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What Is Form W-2 and How Does It Work?
Form W-2 is an essential tax document that reports an employee's earnings and tax withholdings, including details like the employee's Social Security number, employer's identification number, and taxable wages. Each box on the form serves a specific purpose, such as reporting federal income tax withheld and state tax information. The document provides a comprehensive breakdown of what each section of Form W-2 signifies and its implications for tax processing.
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What Is Form W-2 and How Does It Work?
- 1. What Is FormW-2 and How Does It Work?
- 2. Here’s a detailedlook at each box of Form W-2
- 3. Box a Reports yourSocial Security number. Ensure this is correct. An incorrect SSN can delay the processing of your tax return.
- 4. Box b Your employer’sEIN (Employer Identification Number) is reported in box b. An EIN is a nine-digit number assigned to your employer by the IRS and used to identify the tax accounts of employers.
- 5. Box c Reports thelegal address of your employer. This may or may not be the actual address of where you work, depending if your employer has multiple offices with a corporate site.
- 6. Box d Reports thecontrol number used by your employer’s payroll department. This may or may not be blank.
- 7. Box e andf Your legal name, as it reads on your Social Security card, appears in box e and your mailing address is reported in box f. Double-check both of these are correct. If that information is incorrect, it could delay the processing of your return.
- 8. Box 1 Shows yourtotal taxable wages, tips, prizes and other compensation for the year, minus certain elective deferrals, such as 401(k) plans, pretax benefits and payroll deductions.
- 9. Box 2 Reports thetotal federal income tax withheld from your pay during the year. This amount is based on the number of exemptions claimed on your Form W-4. If you’d rather keep more money in your paycheck each week, you’ll want to adjust your Form W-4 for the next year.
- 10. Box 3 Shows yourtotal wages that are taxed for Social Security.
- 11. Box 4 The totalSocial Security taxes withheld from your pay for the year. Unlike federal income taxes, Social Security taxes are calculated based on a flat rate of 6.2%.
- 12. Box 5 This indicatesall your wages and tips that are taxed for Medicaid.
- 13. Box 6 The totalamount of Medicare tax withheld from your pay for the year. Much like Social Security taxes, Medicare taxes are also figured on a flat rate, which is 1.45%.
- 14. Box 7 This showsany tips that you reported.
- 15. Box 8 This showsany allocated tips that your employer has figured attributable to you. These are considered as income.
- 16. Box 9 This isblank, as this requirement has expired. It’s currently in the process of being removed from the form W-2.
- 17. Box 10 Reports thetotal amount deducted from your wages for dependent care assistance programs. It may also include contributions made by your employer for dependent care on your behalf.
- 18. Box 11 Reports thetotal amount distributed to you from your employer’s non-qualified deferred compensation plan.
- 19. Box 13 Your employerwill check the applicable box that pertains to you as an employee.
- 20. Box 14 Reports anythingthat doesn’t have a specific box anywhere else on Form W-2 in box 14.
- 21. Box 15 Includes youremployer’s state and state tax identification number.
- 22. Box 16 Indicates thetotal amount of taxable wages for state tax purposes, if you are subject to state income taxes.
- 23. Box 17 Shows thetotal amount of state taxes withheld from your wages for the year.
- 24. Box 18 If youare subject to local, city or other state income taxes, box 18 reports those wages.
- 25. Box 19 Reports thetotal amount withheld from your wages for local, city or other state income taxes.
- 26. Box 20 Is thelegal name of the local, city or other state tax being reported in box 19.
- 27. The full anatomyof Form W-2. Learn more at blog.taxact.com/form-w-2.