How to Read a W2 Form

Tax forms can bewilder anyone not accustomed to working with them.

Tax forms can bewilder anyone not accustomed to working with them.

Most employees receive a W2 form at the end of the year. The W2 is issued by your employer and lists the wages earned and the money withheld throughout the year. The W2 has seven lettered sections and 20 numbered sections and it is important to know what each means if you want to file your taxes correctly.

Identity and Income

The letter boxes at the top left of your W2 form are for identification purposes. The employee's Social Security number, name and address are all listed in these boxes. The employer's tax ID, name and address are also listed. Box 1 lists the amount of income in wages, tips and other compensation paid to the employee throughout the tax year in question.


Boxes 2 through 8 list the money withheld by your employer and the amount of taxable income you have. Box 2 shows the amount of federal taxes already taken out of your net pay. Box 3 shows the amount of income on which social security charges will be assessed and box 4 shows how much was taken for that purpose. Box 5 shows how much of your pay will be assessed with Medicare taxes and box 6 shows how much was taken for that purpose. Box 7 shows the amount of tips you reported receiving. These tips will be assessed with Social Security tax as was your regular income. Box 8 shows the amount of tips your employer distributed to you and adds them to the Social Security tally.

Other Income & Expenses

Box 10 displays any money paid toward the care of a dependent using a flex payment pre-tax plan. Box 11 shows any money received from your employer as part of a taxable retirement plan [not IRA or 401(k)]. Boxes 12A, B, C and D are designated for a long list of possible tax exempt income or expenses including medical, retirement, stocks and annuities. Any taxes which should have been withheld but were not due to a lack of sufficient income to cover them will be listed here as well.

Work Status and Related Expenditures

Box 13 shows your status as a statutory employee if you fit that description, your membership in a retirement plan recognized by the IRS as non-taxable, or your receipt of payment from a medical insurer other than your employer. Box 14 is a general information field in which everything from expenses like union dues, to income from the sale of stocks is listed. This income might not be taxable and the expenses might not be deductible depending on type.

Local Information

Boxes 15 through 20 list state and city information and are meant to illustrate which local taxes you are subject to. Box 15 shows the state in which you worked and where your state taxes are assessed, while box 16 shows how much of your income is subject to state taxation and box 17 shows how much tax was taken. Box 18 shows the total income taxable by your local government (city or county) and box 19 shows how much tax was taken by the locality. Box 20 lists the name of the city or county where the taxes were assessed.

About the Author

Robert Morello has an extensive travel, marketing and business background. He graduated with a Bachelor of Arts from Columbia University in 2002 and has worked in travel as a guide, corporate senior marketing and product manager and travel consultant/expert. Morello is a professional writer and adjunct professor of travel and tourism.

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