How to report income on my W-2

This article provides information on the following: 

• What is a W-2 Form? 
• W-2 Boxes
• W-2 Form 2024
• W-2 form in MyFreeTaxReturn.com
• How to add a W-2 form

What is a W-2 Form? 

The W-2 tax form shows important tax information about the wages/salary you have earned from your employer, the amount of taxes withheld from your paycheck, benefits provided - Social Security, Medicare and other information for the given tax year. This form is used to file your federal and state taxes.

W-2 Boxes: 

Box 1: Wages, Tips, Other Compensation. The total taxable wages, tips, and other compensation for the year. This amount includes your salary, bonuses, and other forms of income subject to federal income tax, but it does not include pre-tax deductions such as contributions to retirement plans or certain other benefits.

Box 2: Federal income tax withheld. The total amount of federal income tax that was withheld from your paycheck throughout the year. This amount is reported to the IRS and is used to help determine whether you owe additional taxes or are due for a refund when you file your tax return.

Box 3: Social Security Wages. The total amount of wages subject to Social Security tax.

*This amount might differ from Box 1 because it includes wages, tips, and other compensation that are subject to Social Security tax, but it does not include certain pre-tax deductions. Additionally, it is subject to a maximum limit each year, known as the Social Security wage base limit

Box 4: Social Security Tax Withheld. The total amount of Social Security tax withheld from your wages during the year. This amount is calculated based on the wages reported in Box 3, and it reflects the portion of your earnings that were subject to Social Security tax. The amount withheld should align with the Social Security tax rate for the year, up to the Social Security wage base limit.

Box 5: Medicare Wages and Tips. The total amount of wages subject to Medicare tax. 

*Unlike Social Security wages, there is no maximum limit for Medicare wages, so all earnings are subject to Medicare tax. This amount might differ from the amount in Box 1 if certain pre-tax deductions are taken into account.

Box 6: Medicare Tax Withheld. The total amount of Medicare tax withheld from your wages during the year. This amount is calculated based on the wages reported in Box 5. The Medicare tax rate is generally applied to all wages with no cap, and any additional Medicare tax owed on high-income earners would be reported separately.

Boxes 7 and 8: Social Security Tips and Allocated Tips.

Related to tips and other income, and they are relevant for employees who receive tips:

• Box 7: This box reports the total amount of tips you received and reported to your employer. These tips are included in the taxable wages reported in Box 1, but Box 7 specifically identifies the portion that is from tips.
• Box 8: This box shows the total amount of allocated tips. These are tips allocated to you by your employer if the amount you reported in Box 7 was less than the amount your employer calculated based on the business's overall tipping activity. Allocated tips are reported for informational purposes and may not always be taxable to you.

Box 10: Dependent Care Benefits. The total amount of dependent care benefits provided to you by your employer. This includes any contributions your employer made to a dependent care flexible spending account (FSA) or other dependent care assistance programs. These benefits are generally used to pay for the care of dependents, such as children or disabled family members, while you are at work.

Box 11: Nonqualified Plans.

The total amount of deferred compensation that was paid to you during the year. This typically includes amounts from nonqualified deferred compensation plans or other types of deferred compensation that were previously reported as income. The amount in Box 11 represents income that has been deferred to a future year but is now being distributed or paid out to you.

Box 12: Contains various types of compensation or deductions, identified by specific codes. Each code represents a different type of financial information or benefit. Here are some common codes you might see in Box 12:

• Code A: Uncollected Social Security or RRTA tax on tips.
• Code B: Uncollected Medicare tax on tips.
• Code C: Taxable cost of group-term life insurance over $50,000.
• Code D: Elective deferrals to a 401(k) plan.
• Code E: Elective deferrals to a 403(b) plan.
• Code F: Elective deferrals to a 408(k)(6) plan.
• Code G: Elective deferrals to a 457(b) plan.
• Code H: Elective deferrals to a 501(c)(18)(D) plan.
• Code J: Non-taxable sick pay.
• Code K: 20% excise tax on excess golden parachute payments.
• Code M: 30% excise tax on excess compensation of certain executives.
• Code N: Income from the exercise of nonstatutory stock options.
• Code P: Excludable moving expense reimbursements for members of the Armed Forces.
• Code Q: Nontaxable combat pay.

