First, lets start with what a W-2 is. A W-2 is a form issued to an employee from their employer. This form contains information such as your gross income, local, state, and federal tax withholdings, social security withholding, and more. As long as you were paid at least $600 by an employer throughout the year, you will be issued a W-2 from that employer.
Each box on your form W-2 has a different meaning (as some are duplicates). First of all, you will want to verify that boxes a,e, and f are correct. These boxes hold your social security number, name, and address.
Box 1 - This box represents total taxable wages, including all tips, prizes, and compensation.
Box 2 - This represents the amount of federal income tax withheld from your paycheck throughout the year. This amount is dependent on how you filled out your form W-4 (the amount of exemptions you claimed). You can make adjustments to this number by changing the exemptions on your W-4.
Box 3 - This box shows your wages subject to social security tax. This is before any payroll deductions, meaning this amount could end up being more than the amount in box 1.
Box 4 - The amount in box 4 shows the social security taxes that were withheld from your paychex throughout the year. Social security tax is a flat 6.2%. The amount is box 4 is simply box 3 multiplied by .062 (6.2%).
Box 5 - You will find your wages subject to medicare taxes in box 5. This amount could potentially be the largest amount on your form W-2.
Box 6 - The amount of medicare taxes withheld from your paycheck throughout the year. Like the social security tax, medicare tax is a flat rate, 1.45%. This means you should be able to take box 5 and multiply it by .0145 (1.45%) and it will reflect the amount shown in box 6.
Boxes 7 & 8 - These boxes reflect your reported tips. Box 7 shows the tips reported to your employer. If there is no amount shown in the box it simply means you did not report tips. Box 8 is for allocated tips, or those that your employer figured are attributable to you, meaning they are considered income.
Box 9 - This box will be blank. At some point this box should be removed from the W-2 (the reporting requirement has expired).
Box 10 - This box shows the total amount of benefits that were paid for on your behalf under a dependent care assistance program. If this amount is under $5000 is it not taxable.
Box 11 - This amount shows how much has been distributed to you from your employer’s non-qualified deferred compensation plan. This amount is taxable.
Box 12 - In this box you will see a code. Wondering what your code stands for? You can look that up here.
Box 13 - This is a compilation of three boxes and will read 3 things, statutory employee, retirement plan, third-party sick pay. Your employer will check the boxes that apply to your situation.
Box 14 - Otherwise known as the “it didn’t fit anywhere else” box. This box can hold many different things such as unions dues, non-taxable income, and so on.
Along the bottom of your form W-2 you will find state of employment, your employer’s ID number, your state wages and tips, as well as income tax (state and local).
Form W-2 can be confusing at first, but if you break it down box by box it begins to make more sense. If you need more help understanding your W-2, please feel free to reach out to the Dominion tax department.