From
Understanding
Your W-2 Form
Knowing how to read a Form W-2, or Wage
and Tax Statement, can help you understand
your total overall compensation, and also
help you get a head start when preparing
your taxes. Not all the information recorded
in the boxes of your W-2 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.
While there are a variety of different forms
your W-2 can take, they all contain the
same information. Here's a line-by-line guide
to reading your Form W-2. A blank copy of a
W-2 is available on the last page of this
document.
Employer and Employee Identification
(Boxes lettered A through F)
•
Box A: This is your Social Security
number.
•
Box B: This is your employer's unique
tax identification number.
•
Box C: This identifies the name and
mailing address of your employer. The
address may show your company's
headquarters rather than its local
address, if your company has multiple locations.
•
Box D: The control number is a code that identifies this unique Form W-2 in your
employer's records. This number is assigned by the company's payroll processing
software.
•
Box E: This identifies your full name (first name, middle initial and last name).
•
Box F: This identifies your mailing address.
Knowing how to read a Form W-2 can help you
understand your total overall compensation, and also
help you get a head start when preparing your taxes.
If any of the above information is incorrect or outdated, inform your employer’s human
resources or payroll department so they can correct it and issue you a new Form W-2
if necessary.
Numbered Boxes on Form W-2
•
Box 1: Wages, tips and other compensation. This is the total of your taxable
wages, tips and other compensation and taxable fringe benefits. This can include
back pay, bonuses, commissions, severance or dismissal pay and vacation pay.
•
Box 2: Federal income tax withheld. Box 2 reports the total amount withheld
from your paycheck for federal income taxes. This represents the amount of
federal taxes you have paid throughout the year.
•
Box 3: Social Security wages. Box 3 reports the total amount of wages subject
to the Social Security tax. For 2014, the Social Security tax is assessed on wages
up to $117,000. This limit is called the Social Security wage base. Wages above
the Social Security wage base are not subject to the Social Security tax.
•
Box 4: Social Security tax withheld. Box 4 reports the total amount of Social
Security taxes withheld from your paycheck. Normally, the Social Security tax is
6.2 percent of your wage income. That means the highest figure that can be
shown in Box 4 is $7,254.40 ($117,000 maximum wage base times 6.2 percent).
This Know Your Benefits article is provided by Baldwin Krystyn Sherman Partners and is
to be used for informational purposes only and is not intended to replace the advice of an
insurance professional. Visit us at http://www.bks-partners.com/. ©2014 Zywave, Inc. All
rights reserved.
Understanding Your W-2 Form
•
Box 5: Medicare wages and tips. This
is the total of your wages and tips that
are subject to the Medicare tax. There is
no limit on Medicare tax.
•
Box 6: Medicare tax withheld. Box 6
reports the amount of taxes withheld from
your paycheck for the Medicare tax. The
Medicare tax has a flat tax rate of 1.45
percent of your total Medicare wages.
Higher-income employees may be
subject to withholding for the Additional
Medicare Tax at a rate of 0.9 percent.
•
•
•
•
Box 7: Social Security tips. Box 7
reports the amount of tip income that you
reported to your employer. If you did not
report tips to your employer, you will not
have an amount in this box. This amount
is already included in Box 1.
•
Box 11: Nonqualified plans. This amount can be one of two things. It can be a
distribution made to you from a nonqualified deferred compensation plan or
nongovernmental section 457 plan. In this case, the taxable amount is included in
Box 1.
Box 11 can also 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: Deferred compensation and other compensation. There are several
types of compensation and benefits that may be reported in Box 12. Box 12 will
report a single-letter or double-letter code followed by a dollar amount. Some of
these codes have already been reported in other areas of the W-2 as part of other
amounts, but are isolated here for tax reporting purposes. Others have not been
reported elsewhere on your W-2.
Here are the codes for Box 12:
1.
Code A. Uncollected Social Security or railroad retirement (RRTA) tax on
tips.
Box 8: Allocated tips. Box 8 reports any
tip income allocated to you by your
employer.
2.
Code B. Uncollected Medicare tax on tips.
3.
Box 9: No longer used. Box 9 was used
to report any advance of the Earned
Income Credit, but this arrangement
ended in 2010.
Code C. Taxable benefit of group term life insurance over $50,000. This
amount is included as part of your taxable wages in Boxes 1, 3 and 5.
4.
Code D. Non-taxable elective salary deferrals to a 401(k) or SIMPLE 401(k)
retirement plan.
5.
Code E. Non-taxable elective salary deferrals to a 403(b) retirement plan.
6.
