Photo from 401Kcalculator.org via flickr.com
Did you get your W2 from your job and it looks like some foreign language? All the little boxes have some letter or number attached, but what does it all mean? Let me walk you through it.
The two most important parts are: ‘How much did you make?’ and ‘How much tax did Uncle Sam take out?’
Box 1: Wages, tips and other compensation. That’s how much you made; it’s going to go on line 7 of your 1040 or 1040A federal income tax return (line 1 on the 1040EZ).
Box 2: Federal income tax withheld. That’s the tax you paid. It goes on line 62 of the 1040 (line 7 on the EZ and line 36 on the 1040A).
The other numbers aren’t quite so important, but if you’re curious, I’ll explain the rest for you just so you know.
Box a: Employee’s social security number. That’s your social security number. If you don’t have a social security number, they’ll use your ITIN number. It’s important that your social security number is listed correctly. If there’s a mistake here, you should ask your employer for a corrected W2.
Box b: Employer identification number (EIN). That’s the ID number for the company you work for. It’s kind of like a business social security number. If you’re preparing your own tax return online, you’ll have to type that in correctly. A mistake here will get your tax return rejected.
Box c: Employer’s name, address, and ZIP code. Although this seems pretty obvious, this can really confuse people. Let’s say you work at a McDonald’s in St. Louis but when you get your W2, it says you work for Fred Jones LLC with an address in Kansas. A lot of times companies have their “legal” names, and their “doing business as” names. Usually, it will say the DBA name also, but not everyone does that. Don’t die of shock if you see a funky name, it’s pretty normal and legal.
Box d: Control number. Often, that’s blank. If there is something there, you don’t have to worry about it. That’s more of a code for bookkeeping purposes. I have one employee and I had to give him a code for my payroll program. I didn’t know what to do; 7-11 was the first thing that popped into my head (because I had stopped for a Slurpee.) Hopefully, if you have a control number, more thinking went into it than with my company.
Box e: That’s your name. Check, make sure you got the right W2. I was just working on a tax return and the person had been given someone else’s W2. Weird stuff happens.
Box f: That’s your address. If it’s wrong, you can hand write the correct address. Unlike an incorrect social security number which really needs to be fixed by your employer, an incorrect address is not that big of a deal.
We’ve already talked about boxes 1 and 2 being wages and federal income tax withholding. Now let’s talk about those other numbers.
Box 3: Social security wages. Usually, this will match box 1. There are a couple of things that will make those boxes not match.
- You’ve made contributions to a 401(k) or 403(b) retirement plan. You’ll know if you did that by looking at box 12 and finding a code D there. Generally, if you take the amount of money in box 12 and add it to box one, you’ll get box 3.
- If you made over $106,800 your box 1 and box 3 numbers will also be different. It’s called the “wage base limit.” Basically, once your income goes over $106,800 you don’t pay any more social security tax. So the number in box 3 won’t go over $106,800. If you had two jobs and your combined income goes over that number, you can get a refund of your excess social security withholding.
Box 4: Social security tax withheld: For 2011 that number is .042 times whatever is in box 3 – plain math. If you have something in box 7 (tips) then it should be .042 times the wages plus the tips.
Box 5: Medicare wages and tips: Usually, this matches box 3. If you earned tips, that gets added in; also if you took money out for retirement, that’s added in too. Also, there’s no cap on the amount of money you pay medicare tax on, so if you made over $106,800 then you pay tax on your entire wage.
Box 6: Medicare tax withheld: plain math, .0145 times whatever is in box 5.
Box 7: Social security tips: unless you’re wait-staff at a restaurant, you probably will have nothing listed there. This box is for tips you reported to your employer. Usually, it’s the tips that you got on credit card receipts.
