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W
W-2

An IRS form that employers deliver to employees, typically in January. Form W-2 reports the total compensation income that the employee earned during the prior year and the amount that the employer withheld for all taxes. The minimum amount of yearly compensation income needed to receive Form W-2 is $600. Contractors and other nonemployees do not receive Form W-2 and instead receive Form 1099-MISC.

If the employee exercised nonqualified stock options during the tax year, Form W-2 includes exercise gains and amounts withheld for taxes. Gains from ISO exercises are reported on Form W-2 only if the employee made a disqualifying disposition with the shares. For restricted stock and restricted stock units, Form W-2 includes the value of the shares at vesting and the amounts withheld for taxes at vesting.

A section in the Tax Center on this website has FAQs with annotated diagrams that explain W-2 reporting for stock compensation.

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