Form W-2

 

Nearly every employee working in the U.S. should receive a Form W-2, but not everyone knows what it is. In fact, if you get social security and Medicare withheld from your wages, then you have to report it on W-2. Read on to learn more about the W-2 tax form, how to read a W-2, and other information about the W-2 statement.

What is a W-2 Form?

W-2 boxes and codes.

Are you wondering, “What is a W-2 Form?” IRS Form W-2 is a wage and tax statement that reports your wages and the taxes withheld from your wages. Your employer is required to give you a 2019 W-2 by Jan. 31, 2020.

Who Keeps a Copy of Your W-2 Statement?

Your employer keeps a copy for recordkeeping.

Where is Your W-2 Tax Form Sent?

A copy of your W-2 form is sent to:

  • You
  • Social Security Administration (SSA)
  • IRS
  • State or local governments for which taxes are withheld

You’ll refer to some of the W-2 boxes to complete your return. Some W-2 boxes are for informational purposes only.

How To Read a W-2

There are a lot of boxes on a W-2 form, which makes it difficult for some to read. Here is a breakdown of how to read a W-2, box by box:

Box a: Employee’s social security number — If the number is incorrect due to a typographical error:

  • Report it to your employer immediately
  • Get a corrected W-2 statement

All payments withheld from your wages are credited to the social security number (SSN) shown. If the SSN in your payroll system — and on your W-2 form — is incorrect, your employer must fix this. An incorrect SSN means your payments aren’t credited to you for:

  • Income tax
  • Social security
  • Medicare

Box b: Employer’s identification number (EIN) — This is your employer’s federal identification number with the IRS. It’s the equivalent of your SSN or individual taxpayer identification number (ITIN). This number must be valid and match the IRS’s records if you want to e-file your return.

Box c: Employer’s name, address, and ZIP code — If you work for a corporation, this is usually the address of the main office or headquarters. It’s not necessarily the building or even the city or state where you work.

Boxes e and f: Employee’s name and address — Your full name and current address. You don’t need a corrected W-2 if your name is misspelled or your address is incorrect, but you should report these errors to your employer.

Box 1: Wages, tips, and other compensation — The taxable amount of compensation your employer paid you. This includes (but isn’t limited to):

  • Tips
  • Bonuses
  • Commissions
  • Wages
  • Salaries

Enter the amount in this box on Form 1040 or 1040-SR, Line 1, Form 1040NR, line 8, or Form 1040-NR-EZ, line 3.

Box 2: Federal income tax withheld — The total amount of federal income tax your employer withheld from your wages.

Box 3: Social security wages — The amount of earnings your employer paid you subject to social security tax. This doesn’t include tips. This amount might be more than the amount in Box 1 if some income subject to Social Security tax isn’t subject to income tax. Ex: Amounts you contribute to a tax-deferred retirement plan like a 401(k) or a 403(b) plan.

For 2019, the total of Form W-2, boxes 3 and 7 shouldn’t be more than $132,900, the maximum social security wage base.

Box 4: Social security tax withheld — The amount of social security tax withheld on your wages. For 2019, this amount can’t be more than $8,239.80. This amount should equal 6.2% of the amount in box 3 and 7 combined.

If you worked for more than one employer, the total withheld might be more than the limit. If so, the excess is treated as a tax payment. This payment will increase your refund or decrease your balance due.

Box 5: Medicare wages and tips — The total amount of earnings your employer paid you subject to Medicare tax. There’s no limit on the amount of wages that might be subject to Medicare tax.

Box 6: Medicare tax withheld — The amount of Medicare tax withheld on your wages. This amount should equal 1.45% of the amount in box 5.

Box 7: Social security tips — This lists the tips you received that you reported to your employer. Box 7 and box 3 combined are used to figure the social security and Medicare tax on wages and reported tips.

Box 8: Allocated tips — The amount of tips your employer allocated to you. This amount is in addition to the amount you reported to your employer as tips, which are reported to you in Form W-2, box 7. The allocation is usually based on credit card receipts and IRS formulas.

If you have an amount in this box, you will need to complete Form 4137 to pay these taxes or show that you don’t owe additional:

  • Social security tax
  • Medicare tax
  • Income tax

You usually must include the amount shown in Box 8 on your return. To learn when you might not need to report this amount, see Publication 531.

Box 10: Dependent care benefits — The total dependent care benefits under a Section 125 or 1299 plan. These can include:

  • Cafeteria plan
  • Flexible spending arrangement
  • Dependent care assistance program

This amount isn’t included in Form W-2, Box 1. Use Form 2441 to see if any part of this amount is taxable and to claim a credit for additional qualifying dependent care expenses.

Box 11: Nonqualified plans — The total payments you received from your employer’s nonqualified retirement plan. This amount is included in Form W-2, Box 1 and is taxable.

