While many of the items listed below don't apply for each and every business, we've provided an explanation of W-2 Earnings Summary below. (Please visit www.irs.gov for a complete listing).
Box 1: Wages, tips, and other compensation. Box 1 reports total taxable wages for federal income tax purposes. This figure includes wages, salary, tips reported, bonuses, and other taxable compensation. Any taxable fringe benefits (such as group term life insurance) are also included in Box 1 wages.
Box 2: Federal income tax withheld. Box 2 reports the total amount withheld from paychecks for federal income taxes. This represents the amount of federal taxes that have been paid-in throughout the year.
Box 3: Social Security wages. Box 3 reports the total amount of wages subject to the Social Security tax.
Box 4: Social Security tax withheld. Box 4 reports the total amount of Social Security taxes withheld from paychecks.
Box 5: Medicare wages and tips. Box 5 reports the amount of wages subject to Medicare taxes. There is no maximum wage base for Medicare taxes. The amount shown in Box 5 may be larger than the amount shown in Box 1. Medicare wages includes any deferred compensation, 401(k) contributions, or other fringe benefits that are normally excluded from the regular income tax. In other words, the amount in Box 5 typically represents the entire compensation.
Box 6: Medicare tax withheld. Box 6 reports the amount of taxes withheld from paycheck for the Medicare tax.
Box 7: Social Security tips. Box 7 reports the amount of tip income reported to the employer. If tips are not reported to the employer, an amount will not be in this box. The amounts in Box 7 and Box 3 should add up to the amount in Box 1, or the maximum wage limit for Social Security taxes.
Box 8: Allocated tips. Box 8 reports any tip income that an employer thinks an employee may have earned, but failed to report. This amount is not included in the wages reported in Boxes 1, 3, 5, or 7.
Box 10: Dependent Care Benefits. Box 10 reports any amounts reimbursed for dependent care expenses, or the dollar value of dependent care services provided by your employer. Amounts under $5,000 are non-taxable benefits. Any amount over $5,000 is reported as taxable wages in Boxes 1, 3, and 5. Non-taxable benefits must be excluded from expenses claimed for the child and dependent care tax credit on IRS Form 2441.
Box 11: Nonqualified Plans. Box 11 reports any amounts distributed to an employee from the employer's non-qualified deferred compensation plan or non-government Section 457 pension plan. The amount in Box 11 is already included as taxable wages in Box 1.
Box 12: Deferred Compensation and Other Compensation. There are several types of compensation and benefits that can be reported in Box 12. Box 12 will report a single letter or double letter code followed by a dollar amount. The following is a list of commonly used codes for Box 12. Please visit www.irs.gov for a complete listing.
- Code A – Uncollected Social Security or RRTA tax on Include this amount as part of your total tax on Form 1040.
- Code B – Uncollected Medicare tax on tips. Include this amount as part of your total tax on Form
- Code C – Taxable benefit of group term-life insurance over $50,000. This amount is already included as part of your taxable wages in Boxes 1, 3, and
- Code D – Non-taxable elective salary deferrals to a 401(k) or SIMPLE 401(k) retirement
- Code E – Non-taxable elective salary deferrals to a 403(b) retirement
- Code F – Non-taxable elective salary deferrals to a 408(k)(6) SEP retirement
- Code G – Non-taxable elective salary deferrals and non-elective employer contributions to a 457(b) retirement
- Code H – Non-taxable elective salary deferrals to a 501(c)(18)(D) tax-exempt
- Code J – Non-taxable sick pay. This amount is not included in taxable wages in Boxes 1, 3, or
- Code W – Employer Contributions to a Health Savings Account (HSA)
- Code AA – After-tax contributions to a Roth 401(k) retirement
- Code BB – After-tax contributions to a Roth 403(b) retirement
- Code DD – Reports the cost of health insurance provided through the employer
- Code EE – After-tax contributions to a Roth 457(b) retirement plan offered by government
- Code FF – Qualified small employer health reimbursement
Box 13: Check the Box. There are three check boxes in Box 13. Boxes will be checked off if any of these situations apply to an employee.
- Statutory employee means that an employee must report the wages from this W-2 (and any other W-2 forms marked "statutory employee") on Form 1040 Schedule C. Wages are not subject to income tax withholding (there will be a zero or blank amount in Box 2), but are subject to Social Security and Medicare taxes (Boxes 3 through 6).
- Retirement plan means that an employee participated in the employer's retirement plan during the year. This could include a 401(k) plan, profit-sharing plan, or pension plan.
- Third-party sick pay means that the employee received sick pay under the employer's third-party insurance policy. (Instead of receiving sick pay directly from the employer as part of a regular paycheck.) Sick pay is not included in taxable wages.
Box 14: Other Tax Information. Employers may report additional tax information in Box 14. If any amounts are reported, they will have a brief description of what the amounts are for. For example, gross wages, union dues, employer-paid tuition assistance, or after-tax contributions to a retirement plan will be reported here. Some employers report certain state and local taxes in Box 14, such as State Disability Insurance (SDI) premiums.