Tax season is fast approaching, so the more you know, the less scary some of these forms can be. The key to understanding your W-2 is learning what each of the boxes and numbers means. Here at AccessPoint, we want you to be prepared to file your W-2 form because you can’t file your taxes without it. If you can’t remember how to fill out a W-2 form, we’ve broken down what the different boxes mean as well as some frequently asked questions on everything you need to know to make this stressful time less stressful.
How does my W2 work?
Many employers are preparing to send out W-2s, but it’s up to the employee to make sure they file their tax returns by Tuesday, April 17, 2018, and there are a number of items you need to aware of to ensure a smooth filing process.
All employers must mail an employee’s W2 by January 31st, 2018. Your employer will also send a copy to the Social Security Administration as well as state and local tax authorities. This is why filing, and understanding what you’re filing, is important.
You should file a return even if you can’t pay your tax bill. Penalties and interest apply if you miss the filing deadline.
The information on your W2 is derived from the W4 you completed when starting a new job. It tells your employers how much they need to deduct out of your pay for taxes. The more allowances, or deductions you claim, the less money you’ll have taken out of your paycheck.
If you see any errors, make sure to let your employer know so they can notify AccessPoint. If there is an error with your social security number, for example, a correction must be filed.
Here’s what some of the boxes on your W2 mean:
- Box 1 – The total of your taxable wages, tips, other compensation (this is adjusted by pre-tax and 401k deferrals).
- Box 2 – The total amount of federal income tax that was withheld from your check.
- Box 3 – The total in wages that were subject to the social security. In 2017, $127,200 was subject to social security tax of 6.2%.
- Box 4 – The total amount of social security tax withheld. The maximum amount you pay in social security should be $7,886.40. If your total withheld is over this amount, you get a refund.
- Box 5 – The total of your wages and tips subject to Medicare tax. There is no limit on Medicare tax.
- Box 6 – The total you paid to Medicare tax, which is 1.45% of your wages and tips.
- Note that earnings over $200,000 are also subject to the Excess Medicare tax. This is 0.9% for all wages over the $200,000 amount and it will be added to Box 6.
- Box 7 – Tips you reported to your employer, which should already be included in Box 1.
- Box 8 – Total in allocated tips, which are the amount your employer assigned to you in addition to what you reported. Employers may assign tips if you reported less than 8% of food and drink sales.
- Box 9 – Your Advance Earned Income payment. The maximum amount for 2017 is $6,318 with three or more qualifying children. This is not a common box to have information in.
- Box 10 – Total dependent care benefits. If your employer reimburses you for day-care costs or services and the reimbursement is above $5,000, then the excess is taxable and would already be included Box 1.
- Box 11 – Amounts distributed to you from non-qualified deferred compensation plans.
- Box 12 – Can be any number of codes as outlined on the back of the form.
- Box 13 – To indicate whether you are a statutory employee, a participant of the retirement plan or received third party sick pay.
- Box 14 – Are the payments made to union dues, health insurance, or educational assistance, United Way, for example. This is an informational box only and is not required by the IRS.
- Box 15 – This is the State Tax ID number required to report wages for a particular state.
- Box 16 – This is taxable wages for the state tax.
- Box 17 – This is the actual state tax withheld from your check.
- Note that if you moved during the year from one state to another, you may have two separate state wages and tax amounts for Boxes 16 and 17. They cannot be combined on the W2.
- Box 18 – This is the taxable wage amount for any city taxes you were subject to.
- Box 19 – This is the actual city tax withheld from your check.
- Note that if you had to pay taxes in more than one municipality, they will be shown as separate wage and tax amounts for Boxes 18 and 19. They cannot be combined on the W2.
- Box 20 – This is the name of the city for which taxes were withheld.
Frequently Asked Questions
Why don’t I have my W2 by January 31?
- The IRS statute requires that all W2’s be postmarked on or before January 31 for the prior tax year. This does not necessarily mean you will receive the W2 by that date. There are a few different factors that can affect the timely delivery of your form. Here are a couple:
- Address changes – your W2 will be delayed if you did not notify your employer of a change of address or process a change of address with the post office.
- U.S. Postal Service delays – this will vary from city to city and/or states.
What happens if I don’t receive my W2?
- If you don’t receive your W2 by February 10, you can call or email your employer to see if it has been returned by mail. Your employer should keep a list of all employees that have called about their W2 so that they can watch for missing forms to be returned.
- Your employer cannot issue W2 copies until they are certain the original won’t be returned. A W2 copy is not an official document and says ‘re-issued copy’ on the form.
- Your employer will begin re-issuing copies during the middle of February for all employees that have called in to report something missed. Please note that re-issuing copies is typically done on a first come, first serve basis as it does take some time.
- You will need to provide certain information to prove your identity. W2’s will be not be emailed or faxed.
When can I typically access my W2 online?
- If your employer makes W2’s available online, then the W2 copies do not go out on the website until your employer has finished all filings and receive electronic files from the IRS. Once the electronic files become available, they can be uploaded to the client portals and the employee’s will then be able to access the forms. This is usually not until the end of February.
Why doesn’t my W2 wage number match the information on my paystub?
- Box 1, Box 3 and Box 5 are all adjusted gross wage amounts and will most likely not match your YTD pay statements. For example, the gross wages reported in Box 1 are reduced by deductions such as health insurance, retirement plan deferrals, and other pre-tax deductions.
If you are a client or client employee of AccessPoint, please contact us with any further questions.
Disclaimer: Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.