The Breakdown of a W-2
With April 15th right around the corner, getting your taxes filed is of the utmost importance. For many individuals, your W-2 is a key component to this process, but what do all these boxes mean? While some of the boxes may seem straightforward, many of them can be rather confusing. Here is a breakdown of what the boxes actually mean:
Box 1: “Wage, tips, and other compensation”: This box is for your wage and tips that are taxable by the Federal Income tax for the year. Your pre-tax retirement and benefits are deducted from this, while your taxable benefits are added back.
Box 2: “Federal Income tax withheld”: This is federal income tax that was withheld from your pay based on the W-4 you filed with your employer.
Box 3: “Social security wages”: These wages are calculated by adding the amount in Box 1 with your retirement deductions from Box 12.
Box 4: “Social security tax withheld”: This represents the Social Security tax withheld from your pay.
Box 5: “Medicare wages and tips”: These are the wages that are subject to the Medicare tax.
Box 6: “Medicare tax withheld”: This is the Medicare tax withheld from your pay based on a rate of 1.45%.
Box 7: “Social Security tips”: These are the tips subject to the Social Security tax. Notice that unlike the Federal income and Medicare taxes, Social Security tips are separated into their own box.
Box 8: “Allocated tips”: This amount is not included in Boxes 1,3, 5, or 7. For more information on reporting this amount, see the instructions on Form 1040.
Box 9: This box was discontinued and remains shaded on your W-2.
Box 10: “Dependent care benefits”: This box reports any amounts that have been reimbursed or incurred by your employer for dependent care services.
Box 11: “Non-qualified plans”: This box reports distributions from the employer’s non-qualified distribution plan or a nongovernmental 457(b) pension plan.
Box 12: This box reports contributions, deferrals, and uncollected taxes using a single or double letter code and a dollar amount. A list of codes and their descriptions can be found in the W-2 general instructions.
Box 13: This box offers three possible situations. The respective box should be checked if any of these situations apply to you.
Box 14: “Other tax information”: This box is for employers to report additional tax information. This can include union dues, employer-paid tuition assistance, adoption benefits paid from a section 125 plan, and more
Box 15: “State and Employer’s State ID”: This box displays the abbreviation for the employer’s state along with their state tax identification number.
Box 16: “State wages, tip, etc.”: This box displays wages and tips that are taxable under the state’s income tax.
Box 17: “State income tax”: This box displays the amount withheld from your pay for the state income tax.
Box 18: “Local wages, tip, etc.”: This box displays the wages, tips, and compensation that are subject to city, municipal, school district, county, or other local taxes.
Box 19: “Local income tax”: This box displays the amount withheld from your pay for city, municipal, school district, county, or other local taxes.
Box 20: “Locality name”: This is the code or name of the locality for which your local taxes were withheld.
Many organizations with modern self-service software offer employees the option to receive an electronic W-2. The electronic process is faster, more secure, and more eco-friendly. Ask your employer about your options to receive an electronic W-2. Additionally, employees are able to receive their tax information quickly and access it online from anywhere.
For more information on your W-2, please visit: https://taxes.about.com/od/formw2/a/IRSFormW2_2.htm