The specific codes and amounts in Box 12 are used to report various benefits, adjustments, or compensation that might affect your tax return.

Box 13: Check those that apply.

Contains check boxes that indicate whether certain types of compensation or benefits apply to you. The three check boxes in Box 13 are:

1. Statutory Employee: This box is checked if you are considered a statutory employee. Statutory employees are treated as self-employed for tax purposes, meaning they report their income and expenses on Schedule C, not on a standard 1040 form. This classification often applies to certain salespeople, drivers, and other workers who meet specific criteria.
2. Retirement Plan: This box is checked if you were an active participant in an employer-sponsored retirement plan, such as a 401(k) or pension plan, during the tax year. This information helps determine if you need to complete additional tax forms or if you may be eligible for certain tax deductions.
3. Third-Party Sick Pay: This box is checked if you received sick pay from a third party, such as an insurance company, rather than directly from your employer. This amount may be taxable and could affect how you report income on your tax return.

These check boxes provide important information about your employment status and benefits that could impact your tax filing.

Box 14: Other.

This box is used by employers to report additional information that might not be captured elsewhere on the form. The content and use of Box 14 can vary widely, and it's often used for informational purposes to provide details relevant to your specific situation. Common entries in Box 14 might include:

• State Disability Insurance (SDI): Amounts withheld for state disability insurance.
• Union Dues: Amounts deducted for union membership.
• Educational Assistance: Amounts paid for educational benefits.
• Charitable Contributions: Contributions to charity through payroll deductions.
• Health Savings Account (HSA) Contributions: Contributions made to an HSA.

*Box 14 is not used to calculate your federal taxes directly but can provide information that might be useful for understanding deductions or credits on your tax return. It’s a good idea to review Box 14 and consult with a tax professional if you need guidance on how to handle the information reported there.

Box 15: State/Employer’s State ID Number.

Used to report state and local tax information. It typically includes two main parts:

1. State Abbreviation: The two-letter postal abbreviation for the state in which the income was earned.
2. State Employer's Identification Number (EIN): The identification number assigned to your employer by the state. This number is used to track state tax contributions and other employment-related data.

In some cases, additional state-specific information may also be included, such as local tax information if you worked in a locality with income taxes.

Box 16: State wages, tips, etc.

The total amount of wages that are subject to state income tax. This amount may differ from the total taxable wages reported in Box 1 because some types of income or deductions might be treated differently for state tax purposes.

*The figure in Box 16 is used to determine the amount of state income tax withheld, which should be reported on your state tax return. This box helps ensure that you accurately account for state taxes owed or paid when you file your state income tax return.

Box 17: State Income tax.

The total amount of state income tax withheld from your wages during the year. This amount reflects the taxes your employer has deducted and sent to the state on your behalf.

*It's important for preparing your state income tax return, as it helps determine whether you owe additional state taxes or are due for a refund. This figure should be reported on your state tax return to reconcile the taxes you’ve paid throughout the year.

Box 18, 19 and 20: Local Wages, Local Income Tax and Locality Name. Used for reporting local tax information:

Box 18. This box shows the total amount of wages that are subject to local income tax. These wages might differ from the amount reported in Box 1 due to local tax rules and exclusions.

Box 19. This box reports the total amount of local income tax withheld from your wages. It reflects the amount your employer has deducted for local taxes throughout the year.

Box 20. This box contains the name of the locality or local tax jurisdiction for which the local taxes were withheld. It provides context for Box 18 and Box 19, helping you identify which local taxes are being reported.

*These boxes are particularly relevant if you live or work in a locality that imposes its own income taxes, which can vary by city or municipality.

W-2 Form 2024:  

W-2 form in MyFreeTaxReturn.com  

If you have received a W-2 from your employer, you will report the information provided in the Income portion of the interview option you chose. Our DIY software is designed to help you navigate the income portion of your tax return. If you have selected the EZ or Full interview options, you will be guided through the income portion allowing you to input your W-2. 

• How do I report my income?

At any point during your return construction, you may refer back to the W-2 by following the How to add a W-2 Income form listed below. We recommend completing the interview method you chose to add your W-2, then refer to our sidebar navigation if you would like to return to your W-2. 

How to add a W-2 Income form:

1) Enter the return, select Add Form +

2) Select Income Forms

3) Select W-2 Income Page