What are Form W-2s, what do each of the boxes represent, and how does an employee fill this out correctly? As with many tax documents, W-2s can be confusing. Let’s take a deeper dive into what’s on the employee's W-2 and what it all means.
What Is a W-2?
Form W-2 is an IRS tax form used to report wages, salary, and other compensation paid to employees and the taxes withheld from them.
A W-2 must be issued to any full or part-time employee that receives a payment from your business, including noncash payments of $600 or more for the year (all amounts if any income, social security, or Medicare tax was withheld) for services performed by an employee.
W-2s will state the total amount of income received as well as all federal, state, and local taxes withheld.
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How to Read a Form W-2
You'll find employee personal information and the employer's contact information on the form. If the employer uses a Professional Employer Organization (PEO), expect to see the PEO listed as the employer. The PEO reports taxes on behalf of your company.
Make sure your social security number and address are correct. W-2 discrepancies can result in a big headache for employees and can cause potential fines for your employer.
What Does Each Box Mean?
Box a: The employee’s Social Security Number
Box b: The employer’s EIN
Box c: The employer’s business address
Box d: Control number (This is for internal purposes and you won't need to do anything with this number)
Box e and f: The full name and mailing address
Box 1: Total taxable wages, tips, prizes, and other compensation. This does not include elective deferrals to retirement plans, pre-tax benefits, or payroll deductions. Note: Boxes 3 and 5 may contain different numbers than Box 1.
Box 2: Total amount of federal income taxes withheld
Box 3: Total wages subject to Social Security tax
Box 4: Total amount of Social Security actually withheld
Box 5: Total wages subject to Medicare taxes
For the most part, people are only going to have to worry about the above five boxes and 16-20. The other boxes are there for people who received other types of income throughout the business year.
Box 6: Total amount of Medicare taxes withheld
Box 7: Tips the employee reported to the employer
Box 8: Allocated tips that the employer has distributed to the employee as income
Box 9: Blank
Box 10: Total of any benefits paid on the employee’s behalf under a dependent care assistance program
Box 11: Total amounts which have been distributed to the employee from the employer’s non-qualified deferred compensation plan.
Box 12: Various codes will populate this box such as payments related to employee 401(k) contributions, employee 501(c)(18)(D) tax exempt organization plan, non-taxable portion of sick pay, cost of employer-sponsored health coverage, employer contributions to an HSA, and more
Box 13: This is three boxes in one and will indicate if the employee is a statutory employee, if the employee participated in the employer’s retirement plan (i.e. 401(k)), or if the employee received sick pay under a third party insurance carrier
Box 14: This is used to report other amounts and descriptions such as vehicle lease payments and state disability insurance taxes withheld. In addition, employers must report the amount of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act (FFCRA) either in this box on the W-2 or in a statement provided with the W-2.
Box 15: The employer’s state and state tax ID number Box 16: Total amount of taxable wages for state taxes
Box 17: Total amount of state income taxes withheld
Box 18: Wages subject to local, city, or state income taxes
Box 19: Total local, city, and state income taxes withheld
Box 20: Name of the local, city, or other state tax being reported in Box 19
W-2 Frequently Asked Questions
Where Can Employees Get Their W-2?
If you work with a Professional Employer Organization (PEO) such as Justworks, your PEO will send W-2s to employees, as appropriate.
If Filed Electronically, What Does the Employee Do with Their W-2?
Employees will use the information from their Forms W-2 to complete your tax return. After filing, retain a copy of the forms for your records. When filing electronically:* Employees must provide a copy of their Forms W-2 to the authorized IRS e-file provider before the provider sends the electronic return to the IRS.* Employees doesn't need to send their Forms W-2 to the IRS and should keep them in a safe place with a copy of your tax return.* Employees should use Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-File Return to submit any paper documents that need to be sent after their return has been accepted electronically.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.