You should receive your W2 from your employer by the end of January. This is your wage and tax statement and is key to filing your taxes.
• Describes the three separate parts of the W2 form
• Explains in detail each box on your W2 form
• Suggests an easier method of filing your tax return
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You should receive a W2 form for each job you held during the year.
There are three parts to every W2 form. These parts are actually just copies of your W2, but they are to be sent to different places:
Part A which you include with your state tax return
Part B which you include with your federal tax return, and
Part C which you should keep for your own records
If you are self-employed, you will not get a W2. Instead you need to fill out Schedule C or, if you're a farmer, Schedule F.
Not all the information recorded in the boxes of your W2 is necessary when filing your taxes. Often, the amounts recorded are never transferred to your tax return. They are just there to show you the different income base for different taxes or to record other information such as union dues.
I order to help you can get a good understanding of your W2 form, we've compiled a list of explanations for the contents of each box. Some you'll never deal with, others are self-explanatory, but, by the end, you should know what every number or letter on your W2 means.
Box a - the control number for your employer. It doesn't matter if there is an entry or not.
Box b - the employer's identification number (EIN). Employer's with one or more employee must have and EIN. The number is not entered onto your tax return.
Box c - the employer's name, address and ZIP code. This is pretty self-explanatory. Make any corrections on all 3 W2s.
Box d - your social security number. Verify that this number is correct. You can ask for another W2 from your employer or you can correct it yourself. If you correct it yourself, make sure you still tell your employer, so your records are corrected and the Social Security Administration is informed of the mistake.
Box e - your name. Again, verify. Make corrections if necessary.
Box f - your home address and ZIP code. Verify and correct if needed. You don't want your refund sent to a different address!
Box 1 - the total of your taxable wages, tips, other compensation and taxable fringe benefits. This can include back pay, bonuses, commissions, severance or dismissal pay, and vacation pay. For more info, see W2 Wages.
Box 2 - the total amount of federal income tax that was withheld from your salary. (Remember when you filled out your W4?)
Box 3 - the total in wages that were subject to the social security tax. In 2014, your eligible wages, up to $113,700 are subject to social security tax of 6.2%. Wages you earned above this amount, even if the wages are from two jobs, are not subject to the social security tax. Wages not subject to social security tax are not included in this number, such as some retirement plan contributions.
Box 4 - the total amount of social security tax withheld from your salary. For 2014, the amount of social security tax is 6.2% of your wages. The maximum amount you ever have to pay in social security tax for this past year is $7,049. If your total on all your W2 forms is over this amount, you get a refund.
Box 5 - the total of your wages and tips that are subject to Medicare tax. There is no limit on Medicare tax.
Box 6 - the total you paid in Medicare tax already. Medicare tax is 1.45% (2.9% if you are self-employed) of your wages and tips.
Box 7 - the total amount in tips you reported to your employer. This amount is already included in Box 1.
Box 8 - the total in allocated tips. If you worked in a restaurant but didn't report all your tips to your employer, then this box lists the difference between what you reported in tips and your share of 8% of the restaurant's income. If there is any amount listed here, it was not included in Box 1, the total of wages and salaries. When you report your salary on your 1040, you need to add Box 1 and Box 8 and enter this total on your 1040 for "wages, salaries, and tips". If you do have a number in Box 8 you also need to complete Form 4137, Social Security and Medicare Tax on Unreported Tip Income. See federal tax forms.
Box 9 - your Advance Earned Income payment. If you qualify for the earned income credit, you can apply to receive the money before you actually file your taxes. To do this, Form W-5, EIC advance Payment Certificate needs to completed and filed with your employer. Up to 60% of the amount you would receive as credit when you filed your taxes in April, will then be added to your paycheck. Box 9 lists the amount that was already refunded to you during the year. When you file your taxes, this amount needs to be recorded as earned income credit payments on you tax return.
Box 10 - the total in dependent care benefits. If your employer reimburses you for day-care costs or if your employer provides day-care services, Box 10 should not be empty. If the reimbursement for or value of day-care for your child is above $5,000, then the excess is taxable. Don't do anything yet!! The excess amount in Box 10 is already included in Box 1, so don't add it to your total wages and get taxed on it twice!! Instead, fill out Form 2441, Child and Dependent Care Expenses, to see if you need to pay tax on any amount below $5,000 or how much tax you need to pay on the amount above $5,000.
Box 11 - this amount can be two things. It is either a distribution made to you from a non-qualified deferred compensation plan or nongovernmental section 457 plan. In this case the taxable amount is included in Box 1. Or, it can be a prior year deferral under a non-qualified or section 457 plan that became taxable for social security and Medicare taxes this year because there is no longer a substantial risk of forfeiture of your right to the deferred amount. These amounts are also included in Box 3 and/or Box 5.
Box 12 - a monetary amount followed by a letter code. On the back of your W2, are explanations for any codes that you see listed here. The box includes 401(k) contributions, the premium on group life insurance over $50,000, nontaxable sick pay, employer contributions to your medical savings account, and uncollected social security and Medicare taxes. You see most often codes C, D, E, J, L, and Q. Any amounts with codes A,B,M, or N should be entered on your 1040 line 57, with the notation "UT" meaning uncollected tax. Luckily for you, we also provide a list of all W2 form codes that may appear in Box 12.
Box 13 - may have a box checked that indicates whether you are a statutory employee, a participant of your employer's retirement plan or received third party sick pay.
Statutory employees are employees whose earnings are subject to social security and Medicare tax, but not income tax. Full-time life insurance salespeople (traveling or not), agents, commission drivers, and home-workers can file as self-employed instead of filing as employees. The benefit of filing as such is to deduct business expenses, which can include the cost of travel, entertainment, and business use of your car, directly on the Schedule instead of itemizing them on Schedule A. The difference is that your business expense deductions are reduced if they're itemized, but they aren't if you deduct them on Schedule C.
The retirement plan box is checked if you participate in an employer retirement plan, information which the IRS uses to determine if you're eligible to contribute to an IRA.
Third-party sick pay may be checked if you received any compensation from an insurance company, under your employer's plan, while you were not working due to illness. Unless your employer transfers the responsibility to you, you are not required to pay any tax on this amount.
Box 14 - records any other information for the employee, such as union dues, health insurance premiums, and educational assistance payments. Contributions to retirement plans that have no code can be listed here too. All entries should be clearly labeled. Most will be nontaxable earned income.
Boxes 15- 20 - The following boxes are primarily used when you file your state and local tax return. However, if you are itemizing, the state and local taxes you paid during the year can be included in your deduction.
Box 15 - employer's state and I.D. number
Box 16 - your state wages, tips and compensation.
Box 17 - total state income tax you paid.
Box 18 - locality name.
Box 19 - your local wages, tips and compensation.
Box 20 - total local income tax you paid.
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