Wages

What is a W-2?
Your employer will send you or give you this form by January 31.
The form contains the tax information the federal and state governments need to know abou
job with your employer. The information is for the previous calendar year.

Why do you need a copy of the W-2?

You need this form in order to file your federal and state income tax returns, and you need a
It is proof of how much money you made and how much federal and state taxes you already

Wage Income : - Copensation received by employees for services performed.

Usually, Wages are computed by multiplying an hourly pay rate by the number of hours Work

Salary : Copensation received by an employee for services performed.

A salary is a fixed sum paid for a specific period of time worked, such as weekly or monthly

Employer and Employee Identification (Boxes A throu

Box A: Control Number. This is a code that identifies this unique Form W2 document in yo
assigned by the company's payroll processing software.

Box B: Employer Identification Number (EIN). This is your employer's unique tax identif

Box C: Employer's Information. This identifies the name, address, city, state, and zip code
show your company's headquarters rather than their local address.

Box D: Employee's Social Security Number. This is your Social Security Number. If this n
Security card to your company's human resources or payroll department and ask them to co

Box E: Employee's Name. This identifies your full name (first name, middle initial, and last
you might want to ask your company to update their records with your new name, and re-iss

Box F: Employee's Address. This identifies your address, city, state, and zip code. If you h
Box 1: Wages, tips, and other compensation. Box 1 reports your total taxable wages for
figure includes your wages, salary tips you reported, bonuses, and other taxable compensati
as group term life insurance) are also included in your Box 1 wages.

Box 2: Federal income tax withheld. Box 2 reports the total amount withheld from your p
This represents the amount of federal taxes you have paid-in throughout the year

Box 3: Social Security wages. Box 3 reports the total amount of wages subject to Social S
Security tax is assessed on wages of $97,500 or less. If Box 3 shows an amount over $97,500
correct your W2. If your total wages are under $97,500, then the amounts reported in Boxes
reported to your employer are not included in the Box 3 amount. Tip income is reported in Bo
should equal either the amount in Box 1 or the $97,500 maximum wage base for Social Secu

Box 4: Social Security tax withheld. Box 4 reports the total amount of Social Security tax
Social Security tax is a flat tax rate of 6.2% for wages up to a maximum of $97,500. Wages a
Social Security tax. The maximum figure shown in Box 4 should be $6,045 ($97,500 maximu
two or more jobs during the year, and your total wages exceed $97,500, you may have exce
will claim the excess as a refund on Form 1040, Line 67.

Box 5: Medicare wages and tips. Box 5 reports the amount of wages subject to Medicare
base for Medicare taxes. The amount shown in Box 5 may be larger than the amount shown
deferred compensation, 401k contributions, or other fringe benefits that are normally exclud

Box 6: Medicare tax withheld. Box 6 reports the amount of taxes withheld from your payc
Medicare tax is a flat tax rate of 1.45% of your total Medicare wages.

Box 7: Social Security tips. Box 7 reports the amount of tip income that you reported to y
to your employer, you will not have an amount in this box. The amounts in Box 7 and Box 3 s
or the $97,500 maximum wage limit for Social Security taxes.

Box 8: Allocated tips. Box 8 reports any tip income that your employer thinks you may hav
amount is not included in the wages reported in Boxes 1, 3, 5, or 7. Instead, you must add th
Line 7, and must calculate your Social Security and preparer to figure out the best strategy fo
with allocated tips must file Form 1040
Box 9: Advance EIC payment. Box 9 reports any advance against your Earned Income Tax
This only happens if you submitted IRS Form W-5 (PDF) requesting your employer to add a po
paycheck. Advance EIC payments are repaid on Form 1040 as an additional tax payment, wh
you will receive as a tax refund. Employees with advance EIC payments must file Form 1040

Box 10: Dependent Care Benefits. Box 10 reports any amounts reimbursed for dependen
dependent care services provided by your employer. Amounts under $5,000 are non-taxable
reported as taxable wages in Boxes 1, 3, and 5. Non-taxable benefits must be excluded from
dependent care tax credit on IRS Form 2441 (PDF).

Box 11: Nonqualified Plans. Box 11 reports any amounts distributed to you from your emp
compensation plan or non-government Section 457 pension plan. The amount in Box 11 is al
Box 1.

When you got rolled over Wages in Screen W-2 & if Box 12 contains Code A,B,M,N
amount in Uncollected FICA Box # 102 if the same with code D, E, F, G & H (D to H)
106 in Prosystem FX.

