Every year, your employer is supposed to give you a Form W-2, which is a report of your wages and salary during the previous year of employment. Your W-2 will not only display how much you’ve made, but how much your wages were taxed. This document may look confusing at first glance, but we’ll explain everything you need to know.
Who receives a W-2?
Anyone who is employed at a traditional job will be given a W-2 form, whether you work for a small, local business or an international company. Self-employed workers and independent contractors do not receive a W-2; instead, these workers are given a Form 1099 by their clients and are responsible for calculating and paying taxes themselves.
Employers are required to send you the W-2 no later than January 31st. While some employers may still mail a physical copy to your home, many allow employees to access their W-2 online and download a digital copy. In larger companies, this is the norm.
What personal information is on the Form W-2?
Boxes A-F contain personal information unrelated to your wages. If you happen to move or change your name, notify your human resources representative ahead of time so everything on your W-2 is correct. You can also report inaccuracies if you have already received your W-2, and you can have a new one issued to you.
Aside from the basic info such as your name and address, you’ll find some boxes labeled “Employer Identification Number (C)”and “Control Number (D)”. E-file services will prompt you for the EIN when you try to import your W-2. Some forms may not have a control number at all, which is not a problem. You will still be able to file electronically; you just might have to manually enter your W-2 information.
Boxes 1 – 20 Contain Wage Information
There are twenty boxes dedicated to federal, state, and local tax information. Some of these boxes will be left blank on your W-2, depending on your job. There’s no need to worry. Here’s a brief overview of each of the boxes.
- Box 1: Wages, tips, other compensation
The total taxable income you brought home. Aside from your expected salary, this includes extra compensation such as bonuses. This doesn’t include any pre-taxed income, such as 401k contributions.
- Box 2: Federal income tax withheld
The amount of federal income tax taken from your paychecks throughout the year.
- Box 3: Social security wages
The sum of your wages that are subject to the social security tax. There’s a limit to how much of your money can be taxed; as of 2015, the social security wage base is $118,500.
- Box 4: Social Security tax withheld
The social security tax is a flat rate of 6.2% on your wages up to the wage base limit.
- Box 5: Medicare wages and tips
Unlike social security, there is no wage base limit. All of your salary—including income tax-deferred money in your 401k—is subject to the Medicare tax.
- Box 6: Medicare tax withheld
As of 2015, the Medicare tax rate was 2.9% (3.8% for high-income earners) of your eligible Medicare wages.
- Box 7: Social Security tips
This is the amount of tips reported to your employer. If you don’t earn tips, this space will be blank. This number is accounted for in Box 1’s total, and combined with the wages in Box 3, they won’t exceed the Social Security wage base.
- Box 8: Allocated tips
Allocated tips have been given to you by your employer. Unlike the other tip wages, you have to calculate Social Security and Medicare taxes on your own.
- Box 9
You might be wondering why this box is mysteriously grayed out. It used to indicate any advances of the earned income credit. As of 2010, you could no longer receive an EIC advance, so consider Box 9 obsolete.
- Box 10: Dependent Care Benefits
Did you receive any reimbursement for dependent care expenses? If the amount exceeds $5,000, it is considered a taxable wage and will be counted in boxes 1, 3, and 5.
- Box 11: Nonqualified plans
List any payments you received from a non-qualified deferred compensation plan or non-government pension.
- Box 12: “See instructions for Box 12”
There are 30 different codes you can report in Box 12, all relating to certain types of compensation or benefits you’ve received. Codes are used to indicate anything from uncollected Medicare tax to receiving tax-exempt sick pay. You’ll have to refer to page 27 of the IRS’s W-2 instructions for a full list.
- Box 13
If you are a statutory employee, made contributions to your employer’s retirement plan, or received sick pay from your employer’s third party insurance policy, then check the corresponding boxes.
- Box 14: Other
For any other sources of income not listed above. Note expenses such as union dues or taxed retirement contributions.
- Boxes 15 through 20: State and Local Tax Information
Extremely similar to the information in boxes A through F. Your employer will have a unique state tax identification number. If you worked in the same state and city throughout the year, this will be a repeat of the wage information from the previous boxes.