer, the agent should file separate Forms W-2 for the affected employee reflecting the wages paid by each employer.

See Rev. Proc. 2013-39, 2013-52 I.R.B. 830, available at IRS.gov/irb/2013-52_IRB#RP-2013-39 and the Form 2678 instructions for procedures to be followed in applying to be an agent.

Generally, an agent is not responsible for refunding excess social security or railroad retirement (RRTA) tax withheld from employees. If an employee worked for more than one employer during 2024 and had more than $10,453.20 in social security and/or Tier 1 RRTA tax withheld, they should claim the excess on the appropriate line of Form 1040, 1040-SR, or 1040-NR. If an employee had more than $6,129.90 in Tier 2 RRTA tax withheld from more than one employer, the employee should claim a refund on Form 843, Claim for Refund and Request for Abatement.

Archer MSA.

An employer's contribution to an employee's Archer MSA is not subject to federal income tax withholding or social security, Medicare, or railroad retirement taxes if it is reasonable to believe at the time of the payment that the contribution will be excludable from the employee's income. However, if it is not reasonable to believe at the time of payment that the contribution will be excludable from the employee's income, employer contributions are subject to income tax withholding and social security and Medicare taxes (or railroad retirement taxes, if applicable) and must be reported in boxes 1, 3, and 5. (Use box 14 if railroad retirement taxes apply.)

You must report all employer contributions to an Archer MSA in box 12 of Form W-2 with code R. Employer contributions to an Archer MSA that are not excludable from the income of the employee must also be reported in boxes 1, 3, and 5 (box 14 if railroad retirement taxes apply).

An employee's contributions to an Archer MSA are includible in income as wages and are subject to federal income tax withholding and social security and Medicare taxes (or railroad retirement taxes, if applicable). Employee contributions are deductible, within limits, on the employee's Form 1040 or 1040-SR.

For more information, see Pub. 969, Health Savings Accounts and Other Tax-Favored Health Plans, and Notice 96-53, which is found on page 5 of Internal Revenue Bulletin 1996-51 at IRS.gov/pub/irs-irbs/irb96-51.pdf.

Clergy and religious workers.

For certain members of the clergy and religious workers who are not subject to social security and Medicare taxes as employees, boxes 3 and 5 of Form W-2 should be left blank. You may include a minister's parsonage and/or utilities allowance in box 14. For information on the rules that apply to ministers and certain other religious workers, see Pub. 517, Social Security and Other Information for Members of the Clergy and Religious Workers and section 4 in Pub. 15-A.

Deceased employee's wages.

If an employee dies during the year, you must report the accrued wages, vacation pay, and other compensation paid after the date of death. Also report wages that were available to the employee while they were alive, regardless of whether they were actually in the possession of the employee, as well as any other regular wage payment, even if you may have to reissue the payment in the name of the estate or beneficiary.

If you made the payment after the employee's death but in the same year the employee died, you must withhold social security and Medicare taxes on the payment and report the payment on the employee's Form W-2 only as social security and Medicare wages to ensure proper social security and Medicare credit is received. On the employee's Form W-2, show the payment as social security wages (box 3) and Medicare wages and tips (box 5) and the social security and Medicare taxes withheld in boxes 4 and 6. Do not show the payment in box 1.

If you made the payment after the year of death, do not report it on Form W-2, and do not withhold social security and Medicare taxes.

Whether the payment is made in the year of death or after the year of death, you must also report it in box 3 of Form 1099-MISC, Miscellaneous Information, for the payment to the estate or beneficiary. Use the name and taxpayer identification number (TIN) of the payment recipient on Form 1099-MISC. However, if the payment is a reissuance of wages that were constructively received by the deceased individual while they were still alive, do not report it on Form 1099-MISC.

Sam’s employer must also complete Form 1099-MISC as follows.

 

If Sam’s employer made the payment after the year of death, the $3,000 would not be subject to social security and Medicare taxes and would not be shown on Form W-2. However, the employer would still file Form 1099-MISC.

De minimis financial incentives.

De minimis financial incentives (not paid for with or derived from plan assets) may be provided to employees who elect to have the employer make contributions under a 401(k) cash or deferred arrangement or elect to have the employer make contributions pursuant to a salary reduction agreement under a 403(b) plan.

A de minimis financial incentive cannot exceed $250 in value for an employee and it may only be offered to employees who do not have already in effect an election to have such salary deferral or salary reduction contributions made on their behalf.

If an employer provides a de minimis financial incentive to an employee, that incentive is included in the employee's wages and subject to applicable withholding requirements unless an exception applies. See Q&A D-1 through D-6 of Notice 2024-2, 2024-2 I.R.B. 316, at IRS.gov/irb/2024-02_IRB#NOT-2024-2, for additional guidance on de minimis financial incentives.

Designated Roth contributions.

Under section 402A, a participant in a section 401(k) plan, under a 403(b) salary reduction agreement, or in a governmental 457(b) plan that includes a qualified Roth contribution program, may elect to make designated Roth contributions to the plan or program in lieu of elective deferrals.

Employee contributions to a pension-linked emergency savings account (a special designated Roth account) in a defined contribution plan are also designated Roth contributions. See section 402A(e) for more information about pension-linked emergency savings accounts.

Designated Roth contributions are subject to federal income tax withholding and social security and Medicare taxes (and railroad retirement taxes, if applicable) and must be reported in boxes 1, 3, and 5. (Use box 14 if railroad retirement taxes apply.)

Section 402A requires separate reporting of the yearly designated Roth contributions. Designated Roth contributions to 401(k) plans will be reported using code AA in box 12; designated Roth contributions under 403(b) salary reduction agreements will be reported using code BB in box 12; and designated Roth contributions under a governmental section 457(b) plan will be reported using code EE in box 12. Also include designated Roth contributions to a pension-linked emergency savings account in box 12. For reporting instructions, see the box 12 instructions for Code AA—Designated Roth contributions under a section 401(k) plan , Code BB—Designated Roth contributions under a section 403(b) plan , and Code EE—Designated Roth contributions under a governmental section 457(b) plan .

