W2 Box Information

Front 1

Box 1

Back 1

This box represents the taxable amount of wages paid, noncash payments, tips reported, certain reimbursements for business expenses, and other employee compensation. Box 1 does not include amounts paid ito most deferred compensaion plans. All amounts are totaled and then totaled and then carry to Form 1040EZ, line 1; Form 1040A, line 7; or Form 1040, line 7.

Front 2

Box 2

Back 2

Total federal income tax withheld is entered on Form 1040EZ, line 7; Form 1040A, line38; or Form 1040, line 61.

Front 3

Box 3

Back 3

On a single W-2 form, the amount in box 3, combined with any amount in box 7, should not exceed $106,800 (for 2010). If it does, the empoyer should correct it. Unlike box 1, box 3 includes payments the employee may have made to deferred compensation plans and therefore may have made to deferred compensation plans and therefore may exceed box 1.

Front 4

Box 4

Back 4

Most employees are taxed 6.2% on their wages and tips up to 106,800 (for 2010) as their contribution to the social security system.

Equation: 106,800 X 6.2%= $6,621.60 (maximum withheld)

Front 5

Box 5

Back 5

This box reflects the taxpayer's wages and tips subject to the medicare tax. Unlike the amount of social security wges in box 3, there is not limit on wages for medicare; therefore, this box represents the total wages from the employer.

Front 6

Box 6

Back 6

Employees are taxed 1.45% on all of their wages and tips for medicare. Box 6 shows the amunt withheld for this tax. This figure has no consequence on the federal return, except for the additional child tax credit studied in Chapter 8.

Front 7

Box 7

Back 7

Tips subject to social security tax received by tthe employee and reported to the emloyer are entered in box 7. This amount includes all tips reported by the emloyee even if the employee's wages were insufficient to collect the required social security tax on the tips.

Front 8

Box 8

Back 8

Employees of food or beverage establishments may have a portion of computed tips allocated to them. These amounts may be taxable, but are not included in boxes 1, 2, 5 or 7.

Front 9

Box 9

Back 9

Advanced earned income credit payments paid by the employer to the employee are entered here. The taxpayer is required to file a return if there is an amount in box 9. Enter any box-9 amunt on Form 1040, line 59; Form 1040A, line 36. The earned income credit is discussed in Chapter 8.

Front 10

Box 10

Back 10

Some employers help their employees pay for child and dependent care expenses. These (usually) tax free benefits are entered in box 10. In Chapter 18, you will learn about the child and dependent child care credit and how any box 10 enry figures into the credit computation.

Front 11

Box 11

Back 11

This box is for distributions (payments) from nonualified retirement plans. A nonqualified plan is a retirement plan that does not meet certain requirements of the Internal Revenue Code. Any amount shown in box 11, usually has been included in box 1 and is taxable.

Front 12

Box 12a-b

Back 12

These boxes are used to report a variety of information. The entries are accompanied by their letter code.

The employer may enter up to four codes in box 12. A separate W-2 should be issued if more than four codes apply.