Breaking Down Your W-2

What are Form W-2s, what do each of the boxes represent, and how does an employee fill this out correctly? As with many tax documents, W-2s can be confusing. Let’s take a deeper dive into what’s on an employee's W-2 and what it all means.

What Is a W-2?

Form W-2 is an IRS tax form used to report wages, salary, and other compensation paid to employees and the taxes withheld from them.

A W-2 must be issued to any full or part-time employee that receives a payment from your business, including non-cash payments of $600 or more for the year (all amounts if any income, social security, or Medicare tax was withheld) for services performed by an employee.

W-2s will state the total amount of income received as well as all federal, state, and local taxes withheld.

How to Read a Form W-2

You'll find employee personal information and the employer's contact information on the form. If the employer uses a Professional Employer Organization (PEO), expect to see the PEO listed as the employer. The PEO reports taxes on behalf of your company.

Make sure your social security number and address are correct. W-2 discrepancies can result in a big headache for employees and can cause potential fines for your employer.

What Does Each Box on Form W-2 Mean?

• Box a: The employee’s Social Security Number

• Box b: The employer’s EIN

• Box c: The employer’s business address

• Box d: Control number (This is for internal purposes and you won't need to do anything with this number)

• Box e and f: The full name and mailing address

• Box 1: Total taxable wages, tips, prizes, and other compensation. This does not include elective deferrals to retirement plans, pre-tax benefits, or payroll deductions. Note: Boxes 3 and 5 may contain different numbers than Box 1.

• Box 2: Total amount of federal income taxes withheld

• Box 3: Total wages subject to Social Security tax

• Box 4: Total amount of Social Security actually withheld

• Box 5: Total wages subject to Medicare taxes

For the most part, people are only going to have to worry about the above five boxes and 16-20. The other boxes are there for people who received other types of income throughout the business year.

• Box 6: Total amount of Medicare taxes withheld

• Box 7: Tips the employee reported to the employer

• Box 8: Allocated tips that the employer has distributed to the employee as income

• Box 9: Blank

• Box 10: Total of any benefits paid on the employee’s behalf under a dependent care assistance program

• Box 11: Total amounts which have been distributed to the employee from the employer’s non-qualified deferred compensation plan.

• Box 12: Various codes will populate this box such as payments related to employee 401(k) contributions, employee 501(c)(18)(D) tax exempt organization plan, non-taxable portion of sick pay, cost of employer-sponsored health coverage, employer contributions to an HSA, and more

• Box 13: This is three boxes in one and will indicate if the employee is a statutory employee, if the employee participated in the employer’s retirement plan (i.e. 401(k)), or if the employee received sick pay under a third party insurance carrier

• Box 14: This is used to report other amounts and descriptions such as vehicle lease payments and state disability insurance taxes withheld. In addition, employers must report the amount of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act (FFCRA) either in this box on the W-2 or in a statement provided with the W-2.

• Box 15: The employer’s state and state tax ID number Box 16: Total amount of taxable wages for state taxes

• Box 17: Total amount of state income taxes withheld

• Box 18: Wages subject to local, city, or state income taxes

• Box 19: Total local, city, and state income taxes withheld

• Box 20: Name of the local, city, or other state tax being reported in Box 19

Justworks Can Help Your Business Stay Compliant

Justworks Payroll can assist with your employment-related payroll needs, both for as you're getting up and running, and as you grow and scale. Or, for a more robust payroll and HR solution, Justworks PEO can be a great fit. It can get you and your team access to benefits, and help you manage the other aspects of running your business.

Ready to learn more about how Justworks can help you free up time to spend on supporting your people and growing your business? Contact us today to get started.

W-2 Frequently Asked Questions

Where Can Employees Get Their W-2?

If you work with a Professional Employer Organization (PEO) such as Justworks, your PEO will send W-2s to employees, as appropriate.

If Filed Electronically, What Does the Employee Do with Their W-2?

Employees will use the information from their Forms W-2 to complete your tax return. After filing, retain a copy of the forms for your records. When filing electronically:

• Employees must provide a copy of their Forms W-2 to the authorized IRS e-file provider before the provider sends the electronic return to the IRS. 

• Employees don't need to send their Forms W-2 to the IRS and should keep them in a safe place with a copy of your tax return. 

• Employees should use Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-File Return to submit any paper documents that need to be sent after their return has been accepted electronically.