Understanding Your 2015 W-2
When our W-2 forms arrive via iPay or interoffice mail, some of us will have our tax returns
prepared right away in anticipation of a sizeable refund. Others will file their W-2 in a drawer
until April 15, when they will once again experience the familiar adrenaline rush associated
with frantically attempting ot meet the IRS deadline!
The W-2 document is essential to the tax filing process. No matter how confusing the tax form,
we can usually muddle through the portions that say “Enter the amount from box 1 of your
W-2 here”. But do we fully understand what is represented in any of the boxes that are on the
W-2? What is the difference between Medicare wages and tips and State wages and tips?
Here is an explanation of some of the key boxes, and their contents, found on the W-2:

Box 1 Wages, tips, other compensation – the earnings reflected in this box are
calculated as follows:
Gross Wages
Less
Less
Less
Plus
Plus
Plus


Includes all earning plus Taxable Fringe Benefits (such as Auto
Allowance) and the income realized from the exercise of Stock
Options
Includes 401K contributions
Federal Tax
Exempt
Wages
Deferred
Includes contributions to Non-Qualified Deferred Compensation
Compensation
Cafeteria 125 Includes deductions take on a pre-tax basis for many First
Benefits
Commonwealth voluntary benefits, including Healthcare, Dental,
Vision, Medical Flexible Spending Account (FSA), health Savings
Account (HSA) and Supplemental Short Term Disability insurances.
Group Term Taxable cost for coverage provided by First Commonwealth in
Life
excess of $50,000
Third Party
Includes Payments received from Colonial while on short-term
Sick Pay
disability.
Other
Any earnings not covered above (usually not applicable at First
Compensation Commonwealth)
Box 2 Federal Income Tax Withheld – this reflects the federal income tax (FIT)
withheld from your pay, based upon the information submitted on your W-4, and
remitted by First Commonwealth.
Box 3 Social Security Wages – The 2015 wage base for the social security portion of
FICA was $118,500. In other words, eligible earnings in excess of $118,500 are not
taxed.
If you had excess social security taxes withheld, you can claim a credit when you file your tax
return. Social security wages are calculated as follows:
Gross Wages
Includes all earnings plus Taxable Fringe Benefits (such as
Auto Allowance) and the income realized from the
exercise of Stock Options
Less
Less
Plus
Plus
Plus


Social Security
Exempt Wages
Cafeteria 125
Benefits
Includes the income realized on the exercise of qualified
(incentive) stock options
Includes deductions taken on a pre-tax basis for many
First Commonwealth voluntary benefits, including
Healthcare, Dental, Vision, Medical Flexible Spending
Account (FSA), Health Savings Account (HSA) and
Supplemental Short Term Disability insurances.
Group Term
Taxable cost for coverage provided by First
Life
Commonwealth in excess of $50,000
Third Party Sick Includes payments received from Colonial while on shortPay
term disability
Other
Any earnings not covered above (usually not applicable at
Compensation First Commonwealth)
Box 4 Social Security Tax Withheld – Withheld at a rate of 6.2% of Social Security
Wages.
Box 5 Medicare wages and tips – There is no wage base associated with the Medicare
portion of FICA; however,an additional tax does apply for earnings in excess of
$200,000. Eligible wages are calculated as follows:
Includes all earnings plus Taxable Fringe Benefits (such as Auto
Allowance) and the income realized from the exercise of Stock
Options
Medicare Tax Includes the income realized on the exercise of qualified (incentive)
Exempt Wages stock options
Cafeteria 125 Includes deductions taken on a pre-tax basis for many First
Benefits
Commonwealth voluntary benefits, including Healthcare, Dental,
Vision, Medical Flexible Spending Account (FSA), Health Savings
Account (HSA), and Supplemental Short Term Disability
insurances.
Group Term
Taxable cost for coverage provided by First Commonwealth in
Life
excess of $50,000
Third Party Sick Includes payments received from Colonial while on short-term
Pay
disability
Other
Any items not covered above (usually not applicable at First
Compensation Commonwealth)
Gross Wages
Less
Less
Plus
Plus
Plus


