When you earn wages or a salary from an employer, you’ll receive a W-2 form by Jan. 31 of the following year, which contains all the relevant information about your income that you’ll need for tax preparation purposes. Your employer will also send a copy to the Internal Revenue Service, which will match the information from your employer with the information you report on your tax return. In case you had more than one employer during the year, you’ll need to wait to receive all your W-2 forms before filing taxes for the year.
Here’s a guide to everything you need to know about a W-2 form.
What Is a W-2 Form?
Technically, a W-2 form is known as a Wage and Tax Statement. In addition to listing how much you earned and paid in taxes, it includes personal identifying information, such as your Social Security number and information about your employer, including its employer identification number.
Each section of a W-2 serves a specified tax-filing purpose. The IRS provides extensive instructions that are updated annually for the more complicated entries on the form.
What’s On a W-2 Form?
A W-2 is broken down into numbered and lettered boxes. Here’s a breakdown of each of the boxes you’ll see when you receive a W-2 form. Some are self-explanatory, and others need descriptions.
To better prepare for tax time, you should familiarize yourself with a W-2 so you can easily spot any errors you might find. Follow along the diagram to see what each of the numbered and lettered fields means. Here’s an example of what a W-2 will look like:
Seven lettered boxes are present on a W-2 form. The boxes provide employer and employee information for the specific job held during the tax year. Here’s a breakdown of the lettered boxes on a W-2:
a) Employee’s Social Security number
b) Employer Identification Number, or EIN: Assigned to individual employers for tracking by the IRS
c) Employer’s name, address and ZIP code
d) Control Number: Used by employers to identify specific W-2s; often unused
e) Employee name
f) Employee address and ZIP code
Twenty numbered boxes are present on the W-2 form. The boxes contain an individual’s wage and tax information for a specific job held during the tax year. Here’s a breakdown of the numbered boxes on form W-2:
1) Wages, tips and other compensation
2) Federal income tax withheld: all federal income taxes employer withheld
3) Social Security wages: amount of income subject to Social Security tax
4) Social Security tax withheld: all Social Security taxes employer withheld
5) Medicare wages and tips: amount of income subject to Medicare tax
6) Medicare tax withheld: all Medicare tax employer withheld
7) Social Security tips: tips subject to Social Security tax
8) Allocated tips: tips employer allocated to employee
9) Verification code
10) Dependent care benefits
11) Nonqualified plans
12) Codes: Box 12 has four sections, 12a, 12b, 12c and 12d. There is a space for a code in front of each entry. Here are what the codes mean if they appear:
A — Any Social Security or Railroad Retirement Tax Act tax employer did not collect
B — Any Medicare tax or RRTA Medicare tax on tips employer did not collect
C –Taxable cost of any group-term life insurance coverage over $50,000 received
D — Elective deferrals under a 401k plan
E — Elective deferrals under a section 403(b) salary reduction agreement
F — Elective deferrals under a section 408(k)(6) salary reduction SEP
G — Elective deferrals and employer contributions to a 457(b) plan
H — Elective deferrals under a section 501(c) tax-exempt organization plan
J — Sick pay paid by a third party and not included in income because of contributions to sick pay plan
K — 20 percent excise tax on excess golden parachute payments
L — Any reimbursements you receive for employee business expenses
M — Uncollected Social Security or RRTA tax on the taxable cost of more than $50,000 of group-term life insurance coverage for former employees
N — Uncollected Medicare tax on the taxable cost of more than $50,000 of group-term life insurance coverage for former employees
P — Any moving expense reimbursements paid directly to you
Q — For members of the military, any nontaxable combat pay received
R — Employer contributions to an Archer MSA
S — Any salary reduction contributions you made to a 408(p) SIMPLE plan
T — The amount you received or were reimbursed for qualified adoption expenses
V — Income from the exercise of nonstatutory stock options
W — Any employer contributions to a health savings account on your behalf
Y — Deferrals under a section 409A nonqualified deferred compensation plan
Z — Income under a nonqualified deferred compensation plan that fails to satisfy section 409A
BB — Designated Roth contributions under a section 403(b) plan
DD — The amount of any employer-sponsored health coverage received
EE — Designated Roth contributions under a governmental section 457(b) plan
FF — Permitted benefits under a qualified small employer health reimbursement arrangement
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13) Checkboxes: Your employer will check if any of the following apply: statutory employee, retirement plan or third-party sick pay. A statutory employee is an independent contractor who is treated by statute as an employee. Retirement plan is checked if you participated in a retirement plan through your employer. Third-party sick pay is checked if your employer is reporting sick pay received from a third party.
14) Catch-all box for payments made that don’t fall into any other category, such as state disability insurance taxes withheld, union dues, uniform payments or nontaxable income
15) Employer’s state ID number
16) State wages and tips
17) State income tax: all state income tax employer withheld
18) Local wages and tips
19) Local income tax: all local income tax employer withheld
20) Locality name: locality where local income tax was paid
Who Does and Doesn’t Get a W-2?
Here’s the IRS guideline for when employers are required to issue a W-2:
“Every employer engaged in a trade or business who pays remuneration, including noncash payments of $600 or more for the year — or all amounts if any income, Social Security or Medicare tax was withheld — for services performed by an employee must file a Form W-2 for each employee, even if the employee is related to the employer from whom:
“Income, Social Security or Medicare tax was withheld.
“Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on a W-4 form, Employee’s Withholding Allowance Certificate.”
In essence, most traditional employees who receive a paycheck also receive a W-2. Freelance workers and independent contractors generally receive a Form 1099-MISC rather than a W-2, however.
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