What do the W-2 boxes and W-2 form codes mean?
Millions of American taxpayers receive a W-2 form from the Internal Revenue Service, but not everyone knows how to read it — especially when it comes to the many W-2 boxes and W-2 box codes. While you can easily interpret form fields like your name and Social Security number, there are other box codes that are more involved ways to report your taxable wages. We’ll cover W-2 box codes in depth here to help any questions you may have when you receive your form.
The W-2 boxes and W-2 codes show the taxable wages, you’ve earned and any taxes paid through withholding.
Employers submit Form W-4 to the Internal Revenue Service to report information such as marital status, number of dependents, and tax exemptions; while Form W-2 are distributed at the end of every tax year to report an employees’ income and wages for federal tax purposes. An employer fills out the forms, and includes information like wages earned, Social Security wages earned, sick leave wages, tips, and recurring taxes taken out of the employee’s paychecks throughout the year. Other compensation that is reported on a W-2 includes taxable wage benefits.
To help you understand your Form W-2, we’ve outlined each of the W-2 boxes and the corresponding W-2 codes below.
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When viewing your W-2, you could easily get overwhelmed with the number of W-2 boxes – there are more than 14 of them! So, let’s get into the details… Here are the W-2 boxes explained:
- Box 1 — Shows your employee wages, tips, prizes, and other compensation for the year. You should include this amount on the wages line of your return. If you have more than one Form W-2, or you are married and your spouse also has one or more W-2s, the total of all forms’ Box 1 will be shown on Form 1040, line 1.
- Box 2 — Shows the total federal income tax withheld from your paycheck for the tax year. Include this amount on the federal income tax withheld line of your return (Form 1040, line 25a).
- Box 3 — Shows your employee wages subject to Social Security tax, which could be different from what’s reported on Box 1.
- Box 4 — Shows the amount of Social Security tax withheld from your pay.
- Box 5 — Shows your wages subject to Medicare tax. The amount, which also may not be the same as the amount reported in W-2 Box 1, might be required on Form 8959, Additional Medicare Tax, if your income is high enough. See Form 1040 instructions to determine if you’re required to complete Form 8959.
- Box 6 — Shows the amount of Medicare tax withheld. The amount includes:
- 1.45% Medicare tax withheld on all Medicare wages and tips shown in Box 5
- 0.9% Additional Medicare tax on any Medicare wages and tips above $200,000 ($250,000 for married filing joint)
- Box 7 — Shows any social security tip income you reported to your employer.
- Box 8 — Shows tip income allocated to you by your employer. This amount isn’t included in W-2 boxes 1, 3, 5, or 7.
For information on how to report tips on your return, see your Form 1040 instructions or Internal Revenue Service Pub. 531, Reporting Tip Income. You should file Form 4137: Social Security and Medicare Tax on Unreported Tip Income with your return if you collect unreported tip income. At minimum, you should report your allocated tip amount unless you can prove a smaller amount with adequate records. You should report your recorded amount even if it’s more or less than the allocated tips reported in box 8. On Form 4137, you’ll figure the Social Security and Medicare tax owed on the allocated tips shown on your W-2(s). By filing Form 4137, your Social Security tips will be credited to your Social Security record (used to figure your benefits).
- Box 10 — This amount reports dependent care benefits provided under a dependent care assistance program. Any amount in this W-2 box over $5,000 is also included in Box 1. Complete Form 2441, Child and Dependent Care Expenses, to compute any taxable and nontaxable amounts.
- Box 11 — This section shows the total amount distributed to you from your employer’s non-qualified (taxable) deferred compensation plan.
- Box 12 — Various Form W-2 codes on box 12 reflect different types of compensation or benefits. This is one of the more complex W-2 boxes, with codes ranging from A to HH. Gain more insight into W-2 box 12 codes.
- Box 13 — If the “Retirement plan” box is checked, special limits can apply to the amount of traditional IRA contributions you can deduct. If the “Statutory Employee” box is checked, Box 1 will be carried to Schedule C line 1.
- Box 14 — Employers can use W-2 box 14 to report information like:
- A member of the clergy’s parsonage allowance and utilities
- Any charitable contribution made through payroll deductions
- Educational assistance payments
- Health insurance premium deductions
- Nontaxable income
- State disability insurance taxes withheld
- Uniform payments
- Union dues
Railroad employers use this W-2 box to report:
- RRTA compensation
- Tier I tax
- Tier II tax
- Medicare tax
- Additional Medicare tax
Since there’s no standard list of W-2 codes for box 14, employers can list any description they choose. If the code is unclear, contact your employer and ask what the internal revenue code represents.
Completing income tax forms can be tricky. And while information like that found in W-2 boxes seem simple to complete at first, Form W-2 codes could be hard to interpret on your own.
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