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How to Understand the W-2 Form

April 11, 2018
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While your CPA in San Antonio TX can calculate and file your taxes, it’s good for employers and employees to understand what the documents mean. For instance, what exactly is reported on the W-2 form?

Employers must issue W-2 forms for any employees who earned $600 or more during the year. If Medicare and Social Security taxes were withheld, a W-2 must be issued regardless of the amount of earnings reported. One copy of the form is kept by the employer, one goes to the Social Security Administration, one is sent to the employee’s state, local or city tax department and three are sent to the employee.

The boxes at the left of the form contain information identifying the employer and employee:

  • Box a: Employee’s Social Security number.
  • Box b: Employer identification number (EIN).
  • Box c: Employer’s business name and address.
  • Box d: Control number, used by the employer’s payroll department.
  • Box e/f: Employee’s full legal name and address.

The boxes on the right side of the W-2 show wages, taxes withheld and other information:

  • Box 1: The employee’s total wages, tips, taxable benefits and other compensation.
  • Box 2: The amount of employee’s federal income tax withheld during the year.
  • Box 3: Social Security wages. The amount of the employee’s income subject to Social Security tax.
  • Box 4: Social Security tax withheld, at a rate of 6.2%
  • Box 5: Medicare wages. Indicates the wages subject to Medicare taxes, which include most taxable benefits.
  • Box 6: Medicare tax withheld, at a rate of 1.45%.
  • Box 7: Social Security tips. The total amount of tips the employee reported for the year.
  • Box 8: Allocated tips. Tips allocated by the employer and reported as part of the employee’s taxable income.
  • Box 9: Verification code. A security measure to help authenticate the form if needed.
  • Box 10: Dependent care benefits, paid by the employer for employee dependent care assistance.
  • Box 11: Nonqualified plans. Money the employer distributes to the employee from a non-qualified deferred compensation plan.
  • Box 12: Used to report various other forms of taxable and non-taxable income, identified by code letters.
  • Box 13: Space for employer to indicate if the employee was a statutory employee, participated in the employer’s retirement plan and/or received certain sick pay.
  • Box 14: Space to report other information such as union dues, nontaxable income etc.
  • Boxes 15-20 are used for state and local income tax reporting.

Stay on top of tax preparation throughout the year with Gonzales Group CPA in San Antonio TX. Call 210-366-9430 to schedule an appointment today.

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