Form W-2 Wage and Tax Statement (2010): Your Complete Guide

What Form W-2 Is For

Form W-2 is the official document your employer uses to report how much you earned and how much tax was taken out of your paycheck during 2010. Think of it as your year-end earnings report card. Every employer must prepare this form for each employee from whom they withheld income tax, Social Security tax, or Medicare tax—or would have withheld income tax if the employee hadn't claimed multiple exemptions on their W-4.

The W-2 serves multiple purposes: it tells you what to report on your personal tax return (Form 1040), it informs the Social Security Administration about your earnings for future Social Security and Medicare benefits, and it shows the IRS what taxes were already collected from your wages. Your employer creates multiple copies—one goes to the Social Security Administration with a summary form (W-3), copies go to you, and additional copies may go to state or local tax agencies. IRS.gov

The form contains critical information including your wages, tips, federal income tax withheld, Social Security wages and tax, Medicare wages and tax, and various other compensation details that affect your tax liability. Even if you work for a family member or as a household employee, if taxes were withheld or should have been, your employer must file a W-2 for you.

When You’d Use It (Late/Amended Filings)

For Employees

You should receive your W-2 from your employer by January 31, 2011 (for the 2010 tax year). If your employment ended during 2010, your employer may give it to you anytime after your last day, but no later than January 31, 2011. If you specifically request your W-2 after leaving a job, your employer must provide it within 30 days of your request or within 30 days of your final wage payment, whichever comes later.

If you discover errors on your W-2—such as an incorrect Social Security number, wrong name spelling, or inaccurate wage amounts—contact your employer immediately. They should issue you a Form W-2c (Corrected Wage and Tax Statement) with "CORRECTED" written on your copies. If your employer doesn't correct the error by the end of February, you can request that an IRS representative initiate a Form W-2 complaint. IRS.gov

For Employers

If you discover an error before sending the form to the Social Security Administration but after giving it to your employee, mark the incorrect Copy A as "Void," prepare a new W-2, and issue corrected employee copies marked "CORRECTED." If you've already filed with the SSA, you must file Form W-2c to correct the record. Employers can request a 30-day extension to file W-2s with the SSA by submitting Form 8809 before the February 28 deadline, or request an extension to furnish copies to employees by sending a letter to the IRS before January 31.

Key Rules for 2010

HIRE Act Reporting

The Hiring Incentives to Restore Employment (HIRE) Act created a payroll tax exemption for employers who hired qualified unemployed workers between February 3, 2010, and January 1, 2011. Employers had to report these exempt wages in Box 12 using the new Code CC. This affected workers who hadn't worked more than 40 hours during the 60 days before starting their new job. IRS.gov

Military Differential Pay

For 2010, employers paying differential wages to employees on active military duty for more than 30 days had to treat these payments as wages subject to income tax withholding (but not Social Security, Medicare, or unemployment taxes). These payments appear in Box 1 with any federal income tax withheld in Box 2.

Electronic Filing Threshold

Employers filing 250 or more W-2 forms were required to file electronically unless they received a waiver from the IRS. The electronic filing deadline was extended to March 31, 2011, while paper filers had to submit by February 28, 2011.

Social Security Wage Base

For 2010, the Social Security wage base was $106,800—meaning Social Security tax was only withheld on the first $106,800 of wages, though Medicare tax applied to all wages with no cap.

Step-by-Step (High Level)

For Employers

• Gather payroll records for all employees who earned wages in 2010 and calculate total wages, tips, federal income tax withheld, Social Security wages and tax, and Medicare wages and tax.
• Obtain official W-2 forms (printed red-ink Copy A from the IRS or use the Social Security Administration's online "Create Forms W-2 Online" tool). Ensure you have the correct 2010 version.
• Complete each employee's W-2 with their correct Social Security number, name (first name and middle initial in the first box, surname in the second), address, your employer identification number (EIN), company information, and all required wage and tax amounts. Use black 12-point Courier font if possible. IRS.gov
• Distribute employee copies (Copies B, C, and 2) by January 31, 2011. You can mail them or deliver them in person. Electronic delivery is allowed if the employee consents.
• Prepare Form W-3 (Transmittal of Wage and Tax Statements) to summarize all your W-2s. This form totals all the wages and taxes from your W-2s.
• File Copy A of all W-2s with the complete Form W-3 to the Social Security Administration by February 28, 2011 (or March 31 if filing electronically). Mail to: Social Security Administration Data Operations Center, Wilkes-Barre, PA 18769-0001. Do not staple, fold, or tape the forms.
• Keep Copy D for your records for at least four years.
• Reconcile your W-2/W-3 totals with your quarterly Form 941 or annual Form 943/944 reports to ensure consistency.

For Employees

• Receive your W-2 from each employer you worked for during 2010 by January 31, 2011.
• Check for accuracy: Verify your name, Social Security number, address, and all dollar amounts match your final pay stub.
• Report any errors to your employer immediately if you find mistakes.
• Keep your W-2 in a safe place—you'll need it to prepare your 2010 federal and state tax returns (due April 15, 2011).
• Use the W-2 information to complete your Form 1040, 1040A, or 1040EZ, copying the amounts into the correct lines.

Common Mistakes and How to Avoid Them

Formatting Errors

Employers often make simple formatting mistakes that delay processing. Never omit decimal points and cents from dollar amounts, always use black ink (never blue or other colors), and avoid entries that are too small or too large (use 12-point Courier font). Don't add dollar signs to the money boxes—they're no longer required on Copy A. Never staple, tape, or fold the forms because they're machine-read, and physical damage interferes with scanning. IRS.gov

Incorrect Personal Information

Mismatched or incorrect Social Security numbers are the most serious error because they prevent proper credit to your Social Security earnings record. Always verify the employee's SSN against their Social Security card. Misformatting the employee's name is also common—remember to put the first name and middle initial in the first box and the surname in the second box. Never accept an Individual Taxpayer Identification Number (ITIN) for employment purposes—only valid SSNs are acceptable.