Box 8: Allocated tips: This is one to watch out for. Once again, for most people, it’s blank. If you work in a restaurant and you have a number in this box you want to look hard at this number. That means that your boss decided that you didn’t report enough tips and so he “allocated” tip money to you. You have to pay tax on that. Now if you really did earn that in tips, then it’s no problem. But if you’re working at a place with lousy tips and there’s a big number in box 8, you’ve got some issues. The only way to fight this is to keep a really good log of your tip income. Most people don’t keep a log, and then when they get the “allocated tip” item on their W2 it’s too late.
Box 9: Nothing’s there.
Box 10: Dependent care benefits: That’s for when your company pays for your day care. If there’s something in this box, your tax return must have a form 2441 for child care expenses attached to it.
Box 11: Non-qualified plans. For most people this is blank. A non-qualified plan is retirement money that you don’t get to deduct.
Box 12: This is where all the extra goodies go. It could be a whole other blog post. Bottom line, the most common item is coded D or E for retirement funds. For the full list, you can look at the IRS website: http://www.irs.gov/pub/irs-pdf/fw2.pdf. It starts on page 7 and finishes on page 9. Some of those codes require you to file extra forms—for example a code V means you must file a Schedule D (employee stock options) and a code L means you must file a form 2106 (employee business expenses.) If you’re seeing codes in box 12, it’s at least worth a phone call to a professional just to double check what you need.
Box 13: Those are check boxes for statutory employee (means you’ll need a schedule C), retirement plan (which may limit how much you can contribute to an IRA), and third-party sick pay.
Box 14: Other. Usually that’s blank. Sometimes it lists things like union dues or United Way contributions. A lot of times I find the stuff that should have gone into box 12 in box 14, so always look at it if there are numbers in there.
Boxes 15 and up contain your state and local income tax information. 15 has the state and the employer’s state ID number. That’s important to have if you’re e-filing your return.
Box 16: State wages. This usually matches box 1, the federal.
Box 17: State income tax withholding. You’ll need this information to file your state tax return.
If you live or work in an area with a local tax, like St. Louis City, your local tax information will also be listed.
And that’s what’s in your W2.
Hi Crazyteacher,
Yes, things should add up somewhere. Sometimes, I spend way too much time with the last pay stub adding things up to make sure a W2 is right. Usually, your employee health is not taxed in box 1, and it’s also not taxed in box 3 or 5. So, my gut says that you pay for part of your healthcare and that your employer pays a portion of it also.
The MIPH and MIP sound like retirement plans. Those would not be taxed in box 1, but the would be taxed in box 3 and 5. So, from what I see, it looks like the MIP is a pre-tax retirement plan. The MIP I’m guessing is a post-tax investment (or retirement) plan. So, I’m thinking your W2 is okay.
I am curious is something is wrong with W2s. I work for a public school system in Michigan. For this year,
Box 1 is 58796.23.
Box 3 is 63728.12.
Box 14 has two things taken out MIPH ($2113.68) and MIP ($4931.89). (Member Investment Plan – MIP). I have no idea what MIPH stands for. (When I add these both to Box 1, it comes close to my contracted salary, but still that isn’t the same.
Box 12 is DD $20052.18. (cost of my employee health)
The weird thing is my contract says that I made $71247, which has been the same for the past three years.
Shouldn’t some of these numbers add up?
Hi Marian,
If that’s the per diem that you’re recieving, you should still report that you’ve received it on the 2106. (Or when you get audited, the IRS will be asking about it.) So yes, it should be in box 14 with an L, but go ahead and claim it anyway. It will save you a big headache later on.
Hello! I work at an airline as a flight attendant, and last year we merged with another airline. I noticed when I received my W-2, the L is missing in box 12. However, the top portion of my W-2 (Earnings Summary) which is also the Employee Reference Copy, it has the amount of Perdiem Nontaxable on it. In all of my previous W-2s from the old airline (all 17 copies I’ve kept), that amount was always shown under L in box 12. I’m about to do Form 2106 (Employee Business Expenses), and my question is whether I should leave line 7 blank, or do I need to write that amount that is shown in my Earnings Summary even though I don’t even have the L. I’ve called other flight attendants and they are also not showing any L amount in their W-2s.
