Form W-2: Everything You Ever Wanted To Know
Form W-2 is one of the most important tax forms for salaried workers. If you’re employed and you pay your taxes, you’re surely already familiar with it.
It is an information return document, In Form W-2 employers report an employee’s total paid salary and taxes paid on that salary. The form is also used in reporting taxes to the Social Security Administration and FICA.
A W-2 wage statement from an employer may be a basic document for wrapping up your taxes. It’s a clear picture of what percentage an employer has paid you throughout the year, what proportion of tax amount they’ve retained from your paycheck, and also provides information about other payroll holdings that will have an impact on your tax-paying obligation.
At first sight, the W-2 form gives an image of a complicated IRS form including lots of boxes, codes, and numbers. But a W-2 form isn’t that complicated as it looks. If you have other kinds of earnings or income (freelancing income) — report those earnings on other IRS forms and not on your W-2 form.
Eligibility to File Form W2
If an employer pays an employee a minimum wage of $600 per year in form of cash or any alternative. it becomes mandatory to file a Form W-2 for your best interest. If your employer kept income, Social Security, or health tax from your salary, it becomes obligatory to file a Form W-2.
Each W-2 form has 6 copies. The copies are distributed in the following manner:
- Copy A – The employer shall send this copy to the Social Security Administration.
- Copy B – The employer shall send this copy to the employee, who dispatch it along with his tax return forms.
- Copy C – Copy C also is for employees. To save for personal records.
- Copy D – Employers keep this copy for their records.
- Copy 1 – Employer will submit this copy to employees state and/or local taxing authority where necessary. Some states don’t demand this, but some states do.
- Copy 2 – This copy will also go to the employee, the taxpayer. If you file state or local income taxes, you’ll give this copy to the taxing authorities along with other tax forms.
Understanding Form W2
Each section on your W-2 contains important information associated with your taxes.
- Box A: Your Social Security number, which the IRS uses to espy you.
- Box B: The employer number, or EIN, which the IRS uses to espy your employer.
- Box C: Your employer’s name, address, and postcode.
- Box D: An employer may decide to include a code in this section to identify your individual form. It can be left vacant.
- Box E: Your authorized name.
- Box F: Your address and postcode.
- Box 1: The whole amount of taxable wages, declared tip income, and other taxable payments the employer paid you within the last tax year.
- Box 2: The quantity of federal tax the employer retained from employees’ wages for the taxation year.
- Box 3: The entire wages paid that are subject matter to Social Security tax. ( $132,900 this amount is named the Social Security wage base limit. meaning you shouldn’t pay Social Security tax on wages you earn in more than that quantity.) The Social Security rate is 6.2% for workers (your employer pays another 6.2% on your wages), therefore the amount during this box shouldn’t surpass $132,900 x 0.062= $8,239.80.
- Box 5: Shows your earnings subject matter to Medicare tax.
- Box 6: The withholding medicare tax. There’s no Medicare wage base limit, therefore the Medicare rate of two .9% (1.45% from employees and 1.45% from employers) applies to all earnings.
- Box 7: Shows any tip income you declared to your employer.
- Box 8: Shows tip income dedicated to you by your employer. Your employer will report tips allocated to you. Tax is deductible on these tips.
- Box 9: This box needs to be filled with a verification code if your employer is participating in an IRS pilot project. it’s going to remain blank if your employer isn’t participating.
- Box 10: Such an amount reports dependent care benefits granted under a dependent care support program. Any amount exceeding r $5,000 has to be added to Box 1.
- Box 11: Displays the overall amount distributed to you from your employer’s non-qualified (taxable) deferred compensation plan.
- Box 12: Different Form W-2 Codes on Box 12 indicate different types of compensation or allowances.
- Box 13: Three checkboxes that report the following:
- Legal Employee Status
- Retirement Plan
- Third-Party Sick Pay
- Box 14: An Area where your employer reports anything that doesn’t fit in a special area on the W-2 form.
- Boxes 15 to 20: These boxes include information about State tax and local income tax. That information has to be reported by your employer.
Receive Form W-2 from Employer
If you think your employer owes you a W-2 but you haven’t received one by the end of February, there are few things you can do.
- Call your employer.
- If the matter doesn’t get resolved you can contact the IRS through a call.
- If you still don’t get your W-2 Form by Tax Day, you have two options:
- Request an extension of the filing deadline.
- Use Form 4852, Substitute for Form W-2.
- If you receive a W-2 from your employer, but it’s incorrect, contact your employer right away for form corrections so you can file your taxes on time. If the employer refuses to make corrections or takes too long, You have the right to call the IRS.
If you work as an employee for anyone during the tax year, your employer should provide you with a W-2 Form.
By learning how to read a W-2 can assist you to fill the form accurately and make sure the information your employer reports to the IRS on your behalf is accurate.
By understanding each and everything about the W-2 form, you can also file your tax online (e-file) without any hesitation.