A participant in a plan that includes a qualified Roth contribution program may also be permitted to designate certain nonelective contributions or matching contributions as Roth contributions. However, the reporting instructions that apply to designated Roth contributions (which are made in lieu of elective deferrals) do not apply to designated Roth nonelective contributions or designated Roth matching contributions. Instead, those contributions must be reported on Form 1099-R. See Q&A L-9 of Notice 2024-2, 2024-2 I.R.B. 316, available at IRS.gov/irb/2024-02_IRB#NOT-2024-2.

Educational assistance programs.

Employer-provided educational assistance up to a maximum of $5,250 is excludable from an employee's wages only if assistance is provided under an educational assistance program under section 127. See Pub. 970, Tax Benefits for Education, and section 2 of Pub. 15-B for more information. Also see Box 1—Wages, tips, other compensation .

Election workers.

Report on Form W-2 payments of $600 or more to election workers for services performed in state, county, and municipal elections. File Form W-2 for payments of less than $600 paid to election workers if social security and Medicare taxes were withheld under a section 218 (Social Security Act) agreement. Do not report election worker payments on Form 1099-MISC.

If the election worker is employed in another capacity with the same government entity, see Rev. Rul. 2000-6, which is on page 512 of Internal Revenue Bulletin 2000-6 at IRS.gov/pub/irs-irbs/irb00-06.pdf.

Employee business expense reimbursements.

Reimbursements to employees for business expenses must be reported as follows.

For more information on accountable plans, nonaccountable plans, amounts treated as substantiated under a per diem or mileage allowance, the standard mileage rate, the per diem substantiation method, and the high-low substantiation method, see Pub. 463, Travel, Gift, and Car Expenses; and section 5 of Pub. 15 (Circular E).

Employee's social security and Medicare taxes (or railroad retirement taxes, if applicable) paid by employer.

If you paid your employee's share of social security and Medicare taxes rather than deducting them from the employee's wages, you must include these payments as wages subject to federal (or American Samoa, CNMI, Guam, or U.S. Virgin Islands) income tax withholding and social security, Medicare, and federal unemployment (FUTA) taxes. If you paid your employee's share of railroad retirement taxes, you must include these amounts as compensation subject to railroad retirement taxes. The amount to include as wages and/or compensation is determined by using the formula contained in the discussion of Employee's Portion of Taxes Paid by Employer in section 7 of Pub. 15-A and in Rev. Proc. 83-43, 1983-24 I.R.B. 60.

This does not apply to household and agricultural employers. If you pay a household or agricultural employee's social security and Medicare taxes, you must include these payments in the employee's wages for income tax withholding purposes. However, the wage increase due to the tax payments is not subject to social security, Medicare, or FUTA taxes. For information on completing Forms W-2 and W-3 in this situation, see the Instructions for Schedule H (Form 1040) and the discussion of Household and agricultural employers in section 9 of Pub. 15 (Circular E).

Federal employers in the CNMI.

The U.S. Treasury Department and the CNMI Division of Revenue and Taxation entered into an agreement under 5 U.S.C. section 5517 (“5517 agreement”) in December 2006. Under this agreement, all federal employers (including the Department of Defense) are required to withhold CNMI income taxes, rather than federal income taxes, and deposit the CNMI taxes with the CNMI Treasury for employees who are subject to CNMI taxes and whose regular place of federal employment is in the CNMI. Federal employers are also required to file quarterly and annual reports with the CNMI Division of Revenue and Taxation. For questions, contact the CNMI Division of Revenue and Taxation.

Federal employers may use Form W-2 (rather than Forms W-2CM or OS-3710) to report income taxes withheld and paid to CNMI, as well as to report social security and Medicare taxes. Use the state boxes 15, 16, and 17 for CNMI income tax reporting. See the instructions for boxes 15, 16, and 17 under Boxes 15 through 20—State and local income tax information , later. This rule applies only to income tax reporting. Federal employers should withhold and report social security and Medicare taxes for these employees in the same way as for other federal employees. For more information, including special rules for Armed Forces members, go to IRS.gov/5517Agreements.

Foreign agricultural workers.

You must report compensation of $600 or more paid in a calendar year to an H-2A visa agricultural worker for agricultural labor. If the H-2A visa agricultural worker furnishes a valid taxpayer identification number, report these payments in box 1 of Form W-2. If the worker does not furnish a valid taxpayer identification number, report the payments on Form 1099-MISC. See Form 1099-MISC next.

On Form W-2, no amount should be reported in box 3 or 5. In most cases, you do not need to withhold federal income tax from compensation paid to H-2A visa agricultural workers. Employers should withhold federal income tax only if the H-2A visa agricultural worker and the employer agree to withhold. The H-2A visa agricultural worker must provide a completed Form W-4. If the employer withholds income tax, the employer must report the tax withheld in box 2 of Form W-2 and on line 8 of Form 943. See Pub. 15 (Circular E).

Fringe benefits.

Include all taxable fringe benefits in box 1 of Form W-2 as wages, tips, and other compensation and, if applicable, in boxes 3 and 5 as social security and Medicare wages. Although not required, you may include the total value of fringe benefits in box 14 (or on a separate statement). However, if you provided your employee a vehicle, you must include the value of any personal use in boxes 1, 3, and 5 of Form W-2. You must withhold social security and Medicare tax, but you have the option not to withhold federal income tax if you notify the employee and include the value of the benefit in boxes 1, 3, 5, and 14. See Pub. 15-B for more information.

The Tax Cuts and Jobs Act of 2017, Public Law 115-97, section 11045, does not permit employees to deduct unreimbursed employee business expenses for tax years 2018 through 2025. If you included 100% of the vehicle’s annual lease value in the employee’s income, the employee will not be able to deduct expenses attributable to the business use of an employer-provided vehicle.

