Understanding Your W-2 Form

Tax time is here again. And all of us would have already received our W-2 forms from each of our employer. This is the most important form for tax filing. It contains all the information required to filed our taxes. Despite this form being so important, sometimes this form is the least understood one.

There are many boxes on W-2 form. However, all of them are not required and they are just informative in nature. Also, W-2 form is not applicable to self-employed persons (unless they are salaried employees too). For self-employed persons, they need to fill different forms. Let's quickly try to discover what different sections of the form mean:

Box A: This is Control Number for your employer. It uniquely identifies each W-2 form that your employer generates.

Box B: This is Employer's Identification Number for tax purposes. Each employer with one or more employees would have an EIN.

Box C: This is Employer's Information. It includes your employer's Name, Address, City, State, Zip.

Box D: This is your Social Security Number. Make sure this number is correct. If this is incorrect, ask your employer to correct this, and issue you a new W-2.

Box E: This is your name.

Box F: This is your address. This includes your Address, city, state and zip code.

Box 1: This is total of your wages, tips and other compensation. This is basically total of all your taxable wages for federal tax calculation purposes.

Box 2: This represents Federal Income Tax withheld. This is the sum of all the amount that was deducted from your salary for Federal Income tax.

Box 3: This represents the total amount of your wages subject to social security taxes.

Box 4: This represents the total amount of Social Security tax withheld from your salary. This is based on amount given in Box 3.

Box 5: This represents the total amount of your wages subject to medicare tax. This amount can sometimes be greater than even the amount given in Box 1, as it includes 401K benefits and other compensation also.

Box 6: This represents the total amount of Medicare tax withheld from your salary. This is based on amount given in Box 5.

Box 7: This is the total amount of tip income that you reported to your employer. This amount is already included in Box 1 also.

Box 8: This is the allocated tips. This is different from Box 7. Basically, this is the tip income that your employer thinks that you earned (based on overall tips employer gained), but did not report. This amount is not included in Box 1 also. So, you need to calculate taxes on this amount separately.

Box 9: This is the advanced Earned Income Credit that you received.

Box 10: This is the dependent care benefits amount that is reimbursed by your employer. This amount is non-taxable upto a certain limit, and taxable above that.

Box 11: This is the amount distributed to you in non-qualified plans. It is already included in your taxable wages in Box 1. This can either be amount distributed from your employer's non-qualified deferred compensation plan or non-government section 457 pension plan.

Box 12: This is a monetary amount, followed by a letter code. Back of your W-2 form explains the code that you would see over here.

Box 13: These are three check boxes. First box is checked if you are a statutory employee. Second box is checked if you participated in some retirement plan. And third box should be checked if you received third party sick pay.

Box 14: This includes any other information for the employee such as Union dues, health insurance premiums, etc.

Boxes 15-20 are primarily used for filing your state and local tax return.

Box 15: This is your employer's state and State ID.

Box 16: It represents total amount of your taxable wages earned in that state.

Box 17: It represents total amount of state income tax withheld.

Box 18: It represents total amount of wages subject to local, city, or other state income taxes.

Box 19: It represents local income tax withheld.

Box 20: It represents the locality name.

I have tried to explain each of the boxes above in a simple form. You may look at detailed explanation of each one of these on the IRS website. I hope this small article would help you in demystifying your W-2 form.