Form W-2 Wage and Tax Statement: 2011 Guide

What the Form Is For

Form W-2, officially titled "Wage and Tax Statement," is the document employers use to report wages paid to employees and the taxes withheld from those wages during the calendar year. Think of it as your annual work earnings report card—it shows your gross pay, how much federal income tax your employer took out of your paychecks, and your Social Security and Medicare contributions.

Every employer engaged in trade or business must file a Form W-2 for each employee from whom income, Social Security, or Medicare tax was withheld—or would have been withheld if the employee claimed no more than one withholding allowance. The form serves multiple purposes: employees use it to complete their federal tax returns, the Social Security Administration (SSA) uses it to track earnings for future benefit calculations, and the IRS uses it to verify that taxpayers report income correctly. IRS.gov

The 2011 version of Form W-2 contained several boxes reporting different types of compensation and withholding: Box 1 for wages and tips, Box 2 for federal income tax withheld, Boxes 3-6 for Social Security and Medicare wages and taxes, and Box 12 for various types of compensation and benefits using letter codes. One notable change for 2011: the temporary reduction in the employee Social Security tax withholding rate from 6.2% to 4.2%, thanks to the Tax Relief Act of 2010.

When You'd Use It (Late or Amended Filings)

Standard Filing Timeline: Employers must furnish Copies B, C, and 2 to employees by January 31, 2012. Copy A must be filed with the SSA by February 29, 2012 for paper filers, or April 2, 2012 for electronic filers (e-filing provides an automatic extension). IRS.gov

When Employment Ends Early: If you left a job before December 31, 2011, your employer could give you your W-2 anytime after your last day—but no later than January 31, 2012. If you specifically requested your W-2, the employer had 30 days from your request or 30 days from your final paycheck, whichever came later.

Requesting an Extension: Employers needing extra time to file with the SSA could submit Form 8809 (Application for Extension of Time) before the original due date to receive an additional 30 days. However, this extension didn't apply to furnishing copies to employees—those still had to go out by January 31.

Correcting Errors: If you discovered a mistake after issuing a W-2, you needed to file Form W-2c (Corrected Wage and Tax Statement) along with Form W-3c. If you caught the error before sending Copy A to the SSA, you simply checked the "Void" box on the incorrect form, prepared a new one, and marked employee copies as "CORRECTED." For simple address corrections where all wage information was accurate, you could reissue the form to the employee marked "REISSUED STATEMENT" without filing anything with the SSA. IRS.gov

Key Rules or Details for 2011

Reduced Social Security Tax Rate: The most significant change for 2011 was the temporary reduction in employee Social Security tax withholding from 6.2% to 4.2%. This meant employees kept more of each paycheck, though employer rates remained unchanged at 6.2%.

Advance Earned Income Credit Eliminated: Starting with tax year 2011, Box 9 (Advance EIC payments) was removed from Form W-2, as the advance payment option was eliminated for tax years beginning after December 31, 2010.

Health Coverage Reporting (Optional for 2011): A new Code DD was added to Box 12 to report the cost of employer-sponsored health coverage under the Affordable Care Act. However, this reporting was voluntary for 2011, with mandatory compliance phased in later years.

E-Filing Requirements: Employers filing 250 or more Forms W-2 were required to file electronically. Those who failed to e-file when required faced penalties. The SSA encouraged all employers to use Business Services Online (BSO), its free, secure platform for creating and submitting W-2s. IRS.gov

Taxpayer Identification Number Accuracy: Employers had to ensure each Form W-2 showed the correct Social Security Number (SSN) for every employee. ITINs (Individual Taxpayer Identification Numbers) were not acceptable for employment purposes. The IRS and SSA used these numbers to match reported income with tax returns and credit future Social Security benefits.

No Substitutes to SSA: Employers could not download Copy A from IRS.gov and send paper printouts to the SSA—the red-ink official version or electronic filing were the only accepted methods. Substitute forms for employee copies were allowed if they met specifications in IRS Publication 1141. IRS.gov

Step-by-Step (High Level)

Step 1: Gather Annual Payroll Data

Compile total wages, tips, federal income tax withheld, Social Security and Medicare wages and taxes, and any other compensation (like retirement plan contributions, dependent care benefits, or adoption assistance) for each employee for calendar year 2011.

