In this video, we discuss the IRS W-2 tax form (W2) and its importance in filing taxes. Employers are required to send this form to employees and the IRS annually, providing details of earnings and taxes withheld from the previous year.
The W-2 contains personal and employer information, including identifying details, taxable income, and withheld taxes. It also includes boxes detailing Social Security and Medicare taxes, tips earned, dependent care benefits, and deferred compensation income, among others. By understanding the impact of each box on taxable income, taxpayers can ensure the completeness and correctness of their tax returns.
How to Read Your IRS W-2 Tax Form
The W2 form from the IRS, which is a pretty important document when it comes to filing your taxes. This is a document that employers are required to fill out and send to both you and the IRS annually, and it provides information about your earnings for that previous year, as well as any taxes withheld. The W-2 provides details on what money was earned in that previous year, plus it details any withheld taxes paid during that same timeframe.
If you have ever worked for an employer, chances are that you received a W-2 tax form at the end of the year. Your employer must send this form to you no later than January 31st following your last year of work in order that you have enough time to file your taxes for that calendar year.
So, what types of information can be found on your W-2?
A W-2 form is a document that summarizes your earnings and tax withholdings for the year. This form has identifying information such as your name, address and Social Security number; it also has information about your employer (company name, address, and employee identification number). Moreover, there are several boxes which report income and taxes.
Let us take a closer look at the information on the W-2 form.
The W-2 form contains various boxes containing personal and employer data. Boxes A-F contain identifying details like your social security number, name, address and employer’s name and address; this helps the IRS match earnings to your tax return.
Boxes A-F: These boxes contain all the information that identifies you and your employer. You’ll see your social security number, name, address, as well as any employer identification numbers (if applicable).
Boxes 1 and 2: Box 1 displays your total taxable income for the year, including wages, salaries, tips, bonuses and other compensation. Box 2 displays the amount of federal income tax withheld by your employer.
Boxes 3-6: Boxes 3 and 5 indicate the amount of your earnings subject to Social Security and Medicare taxes, respectively; Please note that these amounts may differ from box 1 if you deferred income such as investing in a 401(k) plan. Boxes 4 and 6 show any withheld taxes due.
Boxes 7 and 8: If you earned money through tips, Box 7 displays how much has been reported as tips earned, while Box 8 indicates how much your employer allocated to you in terms of tips.
Box 9: Box 9 is no longer in use and has been left grayed out for future consideration.
Box 10: If your employer provided or paid for dependent care benefits, Box 10 reflects this amount.
Box 11: If your employer provided deferred compensation income from a non-qualified plan, this information is reported in Box 11.
Box 12 outlines any compensation or reductions to your taxable income.. You’ll see a single or double letter code associated with each, such as contributions made to a 401(k) plan, health savings account contributions from your employer, or group-term life insurance over $50,000 that must be included on the tax return.
Box 13: Box 13 outlines whether you were employed as a statutory employee exempt from federal income tax withholding, participated in an employer-sponsored retirement plan such as 401(k) or 403(b), or received sick pay through an external source such as an insurance policy.
Box 14: If you have additional tax information that does not fit into other W-2 boxes, your employer may use Box 14 to report it. Examples include state disability insurance taxes withheld, union dues and uniform payments, health insurance premiums deducted and more.
Boxes 15-20: Your employer uses boxes 15-20 to report state and local income tax information with the two-letter abbreviation for your state, along with an assigned state ID number. These boxes can cover wages for two states as well as two localities; if more than two entities need reporting information to the same employer, a second Form W-2 must be prepared for you to use.
I hope this information has provided you with a better understanding of your W-2 form. Learning how to read a W-2 form is essential for filing your taxes correctly and by understanding each box and its impact on taxable income, you can help make sure that your return is complete and correct.
Lesson Resource
- How to Read Your W-2 Tax Form Lesson – Teaching lesson plan for this lesson.
Website Resource
- Money Instructor – Money Instructor is the leading source for financial education and skills development.
