Understanding Form W-2 – solbiZ

Form W-2 includes federal, state, social security, and other tax information. The W-2 is used by both small businesses and large corporations to let their employees know how much tax was withheld from their paychecks over the year. Employers are expected to provide a paper or electronic W-2 to their employees.

Click here to import or add your W-2 to Credit Karma Tax.

Boxes A-F should already be filled out by your employer with identifying information including: your Social Security number, your employer’s tax ID number or EIN, employer’s address, your legal name, and your address.

The numbered boxes on your W-2 record your wages and taxes withheld from your wages during the year. Learn more about what each box stands for:

Box 1: Total Taxable Wages
Box 2: Federal Income Taxes Withheld
Box 3: Social Security Wages
Box 4: Social Security Tax Withheld
Box 5: Medicare Wages and Tips
Box 6: Medicare Tax Withheld
Box 7: Social Security Tips
Box 8: Allocated Tips
Box 9: Blank
Box 10: Dependent Care Benefits
Box 11: Nonqualified Plans
Box 12: Letter Codes
Box 13: Statutory Employee, Retirement Plan, and Third Party Sick Pay
Box 14: Other
Box 15: Employer’s State and State Tax ID
Box 16: State Wages
Box 17: State Income Taxes
Box 18: Local Wages
Box 19: Local Withheld Taxes
Box 20: Local Name

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Box 1: Total Taxable Wages

Box 1 is your total taxable wages including your salary, wages, tips, bonuses, and other taxable compensation. Box 1 doesn’t include any pre-tax benefits, such as 401(k) plan contributions.

Box 2: Federal Income Taxes Withheld

This is the total amount of federal income tax that has been withheld from your paychecks for the year. This is based on information you provided in your federal W-4.

Box 3: Social Security Wages

This box reports the total amount of your wages that are subject to Social Security tax.

Heads up: If the total of boxes 3 and 7 exceed $132,900 (the 2019 maximum social security wage base) you should consult with your employer.

Box 4: Social Security Tax Withheld

Box 4 reflects the total amount that has been withheld from your wages for social security taxes.

Box 5: Medicare Wages and Tips

Box 5 is the amount of your wages that are subject to the Medicare Tax.

Box 6: Medicare Tax Withheld

This is the total amount that has been withheld from your paychecks for the Medicare tax.

Box 7: Social Security Tips

This box contains any tip income you have reported to your employer. Box 7 may be empty if you didn't report any tips.

Box 8: Allocated Tips

This is any tip income that was allocated to you by your employer. Box 8 may be empty.

If there is an amount in box 8, you usually need to include the amount in your taxable wages and may need to pay Social Security and Medicare tax on the amount. You can read IRS Publication 531 for more information.

Box 9: Blank

Box 9 is no longer in use and should remain blank.

Box 10: Dependent Care Benefits

This box is the total dependent care benefits that your employer paid to you or incurred on your behalf. If the value is over $5,000 (or $2,500 if married filing separately), it will also be included in Box 1. You may be taxed on all or part of your dependent care benefits based on the information you include on Form 2441 (Child and Dependent Care Expenses). Form 2441 is part of the Dependent Care Credit section of Credit Karma Tax.

For more information about this process, check out Publication 503 to determine who qualifies as a dependent and what expenses are eligible.

Box 11: Nonqualified Plans

This is any amount that has been distributed to you from your employer's non-qualified deferred compensation plans. The amount in Box 11 is already included as taxable wages in Box 1.

Box 12: Letter Codes

Make sure to enter the correct values and codes shown in Box 12 of your W-2 to help ensure you pay the correct amount of taxes. Here are some common codes you may find on your W-2, box 12:

AA: Designated Roth contributions under a section 401(k) plan
BB: Designated Roth contributions under a section 403(b) plan
C: Taxable cost of group-term life insurance over $50,000
DD: Cost of employer-sponsored health coverage
D: Elective deferrals under a section 401(k) cash or deferred arrangement plan (including a SIMPLE 401(k) arrangement)
EE: Designated Roth contributions under a governmental section 457(b) plan
E: Elective deferrals under a section 403(b) salary reduction agreement
F: Elective deferrals under a section 408(k)(6) salary reduction SEP
G: Elective deferrals and employer contributions (including nonelective deferrals) to a section 457(b) deferred compensation plan
H: Elective deferrals to a section 501(c)(18)(D) tax-exempt organization plan
J: Nontaxable sick pay
R: Employer contributions to an Archer MSA
S: Employee salary reduction contributions under a section 408(p) SIMPLE plan
T: Adoption benefits
W: Employer contributions to an employee’s health savings account (HSA)
Y: Deferrals under a section 409A nonqualified deferred compensation plan

If your W-2 has a code that isn’t listed here, see the instructions that came with your W-2 form or see the W-2 and W-3 Instructions.

Box 13: Statutory Employee, Retirement Plan, and Third Party Sick Pay

Box 13 contains three check boxes: Statutory Employee, Retirement Plan, and Third Party Sick Pay.

Statutory Employee:

This box will be checked off if you are a statutory employee. If so, your wages should not be subject to federal or state income tax withholding. However, your wages will still be subject to Social Security and Medicare taxes. Retirement Plan:

This box will be checked off if you were an active participant in certain retirement plans during the tax year. This includes a 401(k) plan, a 403(b) plan, SEP-IRA, SIMPLE-IRA, or another specified type of pension plan.

Third Party Sick Pay:

This box will be checked off if you received third-party sick pay from a third-party or the employer is reporting sick pay from a third-party.

Box 14: Other

This box is for remaining information provided by employers that doesn’t fall under an other category. Some items you may see here are state disability insurance taxes withheld, union dues, health insurance premiums deducted, etc.

Depending on the item, it may also be reported on another part of your tax return. For example, health insurance premiums listed on box 14 of your W-2 will flow to Schedule A line 5, (medical expenses).

The value in Box 14 (if any) depends on the type of information reported by your employer. Your employer should label each item listed in Box 14. If you’re confused about what’s reported in Box 14 on your W-2, you can contact your employer or the issuer of your W-2 form.

Box 15: Employer’s State and State Tax ID

This box is for your employer’s state and state tax identification number.

Box 16: State Wages

This is the total amount of your wages that is subject to state tax.

Box 17: State Income Taxes

Box 17 contains the total amount that has been withheld from your paychecks for state income taxes, based on the wages amount reported in Box 16. This is based on the information you provided to your employer in your state W-4.

Box 18: Local Wages

This is the total amount of wages that are subject to local taxes.

Box 19: Local Withheld Taxes

Box 19 contains the total amount withheld from your paychecks for local taxes.

Box 20: Local Name

Box 20 provides the name of the locality that withheld taxes.

If you’re confused about what’s reported in Box 20 on your W-2, you can contact your employer or the issuer of your W-2 form.