Code F. Non-taxable elective salary deferrals to a 408(k)(6) SEP retirement
plan.
7.
Code G. Non-taxable elective salary deferrals and non-elective employer
contributions to a 457(b) retirement plan.
8.
Code H. Non-taxable elective salary deferrals to a 501(c)(18)(D) tax-exempt
plan. This amount is included in Box 1 wages.
Box 10: Dependent care benefits. Box
10 shows the total amount of dependent
care benefits that your employer paid to
you or incurred on your behalf. This
would include employer-provided day
care costs, or employer-reimbursed day
care costs. Amounts under $5,000 are
non-taxable benefits. Any amount over
$5,000 is reported as taxable wages in
Boxes 1, 3 and 5.
Understanding Your W-2 Form
9.
Code J. Non-taxable sick pay. This
amount is not included in taxable
wages in Boxes 1, 3 or 5.
amount is already included as taxable income in Boxes 1, 3 and 5.
20. Code W. Employer and employee contributions to a health savings account.
21. Code Y. Salary deferrals under 409A non-qualified deferred compensation
plan.
10. Code K. Excise tax (equal to 20
percent) on excess "golden
parachute" payments.
22. Code Z. Income received under 409A non-qualified deferred compensation
plan. This amount is already included in taxable wages in Box 1.
11. Code L. Non-taxable
reimbursements for employee
business expenses.
23. Code AA. After-tax contributions to a Roth 401(k) retirement plan. This
amount is already included in taxable wages in Box 1.
12. Code M. Uncollected Social
Security or RRTA tax on taxable
group term life insurance over
$50,000 for former employees.
24. Code BB. After-tax contributions to a Roth 403(b) retirement plan. This
amount is already included in taxable wages in Box 1.
25. Code DD. The cost of non-taxable health insurance provided through your
employer.
13. Code N. Uncollected Medicare tax
on taxable group term life insurance
over $50,000 for former employees.
14. Code P. Non-taxable
reimbursements for employee
moving expenses, if the amounts
were paid directly to the employee.
26. Code EE. After-tax contributions to a Roth 457(b) retirement plan offered by
government employers. This amount is already included in taxable wages in
Box 1.
•
Box 13: Check the box. There are three checkboxes in Box 13. Boxes will be
checked off if any of these situations apply to you as an employee.
1.
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 homeworkers can file as self-employed instead of filing as employees.
17. Code S. Non-taxable salary deferral
to a 408(p) SIMPLE retirement
plan.
2.
“Retirement plan” means that you participated in your employer's retirement
plan during the year. This might be a 401(k) plan, 403(b) plan, SEP-IRA,
SIMPLE-IRA or other type of pension plan.
18. Code T. Employer-paid adoption
benefits.
3.
“Third-party sick pay” means that you received sick pay under your
employer's third-party insurance policy (instead of receiving sick pay directly
from your employer as part of your regular paycheck).
15. Code Q. Non-taxable combat pay.
16. Code R. Employer contributions to
an Archer medical savings account.
19. Code V. Income from the exercise
of non-statutory stock options. This
•
Box 14: Other tax information. Your employer may report additional tax
information in Box 14. If any amounts are reported, they will have a brief
Understanding Your W-2 Form
description of what the amounts are for.
Items that may be reported here include
union dues, employer-paid tuition
assistance and after-tax contributions to
a retirement plan. Some employers report
certain state and local taxes in Box 14,
such as State Disability Insurance (SDI)
premiums.
•
Box 15: State and state employer's
identification. Box 15 reports your
employer's state and state tax
identification number. If you worked for
the same employer in multiple states,
there may be multiple lines of
information.
•
Box 16: State wages. Box 16 reports the
total amount of taxable wages earned in
that state. If you worked for the same
employer in multiple states, there may be
multiple lines of information.
•
Box 17: State income tax withheld. Box
17 reports the total amount of state
income taxes withheld from your
paychecks for the wages reported in Box
16.
•
Box 18: Local wages. Box 18 reports
the total amount of wages subject to
local, city or other state income taxes.
•
Box 19: Local income tax withheld.
Box 19 reports the total amount of taxes
withheld from your paychecks for local,
city or other state income taxes.
•
Box 20: Locality name. Box 20 provides
a brief description of the local, city or
other state tax being paid. The
description may identify a particular city, or may identify a state tax such as SDI
payments.
A blank copy of a W-2 Form is available on the next page. For additional clarification,
or if you have any questions about how to report income and deductions, please
consult your employer’s human resources or payroll department or a qualified tax
professional.
Understanding Your W-2 Form