Wrong Tax Calculations

Some employers incorrectly check the "Retirement plan" box in Box 13 when it doesn't apply, or they fail to report certain taxable fringe benefits in wages. Make sure you understand which benefits are taxable (like personal use of a company car) and which are excludable (like certain health insurance premiums). Box 1 wages may differ from Boxes 3 and 5 due to pre-tax deductions like 401(k) contributions.

Missing Deadlines

Late filing triggers automatic penalties. Paper W-2s are due to the SSA by February 28, 2011, and employee copies by January 31, 2011. Set reminders well in advance and request extensions if needed before the deadline—not after.

Filing on Wrong Forms

Using downloaded Copy A from IRS.gov doesn't work because it lacks the required red-ink scanning marks. Order official forms, use the SSA's online creation tool, or use approved payroll software that prints scannable forms. Also, ensure you're using the correct year's form—don't reuse old 2009 forms for 2010 wages.

What Happens After You File

Immediate Processing

Once the Social Security Administration receives your W-2s (whether paper or electronic), they scan and process the information. The SSA separates what they need (earnings data for Social Security and Medicare records) from what the IRS needs (tax withholding information). This data sharing helps both agencies track income and verify tax returns. IRS.gov

Reconciliation Review

The IRS and SSA compare the totals on your Form W-3 against the amounts you reported on your quarterly Form 941 filings (or annual Form 943, 944, CT-1, or Schedule H). Boxes 2, 3, 5, 7, and 9 from your W-3 should match the corresponding yearly totals from these payroll tax forms. Small discrepancies might be valid (due to timing differences or special circumstances), but large mismatches trigger inquiries. You'll be contacted to explain and resolve any significant differences.

Penalty Assessment

If you filed late, filed with errors, or failed to furnish correct employee copies, the IRS will assess penalties. The penalty structure is tiered: $15 per form if you correct within 30 days (maximum $75,000), $30 per form if corrected by August 1 ($150,000 maximum), or $50 per form after August 1 or for complete failure to file ($250,000 maximum). Small businesses (average annual gross receipts of $5 million or less) face reduced maximums. These penalties can be waived if you demonstrate reasonable cause—meaning circumstances beyond your control and evidence you acted responsibly.

Employee Tax Filing

Employees use their W-2s to prepare their individual income tax returns. The IRS computers automatically match the wage and withholding information from W-2s against what taxpayers report on Form 1040. Significant mismatches can trigger correspondence or audits.

Long-Term Record Keeping

Employers must keep Copy D of all W-2s and a copy of Form W-3 for at least four years. Employees should keep their W-2s permanently as proof of earnings for Social Security benefit calculations, mortgage applications, and other financial purposes.

FAQs

1. What if I worked for two employers in 2010—do I combine my W-2s?

No, each employer issues a separate W-2, and you report each one individually on your tax return. You simply add all the amounts together when filling out Form 1040. If your total Social Security tax withheld exceeds $6,621.60 (because you earned over $106,800 combined from multiple jobs), you can claim the excess as a credit on your tax return.

2. My employer went out of business—how do I get my W-2?

If your employer closed and you cannot reach them, contact the IRS at 1-800-829-1040. You may need to file Form 4852 (Substitute for Form W-2) with your tax return, using your final pay stub to estimate your wages and withholding. However, this may delay processing of your return.

3. Can my employer send my W-2 electronically?

Yes, but only if you explicitly consent to receive it electronically. Your employer cannot force you to accept electronic delivery. If you agree, they must notify you when the W-2 is available online and provide instructions for accessing it. You can revoke consent at any time. IRS.gov

4. Why do Box 1, Box 3, and Box 5 show different amounts?

Box 1 (wages for federal income tax) often differs from Boxes 3 and 5 (Social Security and Medicare wages) because certain pre-tax deductions reduce Box 1 but not Boxes 3 and 5. Common examples include 401(k) contributions, flexible spending account contributions, and health insurance premiums paid through a cafeteria plan. Also, Box 3 stops increasing after wages exceed $106,800 (the 2010 Social Security wage base), while Boxes 1 and 5 continue to include all wages.

5. What should I do if my W-2 has the wrong Social Security number?

Contact your employer immediately and ask them to file Form W-2c (Corrected Wage and Tax Statement) with the Social Security Administration. This is critical because errors prevent proper credit to your Social Security earnings record, which could reduce your future benefits. Don't file your tax return until you receive the corrected W-2c. IRS.gov

6. I'm a household employer (nanny, housekeeper)—do I really need to file W-2s?

Yes, if you paid cash wages of $1,700 or more to any household employee in 2010, or if you withheld federal income tax from their wages. You must file Form W-2 for each qualifying employee and Form W-3 as a transmittal. You'll also need an Employer Identification Number (EIN) and should review Schedule H (Form 1040) for your household employment tax obligations.

7. What are the codes in Box 12, and do I need to worry about them?

Box 12 reports various types of compensation and benefits using letter codes. Common examples include Code D (401(k) contributions), Code C (taxable life insurance costs), Code DD (employer health coverage costs—informational only, not taxable), and Code CC (HIRE Act exempt wages for 2010). Most employees only need to be aware of these for informational purposes; they don't directly change what you owe. However, retirement plan contributions (Code D) reduce your taxable wages, which is already reflected in Box 1.

Source: All information in this guide comes from the official IRS 2010 Instructions for Forms W-2 and W-3, available at IRS.gov.