If you're an American who worked as an employee in 2017, then you should have your Form W-2 by now. Although it's smaller than a standard piece of paper, it has vital information you need in order to do your taxes right.
Some of the information on your W-2 tax form is obvious. But there are also some secrets hidden in plain view on the form. Below, we'll give you a box-by-box guide to Form W-2 so you'll understand everything on it.
Image source: Internal Revenue Service.
Boxes a-f: Personal information
Along the left side, you'll see your Social Security number and your employer's tax ID number. Your employer's name and address is given, along with any internal control number your employer assigns to you. You'll also want to make sure that your complete name and address are correct to avoid any problems.
Box 1: Wages, tips, other compensation
Here, you'll find your net federal taxable income to report on your tax return, after adjusting for certain income exclusions and deductions. For instance, if you have money taken out of your pay for health insurance costs or 401(k) contributions, this number will already reflect the reduction for those items. Usually, you can copy this number directly onto the line for wages on your return.
Box 2: Federal income tax withheld
You'll find the total amount withheld from your pay by your employer for federal income taxes in Box 2. This number goes into the section in which you calculate your final refund or amount owed, giving you credit for the money withheld. Whether you get a refund or owe money depends on whether this number is higher or lower than your total tax due on your return.
Box 3: Social Security wages
The number in Box 3 almost always matches your regular wages in Box 1, but there are a few situations in which your wages for Social Security purposes will be different. Some deductions from income, such as retirement plan contributions, aren't deductible for Social Security payroll tax purposes, and so this number can be higher than the corresponding Box 1 number. Conversely, if you earned more in 2017 than the maximum Social Security wage base of $127,200, then this number will reflect that maximum rather than your actual wages.
Box 4: Social Security tax withheld
Box 4 takes Social Security wages and multiplies it by the payroll tax rate of 6.2% to give you your final withholding. In some cases in which you work more than one job, you might need this number to calculate a refund, but most people don't have to worry about that situation.
Box 5: Medicare wages and tips
Again, for most people, Box 5 will be identical to Box 3 and Box 1. Medicare doesn't have a wage base maximum, so this number won't be lower than Box 1. The same increase situation as Social Security can apply.
Box 6: Medicare tax withheld
You'll find that Box 6 equals your Medicare wages times the Medicare tax rate of 1.45%. You don't need to know this for federal tax purposes, but some states need to account for the number.
Box 7: Social Security tips
Workers in tip-earning professions like waiting tables or driving a cab will generally have to report tip income to their employer. The amount reported in this box should match with what you said.
Box 8: Allocated tips
If you work for an employer with a large number of employees, then you'll find that tips are sometimes automatically allocated to you rather than counted at an individual level. Box 8 reports what your employer said was your number.
Box 9: Verification code
About one in four taxpayers in 2018 will participate in the W-2 Verification Code initiative, getting verification codes that are listed in Box 9. The idea behind the initiative is to verify W-2 information on returns filed electronically, in lieu of submitting paper copies of the W-2 form by separate cover. Your e-filing software will ask you for the code when you file, so make sure you have it ready.
Box 10: Dependent-care benefits
Box 10 includes either employer-provided benefits under dependent-care assistance programs or flexible spending account contributions that you make on a pre-tax basis. The amount in Box 10 is usually excluded from Box 1 wages.
Box 11: Nonqualified plans
Box 11 has any amount that you received in distributions from a nonqualified retirement plan. This is most important in situations in which you're getting Social Security benefits, because the Social Security Administration uses the figure to determine whether you've passed the earnings test, and whether it should have withheld benefits.
Box 12: Codes
You can refer to the IRS list of codes to decipher what's in Box 12. There are more than two dozen different codes that cover situations from the value of employer-provided health coverage to nontaxable combat pay and 401(k) contributions.
Box 13: Check boxes
If you're a statutory employee, a participant in a retirement plan, or are eligible to get third-party sick pay, then one or more of the check boxes on Box 13 will be checked. Being in one of these three categories can change the tax implications of your earnings.
Box 14: Other
Box 14 is a catchall box for any other information employers need to convey. What's here will usually be explained clearly.
Boxes 15 through 20: State tax information
You'll find state tax information in Boxes 15 through 20. State-specific rules can make these numbers differ slightly from their federal counterparts, so be sure to look down here when you complete your state income tax return.
Don't panic!
IRS Form W-2 is small, but it has a lot of information. Nevertheless, you can decipher what your W-2 means, as long as you take the time and effort to understand it fully.
