Understanding your W-2

Everything you need to know about the W-2 form.

Understanding your W-2

Form W-2 Overview

Form W-2 is the annual "Wage and Tax Statement" that reports the taxable income you earned from an employer to you and to the Internal Revenue Service (IRS). The form also includes taxes withheld from your pay, such as Social Security and Medicare.


All these taxes are withheld from your pay and submitted to federal and state taxing authorities on your behalf. Multiple boxes appear on the form, each citing a certain portion of your earnings and withholding. Each box is labeled, but understanding what each of these notations means can make the process of correctly transferring the information to your tax return much easier.

Understanding your W-2

How to read and understand your W-2

What the lettered boxes mean

Form W-2 actually comes in a variety of sizes, shapes, and formats. What you'll see when you look at yours depends on how your employer processes payroll, but every Form W-2 contains the same information regardless.

Boxes A through F are all identifying information: your Social Security number, your employer's tax ID number or EIN, everyone's addresses, and their full legal names. Box D is a control number that identifies your unique Form W-2 document in your employer's records.

What the numbered boxes mean

The numbered boxes on Form W-2 record your financial information.

W-2 Box 1: reports your total taxable wages or salary. The number includes your wages, salary, tips you reported, bonuses, and other taxable compensation.4

Taxable fringe benefits such as group term life insurance are included here, but Box 1 does not include any pre-tax benefits such as savings contributions to a 401(k) plan, 403(b) plan, or health insurance.

W-2 Box 2: reports how much your employer withheld from your paychecks for federal income taxes.

W-2 Box 3: reports the total amount of your wages that are subject to Social Security tax. This tax is assessed up to a specific "wage base" that is adjusted annually to adapt for inflation.

W-2 Box 4: reports the total amount of Social Security taxes withheld from your paychecks. 

W-2 Box 5: reports the amount of your wages that are subject to the Medicare tax. There's no maximum wage base for Medicare.

W-2 Box 6: reports how much in taxes that were withheld from your paychecks for the Medicare tax.

W-2 Box 7: shows any tip income you've reported to your employer. It will be empty if you didn't report any tips.

W-2 Box 8: reports any tip income that was allocated to you by your employer. This amount is not included in the wages that are reported in Boxes 1, 3, 5, or 7.

W-2 Box 9: was once used to report any advance of the earned income credit, but this tax perk ended in 2011 after the Education, Jobs and Medicaid Assistance Act of 2010. Box 9 should therefore be empty.

W-2 Box 10: reports any amounts you might have been reimbursed for dependent care expenses through a flexible spending account, or the dollar value of dependent care services provided to you by your employer.

W-2 Box 11: reports any payments that were distributed to you from your employer's non-qualified deferred compensation plan or a non-government Section 457 pension plan. The amount in Box 11 is already included as taxable wages in Box 1.

W-2 Box 12: applies to deferred compensation and other compensation. Several types of compensation and benefits can be reported in Box 12, so the IRS has simplified this as much as possible by allowing your employer to enter a single letter or double letter code followed by the dollar amount of your compensation.

W-2 Box 13: has three check boxes. They first will be marked off if you're a statutory employee. This means that you would report the wages from this W-2—and any other W-2 forms you receive that are marked "statutory employee"—on Schedule C of Form 1040.15 

 

Your wages are not subject to income tax withholding so you should see a zero in Box 2, or it should be blank. Earnings are subject to Social Security and Medicare tax, however, so Boxes 3 through 6 should be filled out.

These boxes will also be checked if you participated in your employer's retirement plan during the tax year. This might be a 401(k) plan, a 403(b) plan, SEP-IRA, SIMPLE-IRA, or another type of pension plan. 

Finally, these boxes will be checked if you received third-party 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. Sick pay is not included in your Box 1 wages, although it is usually subject to Social Security and Medicare taxes.

W-2 Box 14: may contain additional tax information your employer may choose to report. Any amounts reported in Box 14 should include a brief description of what they're for. Union dues, employer-paid tuition assistance, or after-tax contributions to a retirement plan can be reported here. Some employers may report certain state and local taxes in Box 14.

W-2 Box 15: reports your employer's state and state tax identification number.

W-2 Box 16: reports the total taxable wages you earned in that state. There might be multiple lines of information here, too, if you worked for the same employer in multiple states.

W-2 Box 17: reports the total amount of state income taxes withheld from your paychecks for the wages reported in Box 16.

W-2 Box 18: reports wages that are subject to local, city, or other state income taxes.

W-2 Box 19: reports the total taxes withheld from your paychecks for local, city, or other state income taxes. This amount might also be deductible as part of the deduction for state and local income taxes on Schedule A.

W-2 Box 20: provides a brief description of the local, city, or other state tax being paid.

Understanding you W-2

What do I do with a W-2?

For employees, your W-2 is crucial when filing your annual tax return, as it provides vital information for filing and is required by the IRS to be attached to the front of your Form 1040. You will also notice that you have received multiple copies of the form, each of which gets filed differently. Whether you are going to prepare your taxes on your own or use a tax preparation service, the information provided on your W-2 will be important to the filing of your taxes.

Understanding your W-2

When should I receive my W-2?

You should receive a W-2 form by the begining of February, as employers are required to mail them to you on or before January 31 according to IRS tax deadlines. If you have not recieved a W-2 form, you may not have had sufficient taxable wages for the year.

 

Understanding your W-2

Form W-2 Frequently Asked Questions

Find answers to frequently asked Form W-2 Questions.

Why don’t my wages, tips and other compensation in Box 1 match the year to date gross on my pay stub?

The wages in box 1 of your W2 reflect taxable wages only. This amount does not include tax deferred deductions (i.e. retirement, 403B annuities and 457 deferred compensation) or pre-tax deductions (ie. Medical insurance and parking). Box 1 also includes taxable reimbursements such as same day meal reimbursements, taxable moving expenses and taxable fringes that are not reflected in your payroll gross.

Where can I see the tax-deferred or pre-tax deductions?

Box 14 shows retirement, Choices and parking deductions. Other taxdeferred deductions are reflected in Box 12. Dependent care deductions are shown in Box 10.

Why don't I see the cost of my health coverage in Box 12 on my W2?

According to the most recent IRS guidance, large employers who issue 250 or more W-2s for a calendar year are required to report the value of employer-sponsored health insurance. The reporting is not required for employers who issue fewer than 250 W-2s. In fact, if you’re a small employer, you’ve qualified for transition relief from this reporting requirement from tax year 2012 to date, until the IRS issues new guidance.

Why dont the wages in Box 1 match the wages in Box 3?

Pre-tax deductions are exempt from FICA (Social Security and Medicare), however tax-deferred deductions are subject to FICA tax. The amount in Box 3 includes retirement and annuity deductions. The amount in Box 1 does not included retirement and other qualified deferred compensation.

OR

You were eligible for a FICA exemption due to tax treaty or you were a student enrolled in and attending at least 6 credits of courses during any given pay period in the year.

I want to adjust my withholding for next year, what do I do?

You need to fill out a new W-4 and submit it to Human Resources/Personnel & Payroll. An online version of the form can be completed in your PayNortheast Employee Portal. You can sign in to your employee portal by visiting www.paynortheast.com/employee-login