In the previous blog of Tax Season 2019 Ultimate Guide, we talked about choosing the right filing status, and now we will dwell into Form W-2, the Wage and Tax Statement to ensure you make no mistake while reporting the wages you earned and the taxes you paid.
Form W-2 is one of the most crucial documents at the tax time, which states the wages you earned and the taxes you paid. Employees can also refer W-2 Form as an output document received from the employer’s end, summarizing employee’s total Gross Earnings, Social Security Earnings, and Medicare Earnings. It is more like a ritual that every employer in the U.S. must follow. The basic purpose of this form is to provide all the information to employees that need to be included in their income tax form.
Where to Get W-2 Forms?
You can directly get your W-2 Form by sending an online request to the IRS or, can purchase it from a copy shop. Some advanced tax software programs including Drake Cloud also incorporates W-2 Form and allow taxpayers to file it directly from the platform. Last but not least, you can also fetch your copy of the W-2 Form from your tax preparer.
Note: You should use the official forms as the Copy A of the W-2 Form is printed on special paper. Hence, copying it from the internet won’t help you much.
Understanding Your W-2 Form
The ‘W’ in your W-2 Form stands for ‘withholding’, and the form is used to report the taxable income. The exact format of your W-2 Form actually depends on the way your employer processes payroll, which means that it comes in different sizes, shapes and formats. However, the information it carries is quite the same regardless of anything. Let’s start with the items listed on your W-2 Form!
All Those Lettered Boxes
There are six lettered boxes (A to F) present on your W-2 Form, each one of which conveys your identifying information: your Social Security number, your employer’s tax ID number or EIN, everyone’s addresses and full legal names. Box D, reads as Control Number, is the only lettered box that identifies your Form W-2 document among the piles of employer’s records. It is kind of a unique number.
Learn what each lettered box tells about you:
- Box A: Your Social Security Number (SSN)
- Box B: Your Employer’s Identification Number (EIN)
- Box C: Your employer’s complete details including the employer’s name, address, state, and zip code
- Box D: Your unique Control Number (provided by the company’s payroll processing software) that identifies your W-2
- Box E: Your full name
- Box F: Your complete address
Note: In case, your name has changed or, you’ve shifted to a new address, talk with your HR to update your records.
All Those Numbered Boxes
Where on one hand, the lettered boxes record your personal information, the numbered boxes on the other records your financial information. There are 20 numbered boxes in total on your W-2 Form. Let’s understand what each numbered box tells about your finances:
- Box 1: Your total taxable wages or salary.
- Box 2: It reports the total amount your employer withheld from your paychecks for federal income taxes.
- Box 3: It is to report your total amount of wages to the Social Security tax, which is applicable to the wages up to $128,400.
- Box 4: Your employer needs to mention the total amount of Social Security taxes retain with your paychecks.
- Box 5: This box is to report your wages depending upon the Medicare tax. The amount your employer going to fill in this box might be larger than the amount of Box 1 as there’s no maximum wage to report for Medicare.
- Box 6: Just like Box 4, this box is to report the overall tax amount withheld from your paycheck specifically for the Medicare tax.
- Box 7: It simply tells about any tip income your employer aware of. In case, if you haven’t reported any tips to the employer, it will remain empty then.
- Box 8: Your employer needs to report any tip income that was allocated by him to you.
- Box 9: As of now, it doesn’t report anything. Till 2010, the box is used to report any advance of the earned income credit.
- Box 10: The amount you’ve reimbursed to fulfill your dependent care expenses or, the amount provided by your employer to avail dependent care services can be reported in this box.
- Box 11: This box reports the amount you get from your employer’s non-qualified deferred compensation plan or the non-government (Section 457) pension plan.
- Box 12: Various types of benefits and compensations can be reported in this box.
- Box 13: It contains three checkboxes that will be marked off if you are a statutory employee.
- Box 14: Your employer can report any kind of additional tax information along with the brief descriptions in this particular box.
- Box 15: This reports your employer’s state and state tax identification number.
- Box 16: It includes all of the taxable income that you earned in a single or, multiple states while working for the same employer.
- Box 17: The employer reports your total state income tax amount that your salary holds.
- Box 18: Your employer will fill the total amount of your income that matters to local, city or other state income taxes.
- Box 19: It reports the total amount of taxes including local, city, or other state income taxes withheld from your salary.
- Box 20: Your employer will give a brief description of any kind of tax that you need to pay.
Parts of Your W-2 Form
W-2 Form is not a single page form instead it is a six-part federal Wage and Tax Statement that needs to attach with different documents as per the IRS guidelines. The six multipart and their attachment are as follows:
- Copy A: This part of the form is printed on a laser-scannable document and must submit to the SSA.
- Copy 1: You should keep this copy for your city or locality tax return.
- Copy B: Attach this copy to your federal income tax return.
- Copy C: Secure it for your own records and keep this copy with other tax documents.
- Copy 2: Another copy of the form that you can attach to your state tax return
- Copy D: Another part of the W-2 form that goes to employer’s records.
W-2 Obligations For Employers
The employer must prepare W-2 Form for their employees as it reports their annual earnings along with the tax withholdings. It is mandatory for every employer to prepare one form and pass the copies to the Social Security Administration. Once, the information is checked by SSA it passes on to the IRS. Employers must complete and mail the form to their employees latest by 31st Jan every year.
How to Send Your W-2 Form?
You need to hand over your W-2 form to the Social Security Administration by the end of February. In case you have 250 or more forms with you, then you can submit them online to the SSA.