Form W-2: Wages, salaries, tips.etc (Output Line No. 1)
Wage & Salary is the payment that one gets for his work. W2 is the income earned for the work done. Wages are basically paid either monthly, weekly, tri-weekly, daily or as per the hour.
⦁ Form W-2, also known as the Wage and Tax Statement. It is the document an employer is required to send to each employee and the ⦁ Internal Revenue Service (IRS) at the end of the year. A W-2 reports employees’ annual wages and the amount of taxes withheld from their paychecks. A W-2 employee is someone whose employer deducts taxes from their paychecks and submits this information to the government. The information includes the total of wages, salaries, tips, etc. If one is filing a joint return, spouse’s W2 is also included as income.
What Information Does Form W-2: Wage and Tax Statement Include?
⦁ Every W-2 has the same fields, no matter who the employer is. W-2 forms are divided into state and federal sections since employees must file taxes on both levels.
⦁ employer’s information provide in W2 that including the company’s name, ⦁ Employer Identification Number (EIN) (federal) and the employer’s state ID number.
⦁ The employee’s total earnings from the employer for the year are recorded, along with the amount withheld in taxes from the employee’s paychecks. The Withholdings are separated into federal income tax, Social Security tax, and more. If the employee also works for tips, a field shows how much money the employee has earned as tips for the year.
⦁ If you work multiple jobs that provide W-2s, you need to input each separately.
⦁ When the employee files taxes, the amount of tax withheld according to the W-2 form is deducted from their gross tax obligation. If more tax was withheld than owed, a refund will be issued.
⦁ If one receives wage income from more than one state (that is multi state) it is recorded in the filing as per document and one is liable to pay taxes to the respected state, hence there will be multiple state tax returns.
Boxes of Form W-2
W-2 forms include both numbered and lettered boxes that an employer must fill out and reflect how much you earned and taxes withheld.
Boxes A through F
The lettered boxes on a W-2 include the name and address of employee and employer, Social Security number, and employer’s EIN and state ID number.
Boxes 1 and 2
Box 1 shows taxable income, including wages, salary, tips, and bonuses, while Box 2 shows how much federal income tax employer withheld from your pay.
Boxes 3 and 4
Box 3 provides details how much of earnings were subject to Social Security tax and Box 4 provides the amount of Social Security tax that was withheld @ 6.2%.
Boxes 5 and 6
Box 5 spells out how much of pay is subject to Medicare tax and Box 6 tells how much was withheld. The employee portion of the Medicare tax is 1.45%.
Boxes 7 and 8
If part of the pay is in the form of tips, these boxes show how much is reported in tips (Box 7) and how much employer reported in tips is paid (Box 8).
This box was used to reflect a now-defunct tax perk, so it is left empty.
Box 10 reports how much is received from of dependent care benefits (if applicable).
This box details how much deferred compensation is received from the employer in a non-qualified plan.
Box 12 details other types of compensation or reductions from your taxable income. A single or double letter code that corresponds to each is mentioned in the box. It might include, for example, contributions to a 401(k) plan. Code detailed are provided as per IRS’ W-2 instructions.
This box has three sub boxes designed to report pay that is not subject to federal income tax withholding, if one participated in an employer-sponsored retirement plan, or if one received sick pay via a third-party, such as an insurance policy. If one is/was a statutory employee, the “Statutory employee” box in box 13 of the Form W-2 should be checked.
Box 14 allows an employer to report any other additional tax information that may not fit into the other sections of a W-2 form. A few examples are state disability insurance taxes withheld and union dues.
The last six boxes on a W-2 all relate to state and local taxes, including how much of the pay is subject to these taxes and how much is the withheld.