Golden parachute payments (not applicable to Forms W-2AS, W-2CM, W-2GU, or W-2VI).

Include any golden parachute payments in boxes 1, 3, and 5 of Form W-2. Withhold federal income, social security, and Medicare taxes (or railroad retirement taxes, if applicable) as usual and report them in boxes 2, 4, and 6, respectively. (Use box 14 if railroad retirement taxes apply.) Excess parachute payments are also subject to a 20% excise tax. If the excess payments are considered wages, withhold the 20% excise tax and include it in box 2 as income tax withheld. Also report the excise tax in box 12 with code K. For definitions and additional information, see Regulations section 1.280G-1 and Rev. Proc. 2003-68, 2003-34 I.R.B. 398, available at IRS.gov/irb/2003-34_IRB#RP-2003-68.

Government employers.

Federal, state, and local governmental agencies have two options for reporting their employees' wages that are subject to only Medicare tax for part of the year and both social security and Medicare taxes for part of the year.

The first option (which the SSA prefers) is to file a single set of Forms W-2 per employee for the entire year, even if only part of the year's wages are subject to both social security and Medicare taxes. Check “941” (or “944”) in box b of Form W-3 or Form W-3SS. The wages in box 5 of Form W-2 must be equal to or greater than the wages in box 3 of Form W-2.

The second option is to file one set of Forms W-2 for wages subject only to Medicare tax and another set for wages subject to both social security and Medicare taxes. Use a separate Form W-3 to transmit each set of Forms W-2. For the Medicare-only Forms W-2, check “Medicare govt. emp.” in box b of Form W-3. For the Forms W-2 showing wages subject to both social security and Medicare taxes, check “941” (or “944”) in box b of Form W-3 or Form W-3SS. The wages in box 5 of Form W-2 must be equal to or greater than the wages in box 3 of Form W-2.

Group-term life insurance.

You must include in boxes 1, 3, and 5 (or 14, if railroad retirement taxes apply) the cost of group-term life insurance that is more than the cost of $50,000 of coverage, reduced by the amount the employee paid toward the insurance. Use Table 2-2 in Pub. 15-B to determine the cost of the insurance. Also show the amount in box 12 with code C. For employees, you must withhold social security and Medicare taxes, but not federal income tax. For coverage provided to former employees, the former employees must pay the employee part of social security and Medicare taxes (or railroad retirement taxes, if applicable) on the taxable cost of group-term life insurance over $50,000 on Form 1040 or 1040-SR. You are not required to collect those taxes. However, you must report the uncollected social security tax (or railroad retirement taxes, if applicable) with code M and the uncollected Medicare tax (or RRTA Medicare tax, if applicable) with code N in box 12 of Form W-2. However, any uncollected Additional Medicare Tax (on the cost of group-term life insurance, which, in combination with other wages, is in excess of $200,000) is not reported with code N in box 12.

Health flexible spending arrangement (FSA).

For plan year 2024, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $3,200 (as indexed for inflation).

If a cafeteria plan timely complies with the written plan requirement limiting health FSA salary reduction contributions, but one or more employees are erroneously allowed to elect a salary reduction of more than $3,200 for the plan year, the cafeteria plan will continue to be a section 125 cafeteria plan for the plan year if:

The salary reduction contribution limit of $3,200 does not include any amount (up to $640) carried over from a previous year.

For more information, see Notice 2013-71, 2013-47 I.R.B. 532, available at IRS.gov/irb/2013-47_IRB#NOT-2013-71.

Health savings account (HSA).

An employer's contribution (including an employee's contributions through a cafeteria plan) to an employee's HSA is not subject to federal income tax withholding or social security, Medicare, or railroad retirement taxes (or FUTA tax) if it is reasonable to believe at the time of the payment that the contribution will be excludable from the employee's income. However, if it is not reasonable to believe at the time of payment that the contribution will be excludable from the employee's income, employer contributions are subject to federal income tax withholding, social security and Medicare taxes (or railroad retirement taxes, if applicable), and FUTA tax, and must be reported in boxes 1, 3, and 5 (use box 14 if railroad retirement taxes apply); and on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return.

You must report all employer contributions (including an employee's contributions through a cafeteria plan) to an HSA in box 12 of Form W-2 with code W. Employer contributions to an HSA that are not excludable from the income of the employee must also be reported in boxes 1, 3, and 5. (Use box 14 if railroad retirement taxes apply.)

An employee's contributions to an HSA (unless made through a cafeteria plan) are includible in income as wages and are subject to federal income tax withholding and social security and Medicare taxes (or railroad retirement taxes, if applicable). Employee contributions are deductible, within limits, on the employee's Form 1040 or 1040-SR. For more information about HSAs, see Notice 2004-2, Notice 2004-50, and Notice 2008-52. Notice 2004-2, 2004-2 I.R.B. 269, is available at IRS.gov/irb/2004-02_IRB#NOT-2004-2. Notice 2004-50, 2004-33 I.R.B. 196, is available at IRS.gov/irb/2004-33_IRB#NOT-2004-50. Notice 2008-52, 2008-25 I.R.B. 1166, is available at IRS.gov/irb/2008-25_IRB#NOT-2008-52. Also see Form 8889, Health Savings Accounts (HSAs), and Pub. 969.

Lost Form W-2—Reissued statement.

If an employee loses a Form W-2, write “REISSUED STATEMENT” on the new copy and furnish it to the employee. You do not have to add “REISSUED STATEMENT” on Forms W-2 provided to employees electronically. Do not send Copy A of the reissued Form W-2 to the SSA. Employers are not prohibited (by the Internal Revenue Code) from charging a fee for the issuance of a duplicate Form W-2.

Military differential pay.