Step 2: Obtain or Create Forms

Use official IRS Form W-2s (ordered from the IRS or printed through approved payroll software), or access the SSA's Business Services Online to create forms electronically. Remember: downloaded Copy A from IRS.gov isn't acceptable for filing with SSA.

Step 3: Complete Each Box Accurately

Fill in employee information (SSN, name, address), employer information (EIN, name, address), and wage data. Pay special attention to Box 12 codes (like D for 401(k) deferrals, W for HSA contributions, DD for health coverage costs). Use black ink if filing on paper, 12-point Courier font if possible, and include decimal points with cents.

Step 4: Prepare Form W-3 (Transmittal)

Complete Form W-3 to transmit all Forms W-2 to the SSA. This summary form totals all wages and taxes from your W-2s and identifies what type of employer you are (checking boxes for Form 941, 944, household employer, etc.). One W-3 accompanies each batch of W-2s. IRS.gov

Step 5: Distribute and File

By January 31, 2012, provide Copies B, C, and 2 to each employee. Mail or e-file Copy A to the SSA with Form W-3 by February 29, 2012 (paper) or April 2, 2012 (electronic). Send Copy 1 to state/local tax departments if required. Keep Copy D for your records for at least 4 years.

Step 6: Handle Undeliverable Forms

If you can't deliver an employee's W-2, keep it for 4 years—don't send undeliverable copies to the SSA.

Common Mistakes and How to Avoid Them

Mistake #1: Missing Decimal Points and Cents

Many employers accidentally omit cents from money amounts (e.g., entering "45000" instead of "45000.00"). This causes processing delays at the SSA. Solution: Always include the decimal point and cents, even for whole-dollar amounts.

Mistake #2: Incorrect Social Security Numbers or Name Misspellings

Mismatched SSNs or names prevent proper crediting of wages to employees' Social Security records. Solution: Verify SSNs against employees' Social Security cards before filing. Use the SSA's online verification service for employers. Format employee names correctly: first name and middle initial in one box, surname in the next, suffix (Jr., Sr., III) in the optional third box. IRS.gov

Mistake #3: Using Light Ink or Wrong Font Size

Forms with faint printing or tiny text can't be machine-read by SSA equipment. Solution: Use only black ink. Stick to 12-point Courier font when possible. Never use colored ink or fonts smaller than 10-point.

Mistake #4: Adding Dollar Signs to Money Boxes

Copy A doesn't have dollar signs printed on it for a reason—adding them confuses the scanning equipment. Solution: Enter numbers only, with decimal points and cents.

Mistake #5: Incorrectly Checking the "Retirement Plan" Box

This box in Box 13 should only be checked if the employee was an active participant in an employer retirement plan during 2011—not merely eligible. Incorrectly checking this box can affect the employee's ability to deduct IRA contributions. Solution: Review IRS guidelines on active participation in Publication 15-A before checking this box.

Mistake #6: Stapling or Folding Forms

Staple holes and creases interfere with machine reading. Solution: Mail forms flat without stapling W-2s together or to Form W-3. Use a large enough envelope to avoid folding. IRS.gov

Mistake #7: Filing Paper Forms When E-Filing Is Required

Employers with 250 or more W-2s must e-file or face penalties. Solution: Use the SSA's Business Services Online or approved payroll software if you meet the threshold. Request a waiver (Form 8508) at least 45 days before the deadline if you have a valid reason for not e-filing.

What Happens After You File

For Employers: After filing, the SSA processes your Forms W-2 and shares wage information with the IRS. The IRS uses this data to match against employees' individual tax returns filed in spring 2012. If your W-2s contain errors or discrepancies, the SSA or IRS may contact you for corrections. Properly filed forms protect you from penalties and ensure employees' Social Security earnings are credited correctly.

