All Americans must file the W2 tax form, one of the most basic tax forms, every year. For many people, it presents a big challenge. Some might even say they feel quite overwhelmed and intimidated in filling out the form. However, all it takes is a little know-how on how the W2 form works to be able to file it effectively. Here is a quick but comprehensive guide to everything you need to know about the W2 tax form.
W2 Tax Form | File Your Taxes Like a Pro
1. W2 Tax Form Purpose
Whether you have an accountant who files your forms for you or you do them yourself, it’s important to know what your W2 tax form actually does. In essence, it is a form your employer sends you every year so you can file your taxes. This form includes everything you earned from your wages, salaries, to tips. The form also contains the amount of taxes withheld from your paycheck.
2. Employer and Employee Obligation
Taxes are everyone’s responsibility. The W2 tax form is as much as your employer’s obligation as it is yours. Every year, before January 31st, your employer must hand over several copies of your W2 to you. Employers must prepare copies for you, the Social Security Administration, and themselves. The SSA collects the W2 forms from employers and hands them over to the Internal Revenue Service.
If you have not received your W2 form yet, make sure to follow it up with your employer, as your employer needs to file these before January 31st. If your employer refuses to hand over the form, contact the IRS. Make sure to send them your employer’s details, such as their name, contact number, and tax identification numbers. Withholding tax forms is a serious offense, and your employer will be penalized if this is the case.
3. Three Copies
When you receive your W2 tax form, you get it in three copies. Each of these copies has a unique purpose you need to be aware of. These are copies B, C, and 2.
Copy B is to be attached to your federal income tax return if you are sending it through snail mail. If you are filing online, keep it with your tax documents for the next four years instead. Copy C is your official copy and must be kept with your tax documents for the next four years, as well. Meanwhile, Copy 2 must be attached to your tax returns if you’re mailing them in; otherwise, store them in the same folder as your Copy B and C.
4. Boxes by the Letter
The W2 tax form contains an overwhelming amount of text and boxes, so it helps to understand what they all mean. The W2 form you used in your last job might not necessarily look like the one you’re using now. However, here is a quick rundown of what you need to fill in with each box:
- Box A: Put your Social Security Number here.
- Box B: This is where your employer’s TIN number goes.
- Box C: This is your employer’s physical address.
- Box D: W2 form’s unique control number. Your employer assigns this.
- Box E: Your full name. Update your employer if you have changed your full name.
- Box F: Your physical address. Make sure these details are complete and error-free.
5. Boxes by the Numbers
Numbered boxes on the W2, on the other hand, contain your financial records. They are perhaps the biggest part of the W2 tax form and are definitely the most important. You must know what goes into each box. Keep in mind, this is quite a long list, so make sure you take notes.
- Box 1: Here is a report of your total taxable wages and salaries for your federal income tax. These include wages, salaries, and tips reported. Also included here are bonuses and various other taxable compensations.
- Box 2: In here is the amount of federal income taxes withheld from your paycheck, representing the amount of federal taxes for the year.
- Box 3: This is the total amount of your wages subject to Social Security taxes. It is assessed based on wages that total up to $118,500.
- Box 4: Box 4 tells you how much of your paycheck is withheld for your Social Security taxes. This tax is a flat rate of 6.2 percent of your wages up to $118,500. Anything over that isn’t subject to this tax, meaning the amount withheld shall not exceed $7,347.
- Box 5: Your Medicare taxes (which your wages are subject to) are presented here.
- Box 6: This is where the amount of money withheld from your paycheck for the Medicare tax goes. Rates depend on whether you’re single, head of household, or married.
- Box 7: The tip income you reported is found here. If you didn’t report any, this box will be left empty.
- Box 8: Allocated tips. If your employer allocates tips to you, this is where they are recorded.
- Box 9: This used to be where your Earned Income Credit was put in; however, it ended in 2010 – this box must remain empty.
- Box 10: Here you can find the reports of any reimbursed amounts for dependent care from flexible spending accounts or care services provided by employers.
- Box 11: You can find in Box 11 any amounts distributed to you from non-qualified deferred compensation plans by your employer.
- Box 12: This is for your deferred and other compensations. There are several types and benefits that can be reported in this box, so it is simplified through codes used by the IRS. Here are the codes:
(6) SEP retirement plan. SIMPLE retirement plan.
|Uncollected Social Security or RRTA tax on tips.
|Uncollected Medicare tax on tips.
|Taxable benefit of group term-life insurance over $50,000.
|Non-taxable elective salary deferrals to a 401(k) or SIMPLE 401(k) retirement plan.
|Non-taxable elective salary deferrals to a 403(b) retirement plan.
|Non-taxable elective salary deferrals to a 408(k).
|Non-taxable elective salary deferrals and non-elective employer contributions to a 457(b) retirement plan.
|Non-taxable elective salary deferrals to a 501(c)(18)(D) tax-exempt plan.
|Non-taxable sick pay.
|Excise tax (equal to 20 percent) on excess “golden parachute” payments.
|Non-taxable reimbursements for employee business expenses.
|Uncollected Social Security or RRTA tax on taxable group term life insurance over $50,000 for former employees.
|Uncollected Medicare tax on taxable group term life insurance over $50,000 for former employees.
|Non-taxable reimbursements for employee moving expenses, if the amounts were paid directly to the employee.
|Non-taxable combat pay.
|Employer contributions to an Archer Medical Savings Account.
|Non-taxable salary deferral to a 408(p).
|Employer paid adoption benefits.
|Income from the exercise of non-statutory stock options.
|Employer and employee contributions to a Health Savings Account.
|Salary deferrals under 409A non-qualified deferred compensation plan.
|Income received under 409A non-qualified deferred compensation plan.
|After-tax contributions to a Roth 401(k) retirement plan.
|After-tax contributions to a Roth 403(b) retirement plan.
|Non-taxable health insurance provided through your employer.
|After-tax contributions to a Roth 457(b) retirement plan offered by government employers.
- Box 13: The three checkboxes in Box 13 must be marked off if the following situations apply to you:
- statutory employee
- contributed to your employer’s retirement plan during the tax year
- received third-party sick pay under employer’s third-party insurance policy
- Box 15: Your employer’s state and the state TIN. Additional lines are included for employees who worked in branches across multiple states.
- Box 16: The total amount of taxable wages earned per state.
- Box 17: You can find the total amount of state income taxes taken from your paycheck here.
- Box 18: Wages subject to local tax, city tax, and state income tax can be found here.
- Box 19: Find out how much taxes were taken from your paycheck by local, city, and state income taxes here.
- Box 20: Here is a brief description of the local, city, or state income taxes you are currently paying.
Need a video resource to learn more about your W2 Tax Form? Here is a guide from M. Shafique, CPA, P.C.:
And there you go, a quick but comprehensive review of what the W2 tax form is all about. Granted, it’s a bit overwhelming, especially if you’re doing it for the first time. However, there are numbers of resources here and on the Internet to help you file your W2 forms quickly and completely. If you feel that’s still too much, you may also hire an accountant or use a tax filing software program to help you out. We hope this guide can contribute to the ease of filing your taxes.
Do you have any questions on how to file the W2 tax form? Ask us in the comments section.