Box 6 Medicare Tax Withheld – Withheld at a rate of 1.45% of Medicare wages and
tips. An additional 0.90% is withheld on earnings in excess of $200,000.
Box 12 Employer Use – Items in this box are generally included as taxable earnings in
one or more of the boxes on the W-2, but are also separated in Box 12 with a letter code
as designated by the IRS. The amount of Code DD is not included in any other boxes on
the 2015 W-2, this amount is for information purposes only. A full list of the letter codes
is provided on the back of your W-2; however, the codes most applicable to First
Commonwealth employees include the following:
C
D
DD
Taxable Group Term Life cost (coverage over $50,000)
401K deferral contributions
Aggregate reportable cost of the following insurances: Cancer, Critical Illness, and
Healthcare (cost paid by employer and employee)
HSA deferrals
W


Box 14 Other - Pennsylvania Employee SUI is withheld at a rate of .07% of gross wages
for 2015
Box 16 State wages, tips, etc. – Earnings subject to PA state income tax withholding are
calculated as follows:
Gross Wages
Less
Less
Less
Plus
Plus


State Tax
Exempt Wages
Deferred
Includes contributions to Non-Qualified Deferred Compensation
Compensation
Cafeteria 125 Includes deductions taken on a pre-tax basis for many First
Benefits
Commonwealth voluntary benefits, including Healthcare, Dental,
Vision, Medical Flexible Spending Account (FSA), Health Savings
Account (HSA), and Supplemental Short Term Disability
insurances. (Exempt voluntary deductions/benefits may vary
between states; i.e., 401(k) is exempt from taxable state wages for
OH and WV residents)
Group Term
Taxable cost for coverage provided by First Commonwealth in
Life
excess of $50,000, not applicable for PA residents
Other
Any items not covered above (usually not applicable at First
Compensation Commonwealth)
Box 17 State income tax – Withheld in 2015 as a percentage of state wages and tips;
rates vary by state
Box 18 Local wages, tips, etc. – Earnings subject to PA local tax withholding are
calculated as follows:
Gross Wages
Less
Less
Less
Includes all earnings plus Taxable Fringe Benefits (such as Auto
Allowance) and the income realized from the exercise of Stock
Options
Currently no applicable items at First Commonwealth
Includes all earnings plus Taxable Fringe Benefits (such as Auto
Allowance) and the income realized from the exercise of Stock
Options
Currently no applicable items at First Commonwealth
Local Tax
Exempt Wages
Deferred
Includes contributions to Non-Qualified Deferred Compensation
Compensation
Cafeteria 125 Includes deductions taken on a pre-tax basis for many First
Benefits
Commonwealth voluntary benefits, including Healthcare, Dental,
Vision, Medical Flexible Spending Account (FSA), Health Savings
Plus

Account (HSA), and Supplemental Short Term Disability
insurances. (Exempt voluntary deductions/benefits may vary
between states)
Other
Any items not covered above (usually not applicable at First
Compensation Commonwealth)
Box 19 Local income tax – The amount in this box reflects the income tax withheld at
the assigned rate for the PA school district, borough, or municipality designated by the
employee.
Receiving multiple W-2's from First Commonwealth may be a result of one of the following
reasons:



A transfer between affiliates during the year. Although we are one company as First
Commonwealth, each affiliate has a separate Employer ID for tax filing and legal
purposes.
A change in work location during the year may result in receiving multiple W-2s.
A new home address during the year; moving to a new borough, municipality, or school
district may result in receiving multiple W-2s for EIT (Earned Income Tax or Local
Income Tax) filing purposes.
If you would like to learn more about your W-2, you can access general information from your
home PC by visiting www.irs.gov.