Employers paying their employees while they are on active duty in the U.S. uniformed services should treat these payments as wages. Differential wage payments made to an individual while on active duty for periods scheduled to exceed 30 days are subject to income tax withholding, but are not subject to social security, Medicare, and unemployment taxes. Report differential wage payments in box 1 and any federal income tax withholding in box 2. Differential wage payments made to an individual while on active duty for 30 days or less are subject to income tax withholding, social security, Medicare, and unemployment taxes and are reported in boxes 1, 3, and 5. See Rev. Rul. 2009-11, 2009-18 I.R.B. 896, available at IRS.gov/irb/2009-18_IRB#RR-2009-11.

Moving expenses.

Effective for tax years 2018 through 2025, the exclusion for qualified moving expense reimbursements applies only to members of the U.S. Armed Forces on active duty who move pursuant to a military order and incident to a permanent change of station. All other employees have only nonqualified moving expenses and expense reimbursements subject to tax and withholding.

Report qualified moving expenses for members of the Armed Forces as follows.

Nonqualified moving expenses and expense reimbursements are reported in boxes 1, 3, and 5 (use box 14 if railroad retirement taxes apply) of Form W-2. These amounts are subject to federal income tax withholding and social security and Medicare taxes (or railroad retirement taxes, if applicable).

Nonqualified deferred compensation plans.

Section 409A provides that all amounts deferred under a nonqualified deferred compensation (NQDC) plan for all tax years are currently includible in gross income to the extent not subject to a substantial risk of forfeiture and not previously included in gross income, unless certain requirements are met. Generally, section 409A is effective with respect to amounts deferred in tax years beginning after December 31, 2004, but deferrals made before that year may be subject to section 409A under some circumstances.

It is not necessary to show amounts deferred during the year under an NQDC plan subject to section 409A. If you report section 409A deferrals, show the amount in box 12 using code Y. For more information, see Notice 2008-115, 2008-52 I.R.B. 1367, available at IRS.gov/irb/2008-52_IRB#NOT-2008-115.

Income included under section 409A from an NQDC plan will be reported in box 1 and in box 12 using code Z. This income is also subject to an additional tax of 20% that is reported on Form 1040 or 1040-SR. For more information on amounts includible in gross income and reporting requirements, see Notice 2008-115, available at IRS.gov/irb/2008-52_IRB#NOT-2008-115. For information on correcting failures to comply with section 409A and related reporting, see Notice 2008-113, 2008-51 I.R.B. 1305, available at IRS.gov/irb/2008-51_IRB#NOT-2008-113; Notice 2010-6, 2010-3 I.R.B. 275, available at IRS.gov/irb/2010-03_IRB#NOT-2010-6; and Notice 2010-80, 2010-51 I.R.B. 853, available at IRS.gov/irb/2010-51_IRB#NOT-2010-80.

See the Nonqualified Deferred Compensation Reporting Example Chart.

Qualified equity grants under section 83(i).

Report the amount includible in gross income from qualified equity grants under section 83(i)(1)(A) for the calendar year in box 12 using code GG. This amount is wages for box 1 and you must withhold income tax under section 3401(i) at the rate and manner prescribed in section 3401(t). You must withhold at the maximum rate of tax without regard to the employee’s Form W-4. Social security and Medicare taxation of the deferral stock is not affected by these rules. See Notice 2018-97, 2018-52 I.R.B. 1062, available at IRS.gov/irb/2018-52_IRB#NOT-2018-97.

Qualified small employer health reimbursement arrangement.

Use box 12, code FF, to report the total amount of permitted benefits under a qualified small employer health reimbursement arrangement (QSEHRA). QSEHRAs allow eligible employers to pay or reimburse medical care expenses of eligible employees after the employees provide proof of coverage. The maximum reimbursement for an eligible employee under a QSEHRA for 2024 is $6,150 ($12,450 if it also provides reimbursements for family members). For more information about QSEHRAs, see Notice 2017-67, 2017-47 I.R.B. 517, available at IRS.gov/irb/2017-47_IRB#NOT-2017-67 and Pub. 15-B under Accident and Health Benefits. For information on employer reporting requirements, see Code FF—Permitted benefits under a qualified small employer health reimbursement, later.

Railroad employers (not applicable to Forms W-2AS, W-2CM, W-2GU, or W-2VI).

Railroad employers must file Form W-2 to report their employees' wages and income tax withholding in boxes 1 and 2. You must file a separate Form W-3 to transmit the Forms W-2 if you have employees covered under the Federal Insurance Contributions Act (FICA) (social security and Medicare) and the Railroad Retirement Tax Act (RRTA).

Repayments.

If an employee repays you for wages received in error, do not offset the repayments against current year wages unless the repayments are for amounts received in error in the current year. Repayments made in the current year, but related to a prior year or years, must be repaid in gross, not net, and require special tax treatment by employees in some cases. You may advise the employee of the total repayments made during the current year and the amount (if any) related to prior years. This information will help the employee account for such repayments on their federal income tax return.

If the repayment was for a prior year, you must file Form W-2c with the SSA to correct only social security and Medicare wages and taxes, and furnish a copy to the employee. Do not correct "Wages, tips, other compensation" in box 1, or "Federal income tax withheld" in box 2, on Form W-2c. Also do not correct any Additional Medicare Tax withheld on the repaid wages (reported with Medicare tax withheld in box 6) on Form W-2c. File the “X” return that is appropriate for the return on which the wages or compensation was originally reported (Forms 941-X, 943-X, 944-X, or CT-1X). Correct the social security and Medicare wages and taxes for the period during which the wages or compensation was originally paid. For information on reporting adjustments to Forms 941, 943, 944, or Form CT-1, see section 13 of Pub. 15 (Circular E) or the Instructions for Form CT-1X.

