If you make more than $600 in income and benefits, you will receive a W-2 form. Also known as a "Wage and Tax Statement," this form is one of the most important during tax season. It's what you'll use to prepare your taxes, and you'll need to have it on hand regardless of whether you file yourself or go to a tax preparer. If you need W2 tax form explained, visit this website.
Employers have to prepare a whopping six copies of the W-2. Don't worry. You don't get all of them. As an employee, you receive three copies, Copy B, Copy 2, and Copy C. Copy B is used to report your federal income taxes and is typically filed along with your return. Copy 2 is used to report state, city, or local income tax, and Copy C is the W-2 you keep in your records.
The W2 Tax Form Explained
Are you overwhelmed with the information on your W-2? Tax season can be stressful, but this form is easier to understand than you think. The best way to look at it is to view the left and right sides as separate sections.
The Left Side
The entire left side of the W-2 is for reporting taxpayer information. The data you see should be familiar to you.
In Box A, you'll see your Social Security number. Always double-check to ensure that it's correct.
Box B is the employer identification number (EIN). Think of it as the employer equivalent of a Social Security number.
Box C has your employer's legal address. It's not always the exact address of where you work, so don't be thrown off if you don't recognize it.
Box D includes the control number companies sometimes use internally to identify specific employers. This box may be blank if your job doesn't use it.
Finally, there are Boxes E and F. It should have your full name and address reflected on your Social Security card.
The Right Side
Here's where most people need the W2 tax form explained. The right side of the document has tax codes, and the dollar amounts related to your income. We won't go through every box, but here are some of the most critical tidbits you need to know.
Box 1 has your taxable compensation. It includes wages, prizes, and other taxable income from your employer.
Box 2 reports the total amount withheld from your pay.
Box 3 shows how much of your income is subject to Social Security tax. The number may be higher than your taxable compensation in Box 1 because it's determined before deductions. Box 4 reports how much Social Security taxes were withheld from your pay.
Box 5 reports how much of your income is subject to Medicare tax. The following Box 6 shows the amount withheld for Medicare tax.
Boxes 7 and 8 revolve around tips, including how much you report and your employer allocated to you, respectively.
The remaining boxes provide information on benefits paid on your behalf, statutory employee earnings, and more. Don't be alarmed if your W-2 doesn't have information in every box. These forms cover all the bases but only provide data relevant to your earnings.
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