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Form W-2

Information on your W-2

Box 1. Wages, tips, other compensation This is the amount your employer has determined is the taxable amount of your compensation. If you participated in a deferred compensation or cafeteria plan that amount should not be included in this amount. Likewise if you received other taxable income, such as reimbursed moving expenses, that amount will be added to this amount. The total of your box 1 income from all of your W-2s (and your spouse's if filing a joint return) is reported on line 7 of your Form 1040 or 1040A or line 1 of your form 1040EZ.
Box 2. Federal income tax withheld The tax system is "pay as you go." The purpose is to insure you have a sufficient amount paid-in to cover your tax liability at the end of the year. The amount withheld is based on the filing status and number of exemptions you claimed on the W-4 you provided to your employer. This amount is reported on line 64 of Form 1040, line 39 of Form 1040A or line 7 of Form 1040EZ.
Box 3. Social security wages This is the amount of wages subject to Social Security tax. It will not be the same as the amount in Box 1 if you participated in a deferred compensation or cafeteria plan. Amounts paid into these programs are not subject to income tax but are subject to Social Security tax. The maximum wage subject to Social security tax in 2005 is $90,000.
Box 4. Social security tax withheld This should be 6.2% of the amount in box 3. The maximum amount in 2005 is $5,580. If your employer withheld more, you must contact your employer for a refund.
Box 5. Medicare wages and tips This is the amount of wages subject to Medicare tax. It will not be the same as the amount in Box 1 if you participated in a deferred compensation or cafeteria plan. Amounts paid into these programs are not subject to income tax but are subject to Medicare tax. There is no maximum. All wages are subject to Medicare tax.
Box 6. Medicare tax withheld This should be 1.45% of the amount in box 5.
Box 7. Social security tips. If you reported tips to your employer and your wages were insufficient to cover the Social Security withholding, that amount is reported here. The total of boxes 3 and 7 should not be more than $90,000. This amount should have been included with wages and compensation in box 1 and box 5.
Box 8. Allocated tips If tips reported by employees are less than a specific percentage of a food or beverage establishment's revenue the employer is required to "allocate tips." This amount is not included in boxes 1, 3, 5, or 7. You must report allocated tips on your tax return unless you kept a daily tip record, or other evidence that shows your actual tips were less than those reported on your W-2. If you must report allocated tips on your return the amount in box 8 is added to wages on line 7 of Form 1040. (You cannot file Form 1040EZ or Form 1040A.) Because social security and Medicare taxes were not withheld from the allocated tips, you must report those taxes as additional tax on your return.
Box 9. Advance EIC payment If rather than waiting until the end of the year, you requested that your employer include earned income credit in your paychecks, the amount you received will be reported here. When you file your tax return, the amount of your refund (or balance due) will be adjusted for the advance amount. This amount is reported on line 61 of your Form 1040 or line 37 of Form 1040A (you can not file Form 1040EZ).
Box 10. Dependent care benefits This amount is the total dependent care benefits that your employer paid to you or incurred on your behalf (including amounts from a section 125 (cafeteria) plan). Any amount over $5,000 also is included in box 1. You must complete Schedule 2 (Form 1040A) or Form 2441, Child and Dependent Care Expenses, to compute any taxable and nontaxable amounts.
Box 11. Nonqualified plans This amount is: (a) reported in box 1 if it is a distribution made to you from a nonqualified deferred compensation or nongovernmental section 457(b) plan or (b) included in box 3 and/or 5 if it is a prior year deferral under a nonqualified or section 457(b) plan that became taxable for social security and Medicare taxes this year because there is no longer a substantial risk of forfeiture of your right to the deferred amount.
Box 12. The following list explains the codes shown in box 12. You may need this information to complete your tax return.
A—Uncollected social security or RRTA tax on tips. Include this tax on Form 1040.
B—Uncollected Medicare tax on tips. Include this tax on Form 1040.
C—Taxable cost of group-term life insurance over $50,000 (included in boxes 1, 3 (up to social security wage base), and box 5)
D—Elective deferrals to a section 401(k) cash or deferred arrangement. Also includes deferrals under a SIMPLE retirement account that is part of a section 401(k) arrangement.
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. See “Adjusted Gross Income” in the Form 1040 instructions for how to deduct.
J—Nontaxable sick pay (information only, not included in boxes 1, 3, or 5)
K—20% excise tax on excess golden parachute payments.
L—Substantiated employee business expense reimbursements (nontaxable)
M—Uncollected social security or RRTA tax on taxable cost of group-term life insurance over $50,000 (former employees only).
N—Uncollected Medicare tax on taxable cost of group-term life insurance over $50,000 (former employees only).
P—Excludable moving expense reimbursements paid directly to employee (not included in boxes 1, 3, or 5)
Q—Nontaxable combat pay. See the instructions for Form 1040 or Form 1040A for details on reporting this amount.
R—Employer contributions to your Archer MSA. Report on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts.
S—Employee salary reduction contributions under a section 408(p) SIMPLE (not included in box 1)
T—Adoption benefits (not included in box 1). You must complete Form 8839, Qualified Adoption Expenses, to compute any taxable and nontaxable amounts.
V—Income from exercise of nonstatutory stock option(s) (included in boxes 1, 3 (up to social security wage base), and box 5)
W—Employer contributions to your Health Savings Account. Report on Form 8889, Health Savings Accounts (HSAs).
Y—Deferrals under a section 409A nonqualified deferred compensation plan.
Z—Income under section 409A on a nonqualified deferred compensation plan. This amount is also included in box 1. It is subject to an additional 20% tax plus interest.
AA—Designated Roth contributions to a section 401(k) plan.
BB—Designated Roth contributions under a section 403(b) salary reduction agreement.
Box 13. If the “Retirement plan” box is checked, special limits may apply to the amount of traditional IRA contributions that you may deduct.
Box 14—Other. This area is used by your employer to report various deductions and payments. Some may affect you State or Federal taxes. (Examples include state disability insurance taxes withheld, union dues, uniform payments, health insurance premiums deducted, nontaxable income, educational assistance payments, or a member of the clergy’s parsonage allowance and utilities, contributions to a pension plan, lease value of a vehicle.) If you are unsure of the items reported here you should contact your employer for an explanation.
Note: Keep Copy C of Form W-2 for at least 3 years after the due date for filing your income tax return. However, to help protect your social security benefits, keep Copy C until you begin receiving social security benefits, just in case there is a question about your work record and/or earnings in a particular year. Review the information shown on your annual (for workers over 25) Social Security Statement.