If you failed to file timely or filed incorrect information, penalty notices typically arrive months later. The penalty structure is tiered: $30 per form if you correct within 30 days, $60 per form if corrected by August 1, and $100 per form thereafter—with maximum annual penalties ranging from $75,000 to $1.5 million depending on business size. Intentional disregard carries a minimum $250 penalty per form with no cap. IRS.gov

For Employees: After receiving your W-2 by the end of January, you use it to complete your 2011 federal income tax return (Form 1040, 1040A, or 1040EZ), typically due April 15, 2012. You'll transfer information from Box 1 (wages) and Box 2 (federal income tax withheld) directly to your return. If you worked multiple jobs in 2011 and had more than $4,485.60 in Social Security tax withheld total, you can claim a credit for the excess on your return.

Your W-2 also helps determine eligibility for valuable credits like the Earned Income Credit (EIC). For 2011, you could qualify for EIC with income under $13,660 (single, no children) up to $49,078 (married filing jointly, three or more children).

Keep Copy C of your W-2 for at least 3 years after filing your tax return—but ideally keep it until you start receiving Social Security benefits, in case questions arise about your earnings history. The wages reported on your W-2 determine your future Social Security retirement and disability benefits. IRS.gov

If your employer files an incorrect W-2 with the SSA but you don't realize it until later, you may receive IRS notices about unreported income or face delays in Social Security benefit calculations. That's why it's critical to review your W-2 immediately upon receipt and request corrections promptly.

FAQs

1. What if I never received my W-2 by early February?

First, contact your employer directly. If your employer doesn't respond or can't provide your W-2 by the end of February, call the IRS at 800-829-1040. The IRS will contact your employer on your behalf. Be prepared to provide your name, address, SSN, employer's name and address, dates of employment, and an estimate of wages and taxes withheld.

2. My W-2 has an error in my wages or tax withheld. What should I do?

Ask your employer to correct the error immediately. They should file Form W-2c (Corrected Wage and Tax Statement) with the SSA and provide you with corrected copies. If your employer doesn't cooperate by the end of February, call the IRS at 800-829-1040 or visit an IRS Taxpayer Assistance Center to report the issue. IRS.gov

3. Can I file my tax return before receiving my W-2?

You shouldn't. You need the accurate information from your W-2 to complete your return correctly. If your W-2 is legitimately delayed and you've exhausted efforts to obtain it, you can file using Form 4852 (Substitute for Form W-2) as a last resort, but this may delay your refund and increase your audit risk.

4. I worked for two employers in 2011. Do I file both W-2s?

Yes. Report wage information from all W-2s on your tax return. If you had more than $106,800 in total Social Security wages across both jobs, you may have had excess Social Security tax withheld; you can claim a credit for amounts over $4,485.60 on your Form 1040.

5. What's Box 12 with all those codes?

Box 12 reports various types of compensation and benefits using letter codes. Common ones include: Code D (401(k) contributions), Code W (HSA contributions), Code DD (health coverage cost—for information only, not taxable), Code AA/BB/EE (Roth retirement contributions). Refer to the back of Copy C or IRS instructions for your specific codes. IRS.gov

6. My employer checked the "Retirement plan" box, but I never contributed. Is that correct?

Possibly. The "Retirement plan" checkbox indicates you were an active participant in an employer retirement plan during the year, even if you didn't personally contribute. If your employer contributed on your behalf or you were eligible for a match, you're an active participant. This affects how much of your traditional IRA contributions you can deduct, especially if your income exceeds certain thresholds.

7. Do I need to keep my W-2 after filing my taxes?

Yes. Keep Copy C for at least 3 years after your tax return due date in case of IRS questions. Better yet, keep it indefinitely or until you start receiving Social Security benefits—it's your proof of earnings for Social Security purposes. Compare your W-2 information annually with your Social Security Statement to catch any errors in your earnings record. IRS.gov

Sources

All information in this guide comes from official IRS publications:

2011 Instructions for Forms W-2 and W-3
2011 Form W-2 Wage and Tax Statement
IRS: If you don't get a W-2 or your W-2 is wrong