Tell your employee that the wages paid in error in a prior year remain taxable to them for that year. This is because the employee received and had use of those funds during that year. The employee is not entitled to file an amended return (Form 1040-X) to recover the income tax on these wages. For repayments greater than $3,000, the employee may be entitled to a deduction or credit for the repaid wages on their Form 1040 or 1040-SR for the year of repayment. However, the employee is entitled to file an amended return (Form 1040-X) to recover Additional Medicare Tax on these wages, if any. Refer your employee to Repayments in Pub. 525, for additional information.

Scholarship and fellowship grants.

Give a Form W-2 to each recipient of a scholarship or fellowship grant only if you are reporting amounts includible in income under section 117(c) (relating to payments for teaching, research, or other services required as a condition for receiving the qualified scholarship). Also see Pub. 15-A and Pub. 970. These payments are subject to federal income tax withholding. However, their taxability for social security and Medicare taxes (or railroad retirement taxes, if applicable) depends on the nature of the employment and the status of the organization. See Students, scholars, trainees, teachers, etc., in section 15 of Pub. 15 (Circular E).

SEP arrangements and SIMPLE IRA plans.

An employee's salary reduction contributions under a SEP arrangement to a traditional IRA or under a SIMPLE (savings incentive match plan for employees) IRA plan to a SIMPLE IRA are not subject to federal income tax withholding but are subject to social security, Medicare, and railroad retirement taxes. Do not include an employee's contribution in box 1, but do include it in boxes 3 and 5. (Use box 14 if railroad retirement taxes apply.) An employee's total contribution must also be included in box 12 with code D or S.

An employer's matching or nonelective contribution to an employee's SIMPLE retirement account is not subject to federal income tax withholding or social security, Medicare, or railroad retirement taxes, and is not to be shown on Form W-2.

However, if a SEP arrangement or SIMPLE IRA plan provides for, and an employee elects to designate, a Roth IRA as the IRA to which contributions under the arrangement or plan are made, salary reduction contributions contributed to the account are subject to federal income tax, social security, Medicare, or railroad retirement tax withholding. These contributions are included on Form W-2 in boxes 1, 3, and 5 (or box 14 for railroad retirement taxes) and are reported in box 12 using code F (for a SEP) or code S (for a SIMPLE IRA). Employer matching and nonelective contributions made to a Roth SEP or Roth SIMPLE IRA must be reported on Form 1099-R for the year in which the contributions are made to the employee's Roth IRA. Report the total in boxes 1 and 2a of Form 1099-R using code 2 or 7 in box 7 and check the IRA/SEP/SIMPLE checkbox. For additional guidance on SEP arrangements or SIMPLE IRA plans to which salary reduction contributions are made to Roth IRAs, see Q&A K-1 through K-8 of Notice 2024-2, 2024-2 I.R.B. 316, at IRS.gov/irb/2024-02_IRB#NOT-2024-2.

For more information on SIMPLE retirement accounts, see Notice 98-4, 1998-1 C.B. 269. You can find Notice 98-4 on page 25 of Internal Revenue Bulletin 1998-2 at IRS.gov/pub/irs-irbs/irb98-02.pdf.

Sick pay.

If you had employees who received sick pay in 2024 from an insurance company or other third-party payer and the third party notified you of the amount of sick pay involved, you may be required to report the information on the employees' Forms W-2. If the insurance company or other third-party payer did not notify you in a timely manner about the sick pay payments, it must prepare Forms W-2 and W-3 for your employees showing the sick pay. For specific reporting instructions, seesection 6 of Pub. 15-A.

Successor/predecessor employers.

If you buy or sell a business during the year, see Rev. Proc. 2004-53 for information on who must file Forms W-2 and employment tax returns. Rev. Proc. 2004-53, 2004-34 I.R.B. 320, is available at IRS.gov/irb/2004-34_IRB#RP-2004-53.

Terminating a business.

If you terminate your business, you must provide Forms W-2 to your employees for the calendar year of termination by the due date of your final Form 941 or 944. You must also file Forms W-2 with the SSA by the due date of your final Form 941 or 944. If filing on paper, make sure you obtain Forms W-2 and W-3 preprinted with the correct year. If e-filing, make sure your software has been updated for the current tax year.

However, if any of your employees are immediately employed by a successor employer, see Successor/predecessor employers above. Also, for information on automatic extensions for furnishing Forms W-2 to employees and filing Forms W-2, see Rev. Proc. 96-57, which is on page 14 of Internal Revenue Bulletin 1996-53 at IRS.gov/pub/irs-irbs/irb96-53.pdf.

Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) make-up amounts to a pension plan.

If an employee returned to your employment after military service and certain make-up amounts were contributed to a pension plan for a prior year(s) under the USERRA, report the prior year contributions separately in box 12. See the TIP above Code D under Box 12—Codes. You may also report certain make-up amounts in box 14. See Box 14—Other in Specific Instructions for Form W-2.

Instead of reporting in box 12 (or box 14), you may choose to provide a separate statement to your employee showing USERRA make-up contributions. The statement must identify the type of plan, the year(s) to which the contributions relate, and the amount contributed for each year.

Virtual currency.

For federal tax purposes, virtual currency is treated as property. Bitcoin is an example of virtual currency. Transactions using virtual currency (such as Bitcoin) must be reported in U.S. dollars.

The fair market value (FMV) of virtual currency (such as Bitcoin) paid as wages is income and subject to federal income tax withholding, FICA tax, and FUTA tax and must be reported on Form W-2. For more information about how virtual currency is treated for federal income tax purposes, including W-2 requirements, see Notice 2014-21, 2014-16 I.R.B. 938, available at IRS.gov/irb/2014-16_IRB#NOT-2014-21 and Rev. Rul. 2019-24, available at IRS.gov/irb/2019-44_IRB#REV-RUL-2019-24 and related FAQs, available at IRS.gov/virtualcurrencyfaqs.

Failure to file correct information returns by the due date.

