How To Read a W2

by MB on January 16, 2008

IRS form w2

Continuing our tax theme, we will run a series detailing some of the most common tax forms you have received, or will be receiving, in the next few weeks. 

First up is the W2.  All information is for the 2007 tax year.  Forms will sometimes change from year to year, so check the irs.gov web site for the latest information.

Form W2 is completed by your employer, and the information it contains is reported to the IRS.  Your employer is required to provide you a copy of your W2 before January 31. 

A W2 basically reports wages paid to you by your employer throughout the year.  Additionally, it shows all taxes that were withheld from your earnings. 

Form W2 contains a series of lettered and numbered boxes.  You can click the image above to view a larger image as we go along.

Lettered Boxes

Box a: Employee’s social security number.  You should verify that your number is correct to avoid reporting problems.

Box b: Employer identification number (EIN).  This number identifies your employer to the IRS for tax purposes.

Box c: Employer’s name, address, and ZIP code.

Box d: Control number.  This number is used by your employer for record tracking purposes.  It’s OK if it is blank.

Box e & f:  Your name and address.

Numbered Boxes:

Box 1: Wages, tips, other compensation.  This is your total taxable wages, tips, and other compensation, (before any payroll deductions).

Total wages  include:

  1. Total wages, bonuses (including signing bonuses), prizes, and awards paid to you during the year.
  2. Total noncash payments, including certain fringe benefits.
  3. Total tips reported by the employee to the employer (not allocated tips).
  4. Certain employee business expense reimbursements.
  5. The cost of accident and health insurance premiums for 2% or more shareholder-employees paid by an S corporation.
  6. Taxable benefits from a section 125 (cafeteria) plan.
  7. Employee contributions to an Archer MSA.
  8. Employer contributions to an Archer MSA if includible in the income of the employee.
  9. Employer contributions for qualified long-term care services to the extent that such coverage is provided through a flexible spending or similar arrangement.

Box 2: Federal income tax withheld. This is the total federal income tax withheld from the your wages for the year.

Box 3: Social security wages.  The total amount of your earnings that are subject to social security tax.  This caps out at $97,500 for 2007.

Box 4: Social security tax withheld.  The total amount of social security tax withheld from your wages.  For 2007 this amount should not exceed $6,045.

Box 5: Medicare wages and tips.  Similar to social security wages, except that there is no wage limit at which you no longer have to pay this tax.

Box 6: Medicare tax withheld.  The total amount of Medicare tax withheld from your wages.

Box 7: Social Security Tips.  Tips that you reported to your employer.  If you did not have tip income, this box will be blank.

Box 8: Allocated tips.  if you work for a food or beverage establishment, some tip income may be allocated to you regardless of how much you report.

Box 9: Advance EIC payment.  From irs.gov:

The advance EITC allows taxpayers who expect to qualify for the Earned Income Tax Credit (EITC) and have at least one qualifying child to receive part of the credit in each paycheck during the year the taxpayer qualifies for the credit. The credit is sometimes called the AEITC.

Box 10: Dependent care benefits.  Amounts over $5,000 are reportable.

Box 11: Nonqualified plans.  This box shows any amounts distributed to you from your employer’s non-qualified deferred compensation plan or a nongovernmental Section 457 pension plan.

Box 12a: Uncollected social security or RRTA tax on tips..
Box 12b: Uncollected Medicare tax on tips.
Box 12c: Taxable cost of group-term life insurance over $50,000.
Box 12d: Elective deferrals and designated Roth contributions.

Box 13:

  • Statutory Employee:  If this box is checked, you are not subject to income tax withholding.  See you accountant for filing details.
  • Retirement Plan: This box will be checked if you were an "active participant" in your employer’s retirement plan (i.e. pension or 401k).
  • Third Party Sick Pay: This box wouldn’t be marked on a W2 from your employer.  If you received sick pay from a third-party insurer, they will send you a separate W2.

Box 14: Other.  This is a catch-all.  If there are amounts in this box, they should be listed with a description.

Box 15: State.  Employer’s state ID number.  If you earned wages in more than on state, there may be multiple id numbers listed.

Box 16: State wages, tips, etc.  All income earned by state.

Box 17: State income tax.  The amount of state income tax withheld from your earnings.

Box 18: Local wages, tips, etc.  The amount of wages subject to taxation on a local or city level

Box 19: Local income tax.  The amount of local or city tax withheld from your wages.

Box 20:  Locality name.  This could list a city, state, or it could be blank.

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