Box 12 Codes and Explanations:

Form W-2 Box 12: Deferred Compensation and Other Compensation. There are sever

Code A – Uncollected Social Security or RRTA tax on tips. Include this amount as part of you
Code B – Uncollected Medicare tax on tips. Include this amount as part of your total tax on
Code C – Taxable benefit of group term-life insurance over $50,000. Already included as pa
Code D – Non-taxable elective salary deferrals to a 401(k) or SIMPLE 401(k) retirement plan
Code E – Non-taxable elective salary deferrals to a 403(b) retirement plan.
Code F – Non-taxable elective salary deferrals to a 408(k)(6) SEP retirement plan.
Code G – Non-taxable elective salary deferrals and non-elective employer contributions to a
Code H – Non-taxable elective salary deferrals to a 501(c)(18)(D) tax-exempt plan.
Code J – Non-taxable sick pay. This amount is not included in taxable wages in Boxes 1, 3, o
Code K – Excise tax (equal to 20%) on excess "golden parachute" payments. Include this am
Code L – Non-taxable reimbursements for employee business expenses.
Code M – Uncollected Social Security or RRTA tax on taxable group term life insurance over
Code N – Uncollected Medicare tax on taxable group term life insurance over $50,000 for fo
Code P – Non-taxable reimbursements for employee moving expenses, if the amounts were
Code Q – Non-taxable combat pay. Some individuals may elect to include combat pay when
Code R – Employer contributions to an Archer Medical Savings Account. This amount should
Code S – Non-taxable salary deferral to a 408(p) SIMPLE retirement plan.
 Code T – Employer paid adoption benefits. This amount is not included in Box 1 wages. You
Code V – Income from the exercise of non-statutory stock options. This amount is already in
Code W – Employer contributions to your Health Savings Account. Report this amount on IR
Code Y – Salary deferrals under 409A non-qualified deferred compensation plan.
Code Z – Income received under 409A non-qualified deferred compensation plan. This amo
Code AA – After-tax contributions to a Roth 401(k) retirement plan.
Code BB – After-tax contributions to a Roth 403(b) retirement plan.

Box 13: Check the Box. There are three check boxes in Box 13. Boxes will be checked off i

Statutory employee means that you must report the wages from this W2 (and any other W
on Form 1040 Schedule C Your wages are not subject to income tax withholding (there will b
are subject to Social Security and Medicare taxes (so Boxes 3 through 6 will be filled out).

Retirement plan means that you participated in your employer's retirement plan during the
profit-sharing plan, or pension plan. As a participate in a retirement plan, your ability to contr
IRA may be limited.

Third-party sick pay means that you received sick pay under your employer's third-party in
sick pay directly from your employer as part of your regular paycheck.) Sick pay is not includ

Box 14: Other Tax Information. Your employer may report additional tax information in B
they will have a brief description of what the amounts are for. For example, union dues, emp
insurance premiums you paid, or after-tax contributions to a retirement plan will be reported
state and local taxes in Box 14, such as State Disability Insurance (SDI) premiums

Box 15: State and State Employer's Identification. Box 15 reports your employer's stat
If you worked for the same employer in multiple states, there may be multiple lines of inform

Box 16: State wages. Box 16 reports the total amount of taxable wages earned in that sta
employer in multiple state, there may be multiple lines of information

Box 17: State income tax withheld. Box 17 reports the total amount of state income taxe
Box 18: Local wages. Box 18 reports the total amount of wages subject to local, city, or oth

Box 19: Local income tax withheld. Box 19 reports the total amount of taxes withheld fro

Box 20: Locality name. Box 20 provides a brief description of the local, city, or other state
identify a particular city, or may identify a state tax such as State Disability Insurance (SDI) p
ess might be a former address
benefits that can be reported in Box 12. Box 12 will report a single letter or double letter code followe

xes 1, 3, and 5.

on Form 1040.

s. Include this amount as part of your total tax on Form 1040.

amount as part of your total tax on Form 1040.

me Credit.
alculate the taxable and non-taxable portion of these adoption benefits.
Boxes 1, 3, and 5. See also, how to report stock options.

ble wages in Box 1. This amount is subject to an additional tax of 20% plus interest as part of your tota

to you as an employee.

ks for the wages reported in Box 16.

ty, or other state income taxes.
double letter code followed by a dollar amount. Here are the codes for Box 12:
interest as part of your total tax on Form 1040.
Types Of Source Document For Wages (Considere Information from Copy B)
1 Organizer Page
2 Wages - W-2
3 Handwritten Information
4 Typed Information/Printed Income Summary
SOURCE DOCUMENT

1 - Organizer Page
2 - W-2
Sample 1
ion from Copy B)
Input Screens in Tax Softwares
1 W-2
2 W-4
3 IRS - W2