If you fail to file a correct Form W-2 by the due date and cannot show reasonable cause, you may be subject to a penalty as provided under section 6721. The penalty applies if you:

The amount of the penalty is based on when you file the correct Form W-2. Penalties are indexed for inflation. The penalty amounts shown below apply to filings due after December 31, 2024. The penalty is:

If you do not file corrections and you do not meet any of the exceptions to the penalty, the penalty is $330 per information return. The maximum penalty is $3,987,000 per year ($1,329,000 for small businesses).

Failure to furnish correct payee statements.

If you fail to provide correct payee statements (Forms W-2) to your employees and cannot show reasonable cause, you may be subject to a penalty as provided under section 6722. The penalty applies if you fail to provide the statement by January 31, 2025, if you fail to include all information required to be shown on the statement, or if you include incorrect information on the statement.

The amount of the penalty is based on when you furnish the correct payee statement. This penalty is an additional penalty and is applied in the same manner, and with the same amounts, as in Failure to file correct information returns by the due date .

Civil damages for fraudulent filing of Forms W-2.

If you willfully file a fraudulent Form W-2 for payments that you claim you made to another person, that person may be able to sue you for damages. If you are found liable, you may have to pay $5,000 or more in damages. You may also be subject to criminal sanctions.

How to complete Form W-2.

Form W-2 is a multi-part form. Ensure all copies are legible. Do not print Forms W-2 (Copy A) on double-sided paper.

Send Copy A to the SSA; Copy 1, if required, to your state, city, or local tax department; and Copies B, C, and 2 to your employee. Keep a copy of Copy A, and a copy of Form W-3, with your records for at least 4 years.

Enter the information on Form W-2 using black ink in 12-point Courier font. Copy A is read by machine and must be typed clearly with no corrections made to the entries and with no entries exceeding the size of the boxes. Entries completed by hand, in script or italic fonts are discouraged. Colors other than black cannot be read by the machines. Make all dollar entries on Copy A without the dollar sign and comma but with the decimal point (00000.00). Show the cents portion of the money amounts. If a box does not apply, leave it blank.

Send the whole Copy A page of Form W-2 with Form W-3 to the SSA even if one of the Forms W-2 on the page is blank or void. Do not staple Forms W-2 together or to Form W-3. File Forms W-2 either alphabetically by employees' last names or numerically by employees' SSNs.

Also see the Caution under How To Get Forms and Publications.

Calendar year basis.

The entries on Form W-2 must be based on wages paid during the calendar year. Use Form W-2 for the correct tax year. For example, if the employee worked from December 15, 2024, through December 28, 2024, and the wages for that period were paid on January 3, 2025, include those wages on the 2025 Form W-2.

Multiple forms.

If necessary, you can issue more than one Form W-2 to an employee. For example, you may need to report more than four coded items in box 12 or you may want to report other compensation on a second form. If you issue a second Form W-2, complete boxes a, b, c, d, e, and f with the same information as on the first Form W-2. Show any items that were not included on the first Form W-2 in the appropriate boxes.

If you need to issue an additional Form(s) W-2 to report more than four coded items in box 12, the additional Form(s) W-2 is included in the number of information returns for the purpose of determining whether you must e-file. For more information, see E-filing , earlier.

Do not report the same federal, American Samoa, CNMI, Guam, or U.S. Virgin Islands tax data to the SSA on more than one Copy A.

VOID.

Check this box when an error is made on Form W-2 and you are voiding it because you are going to complete a new Form W-2. Do not include any amounts shown on “VOID” forms in the totals you enter on Form W-3. See Corrections .

Box a—Employee's social security number.

Enter the number shown on the employee's social security card.

If the employee does not have a card, they should apply for one by completing Form SS-5, Application for a Social Security Card. The SSA lets you verify employee names and SSNs online. For information about these free services, visit the Employer W-2 Filing Instructions & Information website at SSA.gov/employer. If you have questions about using these services, call 800-772-6270 (toll free) to speak with an employer reporting technician at the SSA.

If the employee has applied for a card but the number is not received in time for filing, enter “Applied For” in box a on paper Forms W-2 filed with the SSA. If e-filing, enter zeros (000-00-0000 if creating forms online or 000000000 if uploading a file).

Ask the employee to inform you of the number and name as they are shown on the social security card when it is received. Then correct your previous report by filing Form W-2c showing the employee's SSN. If the employee needs to change their name from that shown on the card, the employee should call the SSA at 800-772-1213.

If you do not provide the correct employee name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. For more information, see Pub. 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs on Information Returns.

Box b—Employer identification number (EIN).

Show the EIN assigned to you by the IRS (00-0000000). This should be the same number that you used on your federal employment tax returns (Forms 941, 943, 944, CT-1, or Schedule H (Form 1040)). Do not truncate your EIN. See Regulations section 31.6051-1(a)(1)(i)(A) and 301.6109-4(b)(2)(iv). Do not use a prior owner's EIN. If you do not have an EIN when filing Forms W-2, enter “Applied For” in box b; do not use your SSN. You can get an EIN by applying online at IRS.gov/EIN or by filing Form SS-4, Application for Employer Identification Number. Also see Agent reporting .

Box c—Employer's name, address, and ZIP code.

This entry should be the same as shown on your Forms 941, 943, 944, CT-1, or Schedule H (Form 1040). The U.S. Postal Service recommends that no commas or periods be used in return addresses. Also see Agent reporting .

Box d—Control number.

You may use this box to identify individual Forms W-2. You do not have to use this box.

Boxes e and f—Employee's name and address.

Enter the name as shown on your employee's social security card (first name, middle initial, last name). If the name does not fit in the space allowed on the form, you may show the first and middle name initials and the full last name. It is especially important to report the exact last name of the employee. If you are unable to determine the correct last name, use of the SSA's Social Security Number Verification System may be helpful.

