06c1 – Form W-2 Explained (Withholding Tax)

📘 What is Form W-2 ?

Employers in the U.S. give Form W-2, Wage and Tax Statement to employees each year.

It shows income earned and taxes withheld from pay checks.

🏦 Withholding Tax (shown on W-2) :-

When you earn wages, your employer withholds certain taxes from your pay check and reports them on your W-2:

1.   Federal Income Tax Withheld (Box 2)
o  Based on IRS tax tables and the information you gave on Form W-4.

2.   Social Security Tax Withheld (Box 4)
o  6.2% of wages (up to annual wage base limit).

3.   Medicare Tax Withheld (Box 6)
o  1.45% of wages (no limit, plus 0.9% extra if income is high).

4.   State & Local Taxes Withheld (Boxes 17 & 19, if applicable)
o  Based on your state/local income tax rules.

👉 At year-end, when you file your Form 1040, the amounts withheld on the W-2 are credited against your total tax liability.