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Six things to know about your W-2

W-2s are important forms in the working world that take record of more than just the money you've earned in the past year. Here are six things you should know about W-2s.

If you鈥檝e ever been somebody鈥檚 employee, you鈥檝e probably noticed that every January or February, you receive a form with a lot of little boxes on it in the mail. It鈥檚 not a bill 鈥� it鈥檚 a W-2, and every employer that paid you at least $600 during the year has to send you one.

The W-2 form, formally called the 鈥淲age and Tax Statement,鈥� details your compensation from an employer. Don鈥檛 confuse it with your W-4 鈥� that鈥檚 the form you use聽to tell your employer how much tax to withhold from your paycheck every pay period. And notice the key word here:聽employer. Freelancers or contract workers get聽s from their clients, not W-2s.

The W-2 form is really important. For most people, the information on it determines whether they鈥檙e聽聽in April. Here are six聽things you need to know about how to handle it.

1. You need your W-2 to do your taxes

Your聽W-2 tells you聽how much聽you earned in the past year and how much you already paid in taxes on those earnings. When you聽, you鈥檒l need the W-2 to fill in a lot of the information.

2. It鈥檚 about more than just your pay

Sure, your W-2 shows how much you earned in wages and tips. But it also details other stuff, such as the amount you contributed to your retirement plan during the year, how much your employer paid for your health insurance, or聽even the amount聽you鈥檝e received in聽. All of that data聽affects your tax picture 鈥斅�, for example.

3. It鈥檚 not a secret

Employers are legally required to send copies of your W-2 to the Social Security Administration (鈥淐opy A鈥�) and your state and local tax authorities (鈥淐opy 1鈥�). So you won鈥檛 get away with anything if you just shove your W-2 in a drawer and decide not to put the information on your tax return. In fact, you鈥檒l probably get a terse聽letter and a few months鈥� worth of headaches from the IRS 鈥� and the state, if your state has income taxes 鈥� after聽they compare your return to the information your employer sent to the Social Security Administration.

4. Your employer has to send you a W-2聽by the end of January

The IRS requires employers to furnish their W-2s to the government and employees by Jan. 31 or face penalties. The IRS defines furnish as 鈥済et it in the mail,鈥� which means you should have your W-2 in hand by the first week of February. Employers can also send employees their聽W-2s electronically, but it鈥檚 not required.

Even if you quit your job months ago, your ex-employer can still wait until Jan. 31 to send you a W-2 鈥� unless you ask for it earlier, in which case the employer has 30 days to provide it.

5. Your employer might make an error

If your employer leaves out a decimal point, gets your name or a dollar amount wrong, or checks the wrong box 鈥� it happens 鈥� point out the mistake and ask for a corrected W-2. Pointing out the mistake and waiting for a new W-2 will cost you time, but here鈥檚 something that could make you feel better: The IRS might fine your employer if the error involves a dollar amount or 鈥渁 significant item鈥� in your address.

6.聽The correct聽address is really important

If your W-2 doesn鈥檛 show up by Valentine鈥檚 Day, first ask your employer for a copy and make sure it鈥檚 got the right address. If that doesn鈥檛 fix things, call the IRS (1-800-829-1040). You鈥檒l need to provide information about when you worked and an estimate of what you were paid.

Remember that your tax return is still due in April, so you might need to estimate your earnings and withholdings to get it done on time.聽. Plus, the IRS might delay processing your return 鈥� read: refund 鈥� while it tries to verify your information. If your W-2 finally shows up after you already filed your tax return, you might need to go back and amend it.

Tina Orem is a staff writer at NerdWallet, a personal finance website. Email:torem@nerdwallet.com.

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