Separate parts of a compound name with either a hyphen or a blank space. Do not join them into a single word. Include all parts of a compound name in the appropriate name field. For example, for the name “Jessie R Smith-Jones,” enter “Smith-Jones” or “Smith Jones” in the last name field.

If the name has changed, the employee must get a corrected social security card from any SSA office. Use the name on the original card until you see the corrected card.

Do not show titles or academic degrees, such as “Dr.,” “RN,” or “Esq.,” at the beginning or end of the employee's name. Generally, do not enter “Jr.,” “Sr.,” or other suffix in the “Suff.” box on Copy A unless the suffix appears on the card. However, the SSA still prefers that you do not enter the suffix on Copy A.

Include in the address the number, street, and apartment or suite number (or P.O. box number if mail is not delivered to a street address). The U.S. Postal Service recommends that no commas or periods be used in delivery addresses. For a foreign address, give the information in the following order: city, province or state, and country. Follow the country's practice for entering the postal code. Do not abbreviate the country name.

Box 1—Wages, tips, other compensation.

Show the total taxable wages, tips, and other compensation that you paid to your employee during the year. However, do not include elective deferrals (such as employee contributions to a section 401(k) or 403(b) plan) except section 501(c)(18) contributions. Include the following.

Box 2—Federal income tax withheld.

Show the total federal income tax withheld from the employee's wages for the year. Include the 20% excise tax withheld on excess parachute payments. See Golden parachute payments .

For Forms W-2AS, W-2CM, W-2GU, or W-2VI, show the total American Samoa, CNMI, Guam, or U.S. Virgin Islands income tax withheld.

Box 3—Social security wages.

Show the total wages paid (before payroll deductions) subject to employee social security tax but not including social security tips and allocated tips. If reporting these amounts in a subsequent year (due to lapse of risk of forfeiture), the amount must be adjusted by any gain or loss. See Box 7—Social security tips and Box 8—Allocated tips . Generally, noncash payments are considered to be wages. Include employee business expense reimbursements and moving expenses reported in box 1. If you paid the employee's share of social security and Medicare taxes rather than deducting them from wages, see Employee's social security and Medicare taxes (or railroad retirement taxes, if applicable) paid by employer . The total of boxes 3 and 7 cannot exceed $168,600 (2024 maximum social security wage base).

Report in box 3 elective deferrals to certain qualified cash or deferred compensation arrangements and to retirement plans described in box 12 (codes D, E, F, G, and S) even though the deferrals are not includible in box 1. Also report in box 3 designated Roth contributions made under a section 401(k) plan, under a section 403(b) salary reduction agreement, or under a governmental section 457(b) plan described in box 12 (codes AA, BB, and EE).

Amounts deferred (plus earnings or less losses) under a section 457(f) or nonqualified plan or nongovernmental section 457(b) plan must be included in boxes 3 and/or 5 as social security and/or Medicare wages as of the later of when the services giving rise to the deferral are performed or when there is no substantial forfeiture risk of the rights to the deferred amount. Include both elective and nonelective deferrals for purposes of nongovernmental section 457(b) plans.

Wages reported in box 3 also include:

Box 4—Social security tax withheld.

Show the total employee social security tax (not your share) withheld, including social security tax on tips. For 2024, the amount should not exceed $10,453.20 ($168,600 × 6.2%). Include only taxes withheld (or paid by you for the employee) for 2024 wages and tips. If you paid your employee's share, see Employee's social security and Medicare taxes (or railroad retirement taxes, if applicable) paid by employer .

Box 5—Medicare wages and tips.

The wages and tips subject to Medicare tax are the same as those subject to social security tax (boxes 3 and 7) except that there is no wage base limit for Medicare tax. Enter the total Medicare wages and tips in box 5. Be sure to enter tips that the employee reported even if you did not have enough employee funds to collect the Medicare tax for those tips. See Box 3—Social security wages for payments to report in this box. If you paid your employee's share of taxes, see Employee's social security and Medicare taxes (or railroad retirement taxes, if applicable) paid by employer .

If you are a federal, state, or local governmental agency with employees paying only Medicare tax, enter the Medicare wages in this box. See Government employers .

Box 6—Medicare tax withheld.

Enter the total employee Medicare tax (including any Additional Medicare Tax) withheld. Do not include your share. Include only tax withheld for 2024 wages and tips. If you paid your employee's share of the taxes, see Employee's social security and Medicare taxes (or railroad retirement taxes, if applicable) paid by employer .

For more information on Additional Medicare Tax, go to IRS.gov/ADMTfaqs.

Box 7—Social security tips.

Show the tips that the employee reported to you even if you did not have enough employee funds to collect the social security tax for the tips. The total of boxes 3 and 7 should not be more than $168,600 (the maximum social security wage base for 2024). Report all tips in box 1 along with wages and other compensation. Also include any tips reported in box 7 in box 5.

Box 8—Allocated tips (not applicable to Forms W-2AS, W-2CM, W-2GU, or W-2VI).

If you operate a large food or beverage establishment, show the tips allocated to the employee. See the Instructions for Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips. Do not include this amount in box 1, 3, 5, or 7.

Box 10—Dependent care benefits (not applicable to Forms W-2AS, W-2CM, W-2GU, or W-2VI).

Show the total dependent care benefits under a dependent care assistance program (section 129) paid or incurred by you for your employee. Include the fair market value (FMV) of care in a daycare facility provided or sponsored by you for your employee and amounts paid or incurred for dependent care assistance in a section 125 (cafeteria) plan. Report all amounts paid or incurred (regardless of any employee forfeitures), including those in excess of the $5,000 exclusion. This may include (a) the FMV of benefits provided in kind by the employer, (b) an amount paid directly to a daycare facility by the employer or reimbursed to the employee to subsidize the benefit, or (c) benefits from the pre-tax contributions made by the employee under a section 125 dependent care flexible spending account. Include any amounts over your plan’s exclusion in boxes 1, 3, and 5. For more information, see Pub. 15-B.

