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Verify These 5 Components on Your W-2 Form
Receiving a W-2 form is often the kick-off to tax season.
The W-2 form is essential to filing your federal and state income tax returns. It shows the wages you were paid and taxes that were withheld from your paycheck for the year.
Regardless if you worked part time, several different jobs, or the same job year-round, employees should receive a W-2 form from each organization that employed them. If you worked as an independent contractor, you’ll receive a Form 1099 instead.
If you haven’t received a W-2 form from an employer by the end of January, contact its payroll department immediately so you can stay on target to file your tax forms before the April 15 IRS tax filing due date and avoid penalties.
The W-2 form is packed with information. The following breakdown and infographic will help you better understand this form and identify five areas to verify so you can have a hassle-free tax season and receive a proper and timely tax return.
Personal information boxes
- Box A: Social Security number
- Box E: Full name
- Box F: Address and ZIP code
Verify your Social Security number
If the Social Security number listed on your form W-2 is incorrect, it can bring trouble when you file your taxes. This is because the IRS won’t be able to match you to your Social Security number. It can also prevent you from receiving the proper Social Security contributions that you’re entitled to receive.
“Some people don’t realize that the Social Security Administration will use your wages to determine your Social Security benefits when you retire,” says Alison Flores, JD, principal tax research analyst at H&R Block’s Tax Institute.
Wages and taxes
- Box 1: Wages, tips, other compensation
- Box 2: Federal income tax withheld
Verify your wages
It’s fairly common to see some differences in your final pay stub of the year and your total wages on your W-2.
“Some things are labeled differently on the W-2 than on your paystub,” Flores says. “It’s not a side-by-side naming convention.”
Box 1 shows your wages, tips, and other compensation, but it may be lower than you expected. Pretax deductions from retirement plan contributions and some health insurance plans that use pretax dollars may be the reason behind the difference. The remainder is known as your taxable income or your total taxable wages.
“When you get your W-2, taxable wages won’t include the money spent on things like health insurance, and it’ll be lower than what you know your salary to be,” Flores says.
After accounting for pretax deductions, if your W-2 still doesn’t match up, it’s best to contact your payroll department to understand the discrepancy.
Verify income tax withheld
The withholdings you reported on your Form W-4 will determine the amount you see in Box 2. When your withholdings are correct, it can minimize the taxes you’ll pay throughout the year. If you overwithheld or underwithheld this tax year, it might be time to pull out your W-4 and adjust your withholdings.
“Instead of getting a tax refund, you could put that money right back into your paycheck,” says Bill Dunn, director of government relations at the American Payroll Association. “It works like an instant raise.”
Many Americans will receive a tax refund and view it as free money. Instead, a tax refund indicates you overpaid on taxes throughout the year and the government is giving your money back.
Social security and medicare
- Box 3: Social security wages paid before payroll deductions
- Box 4: Social security tax withheld
- Box 5: Medicare wages and tips
- Box 6: Medicare tax withheld
- Box 7: Social security tips
Verify your social security withholdings
While there isn’t a maximum amount you can hit on medicare tax withholdings, there are maximum allotments you can hit with Social Security tax.
Box 4 shouldn’t be more than $8,853.60 for tax year 2020. The total amount from Box 3 and Box 7 shouldn’t be more than $142,800, which is the maximum for tax year 2020.
If the amounts in Box 4 or Box 7 are higher than the maximums, you’ll want to talk to your employer to adjust these amounts, Dunn says.
State and local income tax information
- Box 15: Employer’s state and ID number
- Box 16 State wages, tips, etc.
- Box 17: State income tax
- Box 18: Local wages, tips, etc.
- Box 19: Local income tax
- Box 20: Locality name: This code reports where your employer is located.
Verify your state and local taxes
If you live in a state without individual income taxes, Boxes 16-19 will generally be blank.
States without individual income taxes include: Alaska, Nevada, South Dakota, Texas, Washington, Wyoming, and Florida. New Hampshire and Tennessee do have an income tax, but don’t tax wages. If you live in one of these states that doesn’t have an income tax and commute to work in a state that does, there will be information on your W-2 for the state you work in.
For most cases, if you live in a different state than your employer, the state tax will apply to the state in which you work. However, “If you live in one state and physically work in another state, both states may tax the income,” Flores says.
Some states have reciprocal agreements or the potential to claim a credit for taxes paid to another state. This is to reduce the possibility of double taxation on wage income.
Additional boxes on the W-2
In addition to the information mentioned above, the below boxes and information are also part of Form W-2:
- Box B: Employer identification number (EIN)
- Box C: Employer’s name, address, and ZIP code
- Box D: Your employer may choose to identify individual forms with a control number, but this box may also be left blank.
- Box 8: This box will have your tip income if you work for a food or beverage establishment that pools tips.
Other benefit information
Box 10: This box will show if you elected to defer pretax dollars into a dependent care flexible spending account.
Box 11: This box reports if any of the amounts in Box 1, 3, or 5 are from a prior year.
Box 12: You may notice random letters here, but they represent different tax codes for different types of compensation and benefits. Box 12 codes can refer to everything from nontaxable sick pay (Code J) to employer-sponsored health coverage (Code DD).
Box 13: The following checkboxes will be marked under certain conditions:
- Statutory employee status: If you have earnings that are subject to social security and Medicare taxes, but not federal income tax withholdings
- Retirement plan: If you actively participated in a retirement plan, such as a 401(k)
- Third-party sick pay: If sick payments need to be made by a third-party provider
Box 14: Other information from your employer, such as state disability insurance taxes that were withheld and union dues.
Your employer may report qualified sick and family leave wages under the Families First Coronavirus Response Act here.
I found a mistake on my W-2. Now what?
Contact your employer’s payroll department as soon as possible to request for a corrected W-2 if you’ve identified a mistake on yours. To correct the error, your employer will file Form W-2c Corrected Wage and Tax Statement.
If your employer hasn’t issued you a corrected W-2 form by the end of February, you can initiate a Form W-2 complaint with an IRS representative.
As the American Payroll Association’s director of government relations, Bill Dunn advocates on behalf of APA members and the payroll community. Bill oversees the APA’s Government Relations Task Force, through which the association's members engage federal, state, and local authorities to address issues relevant to the payroll profession. Bill has more than 25 years of experience writing for, teaching, and advocating on behalf of payroll professionals.
Alison Flores, JD, is a principal tax research analyst at The Tax Institute at H&R Block. Alison specializes in the Tax Cuts and Jobs Act (TCJA) and individual income tax issues.