W-2
Box Discription Input Box
A Employee’s social security number N/A
B Employer identification number (EIN) N/A
C Employer’s name, address, and ZIP code 30
D Control number N/A
E Employee’s first name and initial, Last name,Suff. N/A
F Employee’s address and ZIP code N/A
1 Taxable Wages (reportable on IRS 1040 form) 70
2 Federal Income Tax (reportable on IRS 1040 form) 71
3 Social Security Wages (reported to SSA) 74
4 Social Security Taxes Withheld (reported to SSA) 72
(6.2% of Gross Pay up to $97,500)
5 Medicare Wages (reported to SSA) 75
6 Medicare Taxes Withheld (reported to SSA) 73
(1.45% of Medicare wages with no limit)
7&8 Not used N/A
9 Advanced Earned Income Credits 104
10 Dependent Care Benefits 105
11 Not used N/A
12a-12d See Instrs. for Form W-2 102/106
13 Statutory Employee N/A
Retirement Plan N/A
Third-party sick pay N/A
14 Others
SDI 103
UI 103
15 State Code N/A
16 State Wages 136
17 State Taxes 100
18 City wages 137
19 City taxes 101
20 City Code N/A
When you got rolled over Wages in Screen W-2 & if Box 12 contains Code A,B,M,N

Box 12 Codes and Explanations:

Form W-2 Box 12: Deferred Compensation and Other Compensation. There are sever

Code A – Uncollected Social Security or RRTA tax on tips. Include this amount as part of you
Code B – Uncollected Medicare tax on tips. Include this amount as part of your total tax on
Code C – Taxable benefit of group term-life insurance over $50,000. Already included as pa
Code D – Non-taxable elective salary deferrals to a 401(k) or SIMPLE 401(k) retirement plan
Code E – Non-taxable elective salary deferrals to a 403(b) retirement plan.
Code F – Non-taxable elective salary deferrals to a 408(k)(6) SEP retirement plan.
Code G – Non-taxable elective salary deferrals and non-elective employer contributions to a
Code H – Non-taxable elective salary deferrals to a 501(c)(18)(D) tax-exempt plan.
Code J – Non-taxable sick pay. This amount is not included in taxable wages in Boxes 1, 3, o
Code K – Excise tax (equal to 20%) on excess "golden parachute" payments. Include this am
Code L – Non-taxable reimbursements for employee business expenses.
Code M – Uncollected Social Security or RRTA tax on taxable group term life insurance over
Code N – Uncollected Medicare tax on taxable group term life insurance over $50,000 for fo
Code P – Non-taxable reimbursements for employee moving expenses, if the amounts were
Code Q – Non-taxable combat pay. Some individuals may elect to include combat pay when
Code R – Employer contributions to an Archer Medical Savings Account. This amount should
Code S – Non-taxable salary deferral to a 408(p) SIMPLE retirement plan.
Code T – Employer paid adoption benefits. This amount is not included in Box 1 wages. You
Code V – Income from the exercise of non-statutory stock options. This amount is already in
Code W – Employer contributions to your Health Savings Account. Report this amount on IR
Code Y – Salary deferrals under 409A non-qualified deferred compensation plan.
Code Z – Income received under 409A non-qualified deferred compensation plan. This amo
Code AA – After-tax contributions to a Roth 401(k) retirement plan.
Code BB – After-tax contributions to a Roth 403(b) retirement plan.
 W-4
Input Box Output
N/A
35
39
33
44
45,46,47,48
49 1040 Line 7
50 1040 Line 64
53
51

54
52

N/A
57 1040 Line 61
58 Form 2441 & 1040 Line 48
N/A
61/62
73
74
75

100 Schedule A Line 5

100 Schedule A Line 5
91 State Return
93 State Return
94 Schedule A Line 5
97 City Return
98 Schedule A Line 5
96 City Return
tains Code A,B,M,N & K, Please consider the amount in Uncollected FICA Box # 102 & if the

ation. There are several types of compensation and benefits that can be reported in Box 12. Box 12 w

amount as part of your total tax on Form 1040.

rt of your total tax on Form 1040.
Already included as part of your taxable wages in Boxes 1, 3, and 5.
401(k) retirement plan.

ement plan.
oyer contributions to a 457(b) retirement plan.
exempt plan.
wages in Boxes 1, 3, or 5.
yments. Include this amount as part of your total tax on Form 1040.

rm life insurance over $50,000 for former employees. Include this amount as part of your total tax on
ce over $50,000 for former employees. Include this amount as part of your total tax on Form 1040.
s, if the amounts were paid directly to the employee.
ude combat pay when calculating their Earned Income Credit.
nt. This amount should be reported on IRS Form 8853.
d in Box 1 wages. You must use IRS Form 8839 to calculate the taxable and non-taxable portion of the
is amount is already included as taxable income in Boxes 1, 3, and 5. See also, how to report stock op
port this amount on IRS Form 8889.
sation plan.
sation plan. This amount is already included in taxable wages in Box 1. This amount is subject to an ad
Box # 102 & if the same with code D, E, F, G & H (D to H) consider Elective Deferrals Box #

in Box 12. Box 12 will report a single letter or double letter code followed by a dollar amount. Here are

of your total tax on Form 1040.

ax on Form 1040.
axable portion of these adoption benefits.
w to report stock options.

unt is subject to an additional tax of 20% plus interest as part of your total tax on Form 1040.
Elective Deferrals Box # 106 in Prosystem FX.

y a dollar amount. Here are the codes for Box 12:

ax on Form 1040.