Preparing and Reading a W-2 Form
Form W-2 is one of the most common tax forms that a person may come across. If you’ve ever worked at a full-time job, you’ve received one around tax season. While you may casually glance over it and assume it’s correct, it’s important to double-check the information provided. If your income is incorrect, you may end up being taxed more or less than you’re supposed to be. And if your Social Security number is incorrect, you may not be able to collect the right amount of benefits when you retire.
Depending on how your employer processes your W-2, the boxes included will look just a bit different. Some of the boxes for identifying information are labeled with letters. Boxes A through F include your Social Security number, your employer’s tax ID number, and the addresses and names of both yourself and the employer. It’s important that you double-check this information; an error in an address or Social Security number could result in delays at tax time. These will also need to be updated if you move or change your name. Box D is a unique identifier for your employer’s records and does not need to be double-checked by the employee.
The numbered boxes contain your income and tax information for the past year. Each box is read by the IRS to determine how much you made that year, which business the money came from, and how much you have already paid in taxes and other pay deductions.
- Box 1: This is your total taxable income for the year. It includes wages, tips, and other compensation but does not include any pre-tax benefits such as health insurance or contributions to a 401(k) plan.
- Box 2: This is your total withheld for taxes in the past year. The employee can change the amount withheld by filing a new W-4 form with their employer. This may be done if an employee acquires a new dependent or changes their marital status.
- Box 3: This is your total wages subject to Social Security tax. This may be equal to Box 1 but doesn’t have to be.
- Box 4: This is the total amount of Social Security tax that was withheld from your pay. This should be a flat 6.2% of the amount in Box 3 up to the maximum taxable income, set at $132,900 for 2019 and $137,700 for 2020.
- Box 5: This is your total wages subject to the Medicare tax. It may or may not be the same values as boxes 1 and 3.
- Box 6: This is the total amount of Medicare tax that was withheld from your pay. If box 5 is less than $200,000 in total, then this will be a 1.45% flat tax on your income. If you made more than $200,000 in the past year, everything above that value is taxed an extra 0.9%.
- Box 7: This is the amount of tips you received in the past year, as reported by your employer. Without any pre-tax benefits, boxes 7 and 3 will add up to the value in box 1.
- Box 8: This is the amount of tips allocated to you by your employer. If this box is not empty, this means you have to fill out Form 4137 and may want to talk to a tax professional for guidance.
- Box 9: This used to show any advance on the Earned Income Credit, but as that ended in 2010, it should be blank.
- Box 10: This is the amount you were reimbursed last year for dependent care expenses through a flexible spending account. Any amount over $5,000 in this box is taxable and will be included in boxes 1, 3, and 5. If there is any value in this box, you must fill out Form 2441.
- Box 11: This is the amount distributed to you from an employer’s deferred compensation plan. These are taxable wages and part of box 1.
- Box 12: This is a special box that may show deferred compensation or other types of compensation. Employers use a single- or double-letter code to indicate which type of compensation it is as well as the dollar amount.
- Box 13: This box has three checkboxes inside it: statutory employee, retirement plan, and third-party sick pay. If “statutory employee” is checked, you must fill out Form 1040 Schedule C, and you should not have any value in box 2. If “retirement plan” is checked, this means you participated in a retirement plan such as a 401(k). If “third-party sick pay” is checked, that means you received disability pay from an outside company instead of directly from your employer as part of your salary.
- Box 14: This is for other information that may be entered in other places on your sheet but does not have to be. The values in this box are unique to your employer or business but may include uniform costs, union dues, or charitable contributions made through payroll deduction.
- Box 15: This is your employer’s state and state tax ID number.
- Box 16: This is the amount of taxable income you received within your state.
- Box 17: This is the amount of state tax withheld from your paycheck in the past year.
- Box 18: This is the amount of taxable income you received in your locality, such as a city or township.
- Box 19: This is the amount of taxes withheld from your paycheck for local, city, or other state tax. This amount may be deductible via Schedule A.
- Box 20: If boxes 18 or 19 have a value in them, box 20 provides a short description of the tax that is being paid.
What if My Information Is Wrong?
If the information on your W-2 is incorrect in any way, contact your employer. They will issue you a corrected W-2. If they refuse to do so or did not give you any W-2 at all, contact the IRS at 800-829-1040 or visit a Taxpayer Assistance Center.
- What Is a W-2 Form? How to Read and Understand It
- Description of Each Box on Form W-2
- Classification as a Statutory Employee
- What the Form W-2 Box 12 Codes Mean
- How Does Having Multiple W-2s Affect Your Taxes?
- What Is IRS Tax Form 2441?
- Helpful Hints About Filing Corrected W-2s
- Medicare Surtax on Wages and Self-Employment Income
- How to Find Union Deductions on a Pay Stub or W-2
- How to Double-Check Your W-2 Before You File Your Taxes
- Getting a Corrected W-2 if a Former Employer Won’t Help
- Should I Be Claiming All of My Tips? Advice for Restaurant Servers
- How to Claim Tips on Your Tax Return
- Federal Form 4137 Instructions
- How to Read and Understand Your Form W-2 At Tax Time