An employer that amends its cafeteria plan to provide a grace period for dependent care assistance may continue to rely on Notice 89-111 by reporting in box 10 the salary reduction amount elected by the employee for the year for dependent care assistance (plus any employer matching contributions attributable to dependent care). Also see Notice 2005-42, 2005-23 I.R.B. 1204, available at IRS.gov/irb/2005-23_IRB#NOT-2005-42 and Notice 2005-61, 2005-39 I.R.B. 607, available at IRS.gov/node/51071#NOT-2005-61.

Box 11—Nonqualified plans.

The purpose of box 11 is for the SSA to determine if any part of the amount reported in box 1 or boxes 3 and/or 5 was earned in a prior year. The SSA uses this information to verify that they have properly applied the social security earnings test and paid the correct amount of benefits.

Report distributions to an employee from a nonqualified plan or nongovernmental section 457(b) plan in box 11. Also report these distributions in box 1. Make only one entry in this box. Distributions from governmental section 457(b) plans must be reported on Form 1099-R, not in box 1 of Form W-2.

Under nonqualified plans or nongovernmental 457(b) plans, deferred amounts that are no longer subject to a substantial risk of forfeiture are taxable even if not distributed. Report these amounts in boxes 3 (up to the social security wage base) and 5. Do not report in box 11 deferrals included in boxes 3 and/or 5 and deferrals for current year services (such as those with no risk of forfeiture).

If you made distributions and are also reporting any deferrals in boxes 3 and/or 5, do not complete box 11. See Pub. 957, Reporting Back Pay and Special Wage Payments to the Social Security Administration, and Form SSA-131, Employer Report of Special Wage Payments, for instructions on reporting these and other kinds of compensation earned in prior years. However, do not file Form SSA-131 if this situation applies and the employee was not 61 years old or more during the tax year for which you are filing Form W-2.

Unlike qualified plans, NQDC plans do not meet the qualification requirements for tax-favored status for this purpose. NQDC plans include those arrangements traditionally viewed as deferring the receipt of current compensation. Accordingly, welfare benefit plans, stock option plans, and plans providing dismissal pay, termination pay, or early retirement pay are generally not NQDC plans.

Report distributions from NQDC or section 457 plans to beneficiaries of deceased employees on Form 1099-MISC, not on Form W-2.

Military employers must report military retirement payments on Form 1099-R.

Do not report special wage payments, such as accumulated sick pay or vacation pay, in box 11. For more information on reporting special wage payments, see Pub. 957.

Box 12—Codes.

Complete and code this box for all items described below. Note that the codes do not relate to where they should be entered in boxes 12a through 12d on Form W-2. For example, if you are only required to report code D in box 12, you can enter code D and the amount in box 12a of Form W-2. Report in box 12 any items that are listed as codes A through II. Do not report in box 12 section 414(h)(2) contributions (relating to certain state or local government plans). Instead, use box 14 for these items and any other information that you wish to give to your employee. For example, union dues and uniform payments may be reported in box 14.

On Copy A (Form W-2), do not enter more than four items in box 12. If more than four items need to be reported in box 12, use a separate Form W-2 to report the additional items (but enter no more than four items on each Copy A (Form W-2)). On all other copies of Form W-2 (Copies B, C, etc.), you may enter more than four items in box 12 when using an approved substitute Form W-2. See Multiple forms.

Use the IRS code designated below for the item you are entering, followed by the dollar amount for that item. Even if only one item is entered, you must use the IRS code designated for that item. Enter the code using a capital letter(s). Use decimal points but not dollar signs or commas. For example, if you are reporting $5,300.00 in elective deferrals under a section 401(k) plan, the entry would be D 5300.00 (not A 5300.00 even though it is the first or only entry in this box). Report the IRS code to the left of the vertical line in boxes 12a through 12d and the money amount to the right of the vertical line.

See the Form W-2 Reference Guide for Box 12 Codes.

The detailed instructions for each code are next.

Box 13—Checkboxes.

Check all boxes that apply.

Box 14—Other.

If you included 100% of a vehicle's annual lease value in the employee's income, it must also be reported here or on a separate statement to your employee.

You may also use this box for any other information that you want to give to your employee. Label each item. Examples include state disability insurance taxes withheld, union dues, uniform payments, health insurance premiums deducted, nontaxable income, educational assistance payments, or a minister's parsonage allowance and utilities. In addition, you may enter the following contributions to a pension plan: (a) nonelective employer contributions made on behalf of an employee, (b) voluntary after-tax contributions (but not designated Roth contributions) that are deducted from an employee's pay, (c) required employee contributions, and (d) employer matching contributions.

If you are reporting prior year contributions under USERRA (see the TIP above Code D under Box 12—Codes and Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) make-up amounts to a pension plan ), you may report in box 14 make-up amounts for nonelective employer contributions, voluntary after-tax contributions, required employee contributions, and employer matching contributions. Report such amounts separately for each year.

Railroad employers, see Railroad employers for amounts reportable in box 14.

Boxes 15 through 20—State and local income tax information (not applicable to Forms W-2AS, W-2CM, W-2GU, or W-2VI).

Use these boxes to report state and local income tax information. Enter the two-letter abbreviation for the name of the state. The employer's state ID numbers are assigned by the individual states. The state and local information boxes can be used to report wages and taxes for two states and two localities. Keep each state's and locality's information separated by the broken line. If you need to report information for more than two states or localities, prepare a second Form W-2. See Multiple forms . Contact your state or locality for specific reporting information.

Federal employers reporting income taxes paid to the CNMI under the 5517 agreement, enter the employer’s identification number in box 15. Enter the employee’s CNMI wages in box 16. Enter the income taxes paid to the CNMI in box 17. See Federal employers in the CNMI , earlier, for more information.