It does not include elective deferrals to retirement plans, pretax benefits or payroll deductions. Since the figure doesn't include those amounts, it's not unusual for this amount - like the one in my example - to be less than the amounts included in boxes 2 and 3. This tends to be the number most taxpayers care about the most.

Box 2 reports the total amount of federal income taxes withheld from your pay during the year.

This amount is determined by the elections on your form W-4 based on exemptions and any additional withholding. If you find that this number is too low or too high, you'll want to make an adjustment to your withholding in keep in mind that those numbers may change due to tax reform. Box 3 shows your total wages subject to the Social Security tax.

This figure is calculated before any payroll deductions which means that the amount in box 3 could be higher than the number reported in box 1, as in my example. It could also be less than the amount in box 1, if you're a high-wage earner, since the total of boxes 3 and 7 see below cannot exceed the maximum Social Security wage base. If you have more than one job, for Social Security tax purposes, the cap still applies. Box 4 shows the total of Social Security taxes withheld for the year. Unlike federal income taxes, Social Security taxes are calculated based on a flat rate.

The rate is 6. The amount in Box 4 should, then, be equal to the amount in box 3 times 6. Since you should not have more Social Security withholding than the maximum wage base times 6.

1099 & W2 Roadmap

Box 5 indicates wages subject to Medicare taxes. Medicare taxes generally do not include any pretax deductions and will include most taxable benefits. That, combined with the fact that unlike Social Security wages, there is no cap for Medicare taxes, means that the figure in box 5 may be larger than the amounts shown in box 1 or box 3. In fact, it's likely the largest number on your form W Box 6 shows the amount of Medicare taxes withheld for the year.

Like Social Security taxes, Medicare taxes are figured based on a flat rate. The rate is 1. For most taxpayers, this means that the figure in box 6 is equal to the figure in box 5 times 1.

Your employer must also withhold additional Medicare tax of. Since your employer doesn't know your entire financial picture, it's possible that you may have to pay more additional Medicare taxes than your withholding depending on filing status, compensation and self-employment income. Tips which were reported to your employer will be found in box 7. Those tips are considered income to you. You may see a digit verification code here.

If the code is not on your form, don't worry: your tax return will still be accepted. Box 11 is used to report amounts distributed to you from your employer's non-qualified deferred compensation plan this amount is taxable. That shows up in box Box 12 is the kitchen sink of form W-2 reporting. Here, you'll see all kinds of codes.

What is a W-2 Form?

Not all of the income coded at box 12 is taxable. Here's a quick rundown of the codes if you have trouble reading them, click here :. In my example form W-2, I've included three of the most popular codes. If you participate in an elective deferral program like a k plan, you'll see it reported using Code D.

As explained earlier, these amounts will generally be included in box 3 and box 5, too, even if they are excluded from wages at box 1. The cost of employer-sponsored health coverage or health insurance paid for by your employer is reported using Code DD. This amount is reportable under the Affordable Care Act, sometimes referred to as Obamacare, but it is not taxable to you. In most cases, this is only your major medical benefit: separate dental or vision plan reporting is optional.

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Also optional? Excludable moving expenses are reported using Code P. This is an example of benefits which are reported by your employer but are not taxable to you.

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If reimbursements are non-qualified, they will be reported as income to you in boxes 1, 3, and 5. Box 13 really isn't one box: it's a series of three boxes. Your employer will check the applicable box if you are a statutory employee employees whose earnings are subject to Social Security and Medicare taxes but not federal income tax withholding ; if you participated in your employer's retirement plan during the year; or if you received sick pay under your employer's third-party insurance policy.

Box 14 is a "catch all" box. Your employer reports anything here that doesn't fit anywhere else. Examples include state disability insurance taxes withheld, union dues, health insurance premiums deducted and nontaxable income. If you can't figure out the amounts in this box, check with your payroll or human resources HR department: in most cases, the IRS will not be able to interpret these for you.

Box 15 is straightforward and includes your employer's state and state tax identification number. If you work in a state without a reporting requirement, this box along with boxes 16 and 17 will be blank. Your software may support these formats, be sure to check its functionality before ordering.

Reading a W2

The number of parts you need is determined by which government agencies you are reporting to. When using condensed 2up, 3up or 4up forms, you can print all employee copies on a single sheet to save time. Visit DiscountEfile. One W3 is required to summarize all W2s for one employer. Order W-3 Forms.

Understanding Form W-2, the Wage and Tax Statement

Order compatible W-2 Envelopes to ensure mailing information aligns correctly in the windows. Order W-2 Envelopes. This act proposes wide-sweeping changes to the largest bureau of the Department of Treasury in an effort to modernize the department in order to serve taxpayers better. As part of the Taxpayer First Act, many businesses will no longer be able to submit paper forms. One of the main changes of the act is the lowering of the threshold of information returns in order to be required to e-file.

With the passing of the act, the following filing thresholds below will be enforced in the upcoming calendar years:. The act also requires that all partnerships with more than partners file on magnetic media. Partnerships for IRS purposes are small businesses with 2 or more owners that are not classified as sole proprietorships or corporations. Discount E-file is an online e-filing service that can also print and mail your forms for you!