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Resource Center / Payroll

Breaking Down Your W-2

Unsure about your W-2? Justworks breaks it down for you.

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Justworks
Dec 16, 20193 minutes

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. It reports how much you earned and the amount of federal, state and local taxes withheld from paychecks. As with many tax documents, it can be confusing. Let’s take a deeper dive into what’s on your W-2 and what it all means.

How to Read a Form W-2

You'll find your personal information and your employer's contact information on the form. If your employer uses a Professional Employer Organization (PEO), expect to see the PEO listed as your 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 you and your employer and can cause potential fines for your employer.

Wages and Withholding

The numbered boxes on your W-2 record your financial information. Let’s go through each box to get a feel of what to expect to see on your W-2.

  • Box 1: Wages, tips, other compensation: This outlines the total taxable income for the entire year. If you worked less than a year, it'll be from day one. 
  • Box 2: Federal income tax withheld: This is the amount of money that your employer withheld for federal income taxes.
  • Box 3: Social security wages: This is the amount of income that is subject to the social security/FICA tax. This is different from income tax because there is a maximum amount that can be taxed with FICA each year.

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  • Box 4: Social security tax withheld: This is the total amount of social security tax that was withheld. There is a maximum amount because of the cap.
  • Box 5: Medicare wages and tips: This is the amount of income that can be taxed for medicare. There is no cap on this.

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 12: There are various codes that 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 you’re a statutory employee, if you participated in your employer’s retirement plan (i.e. 401(k)), or if you received sick pay under a third party insurance carrier.
  • Box 14: This is anything not included in another box.
  • Box 15: This is your employer’s state and state tax ID number.
  • Box 16: This is the total amount of taxable wages for state taxes
  • Box 17: This is the total amount of state income taxes withheld.
  • Box 18: These are the wages subject to local, city, or state income taxes.
  • Box 19: This is the total local, city, and state income taxes withheld.
  • Box 20: This is for the name of the local, city, or other state tax being reported in Box 19.

As an employee, the information on your W-2 is extremely important when preparing your tax return. To make sure you have the time, the IRS requires your employer to issue your W-2 no later than January 31st following the close of the tax year.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.