Boxes 12a, 12b, 12c, 12d — These boxes are used for various reporting purposes. Some of the letter codes and their meanings include:

  • A — Social Security or RRTA taxes your employer couldn’t withhold since there wasn’t enough income to cover the tax. Include this amount in the total you enter on Form 1040, Schedule 2.
  • B — Medicare tax your employer couldn’t withhold since there wasn’t enough income to cover the tax. Include this amount in the total you enter on Form 1040, Schedule 2.
  • D — Pre-tax contributions to an employer’s 401(k) plan. This amount isn’t included in Box 1 and isn’t taxable to you. However, if you worked for more than one employer, you might be taxed on a portion of this amount if too much was contributed.
  • E — Pre-tax contributions to an employer’s tax-sheltered annuity plan. This amount isn’t included in Box 1 and isn’t taxable to you. However, if you worked for more than one employer, you might be taxed on a portion of this amount if too much was contributed. To learn more, see Publication 525.
  • F — Pre-tax contributions to an employer’s salary-reduction simplified employee pension (SEP) plan. This amount isn’t included in box 1 and isn’t taxable to you. However, if you worked for more than one employer, you might be taxed on a portion of this amount if too much was contributed.
  • G — Pre-tax contributions to an employer’s Section 457(b) retirement plan. This amount isn’t included in box 1 and isn’t taxable to you. However, if you worked for more than one employer, you might be taxed on a portion of this amount if too much was contributed. To learn more, see Publication 525.
  • J — Amount of sick pay not taxable since you contributed to the plan.
  • K — 20% excise tax on excess golden parachute payments.
  • L — Amount of substantiated employee business expense reimbursements. This amount is nontaxable to you.
  • M — Former employees only. Uncollected social security or railroad retirement benefits on taxable cost of group-term life insurance over $50,000.
  • N — Former employees only. Uncollected Medicare tax on taxable cost of group-term life insurance over $50,000.
  • P — Amount of moving expense reimbursement paid to the employee. This amount is neither taxable nor deductible. It isn’t included in Form W-2 Boxes 1, 3, or 5.
  • Q — Amount of nontaxable military combat pay. This amount may be treated as earned income for these purposes:
    • Earned Income Credit (EIC)
    • Additional child tax credit
    • IRA contributions
  • R — Employer contributions to your Archer medical savings account (MSA). Report it on Form 8853.
  • S — Pre-tax contributions to an employer’s SIMPLE plan. This amount isn’t included in box 1 and isn’t taxable to you. However, if you worked for more than one employer, you might be taxed on a portion of this amount if too much was contributed.
  • T — Adoption benefits not included in Box 1. Complete Form 8839 to figure any taxable and nontaxable amounts.
  • V — Income from exercise of nonstatutory stock options included in Boxes 1, 3 (up to the social security wage base), and 5. For reporting requirements, see Publication 525 and the instructions for Schedule D.
  • W — Contributions to a Health Savings Account (HSA) established through your employer, including both your own salary reduction contributions and your employer’s contributions. Report this amount on Form 8889, box 9. Y — Deferrals under a section 409(A) nonqualified deferred compensation plan. This amount is also included in Box 1. It’s subject to an additional 20% tax plus interest.
  • AA — Designated Roth IRA contributions under a Section 401(k) plan.
  • BB — Designated Roth IRA contributions under a Section 403(b) plan.
  • DD — Cost of employer-sponsored health coverage. This amount isn’t taxable.
  • EE — Designated Roth IRA contributions under a governmental Section 457(b) plan.

Box 13: Statutory employee, retirement plan, third-party sick pay — One of the boxes will be checked if it applies to you:

  • Statutory employee — If you’re a statutory employee, your W-2 form should show social security and Medicare tax withheld. No federal or state taxes should be withheld.
  • Retirement plan — If you’re considered to be a participant in a qualified employer retirement plan, this box will be checked. This is true whether or not you contribute to the plan. If this box is checked, your deductible IRA contributions might be limited.
  • Third-party sick pay — If you received payments for sick pay from a third-party provider, this box will be checked. Premiums paid by your employer will be taxable to you. Amounts paid from your own contributions won’t be taxable.

Box 14: Other — This is used by your employer to provide you with additional information. It might or might not affect your return. Items commonly reported in this W-2 form box include:

  • Union dues
  • Charitable contributions
  • Health insurance premiums deducted
  • Educational assistance programs
  • Tier 1 and Tier 2 railroad retirement contributions
  • Lease value of vehicle provided to an employee
  • State disability insurance tax withheld
  • After-tax contributions to 401(k) plans — but not to a designated Roth IRA
  • Wages from disposing of stock acquired by exercising incentive stock options (ISO)

Box 15: State — This includes:

  • Postal abbreviation of the state for which taxes were withheld
  • Employer’s state identification number

Box 16: State wages, tips, etc. — The amount of your wages subject to state tax. This amount might differ from the amount shown in Box 1.

Box 17: State income tax — The amount of tax withheld for the state in Box 15

Box 18: Local wages, tips, etc. — The amount of your wages subject to local income tax. This amount might differ from the amount shown in Box 1 or Box 16.

Box 19: Local income tax — The amount of tax withheld for the locality in Box 20. This amount is entered on the appropriate line of your local return.

Box 20: Locality name — The description of the place — like a city or town — for which taxes were also withheld.

Help With the W-2 Tax Form

Need hands-on guidance as you read your W-2 tax form? Find a tax office nearest you to get personalized help.

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