Hi Mike,
Good question. Box 18 is how much you earned in a city. For example, we have a St Louis City tax so if you worked or lived in St. Louis, that box would be filled and it usually matches your box 7 figure.
Although not always. Some people have jobs where they work in various locations so if you worked part time in the city and part time out–box 18 could be smaller than box 7.
Box 19 is the city income tax that you paid.
I haven’t seen the NR and RS designations. We don’t have that in St. Louis, and I’m not familiar with it. I would guess that the NR stands for non-resident and the RS could mean resident-status. Did you go from just working in your city to living in your city? That’s my best guess.
But, that’s just a guess. You’ll need to ask a local preparer that question.
Hi Jan
In boxes 18 and 19 I have two sets of numbers and in the locality name it has the number followed by NR and RS. what does this mean ?
Thank You
Hi Mehrooq,
I would put the state and city and here wages and leave the tax part blank. (Or you could put $0.)
I have to fill out a W2 for my nanny and I live in Ohio. I withheld federal income tax, Medicare, and Social Security from her wages throughout the year (and know how to fill out the top of the W2), but I didn’t withhold any state or local income tax because domestic household employers aren’t required to do so. Should I just leave boxes 15-20 blank when I fill out her W2, or should I fill in the state and city names, her wages, and just list $0 in box 17 and 19 since I didn’t withhold anything? Thanks for your help!
Hi Stacey,
Box 18 is for city wages. For example, here in St. Louis, if you live or work in the city proper you have to pay a St Louis city tax. If you had any city withholding that would be in box 19, and the city they’re talking about is in box 20.
Now if you worked in St. Louis and you made $25,000, your employer would withhold 1% or $250 for your St. Louis city tax. If the withholding was correct you wouldn’t even have to file a city return. If there was no withholding, or the number was wrong, then you would file a return and pay the difference or get a refund.
Lots of cities, especially in Ohio, have city taxes. Many of the software programs include city tax returns in their software. (It will be with the state software.) You can often get copies of blank forms online also.
My box 18 was blank and I filed my taxes as such. Now several months later my employer sent me a correction stating box 18 should have actually had a number in there and what I believe to be the same number as what I made that year. What does this mean?
Hi Diana,
That means that you paid income tax to the city you live in or work in. Here in St. Louis, if you live or work in the city, you pay 1% of your wages as a city income tax.
You may have to file a city income tax return. (Maybe not if the correct amount was withheld.) It all depends upon what city you’re in and their rules.
My w2 box 19(local income tax) has an amount in it. What’s this for?
Hi John,
If there is nothing listed in box 17, that means that your employer didn’t withhold state income taxes for California. Now, if you didn’t make very much, then that would make sense (like if you’re a teenager and that was a summer job.)
Now, if you’re a professional with a $100,000 a year income, that would be a major problem.
Bottom line, if the box is blank, that means zero. File your taxes that way and if you wind up owing California money, then talk to your employer about withholding for 2014.
Hi Jan Roberg
I leave here in Los Angeles, CA my employer didn’t enter any numbers on BOX 17 on my W2 do I still need to ask that or is that important?
Thanks!
Hi Pavithra,
In most circumstances, SDI won’t affect your return. I once saw a refund for an overpayment of SDI on a California return, but that’s pretty rare.
So if I have anything with SDI mentioned on my W2, I don’t have to enter that anywhere on my federal or state tax return right ?? Just wanted to clarify
Hi Tom,
Box 14 is for the “extra” stuff. It doesn’t go on your tax return. It sounds to me like INSUR is going to be some type of insurance. SDI is usually labeled as SDI so I’m guessing that’s not it. How high is the number? around $6000–that seems like health insurance (which is usually listed as DD). A smaller number (like under $100) is usually extra life insurance. But I’m pretty sure that it’s some type of insurance but it’s not going to make a difference on your tax return.
Hi Kaitlin,
First, you cannot deduct your health insurance on your Schedule C. You may claim it on the front of your 1040 though. You may claim it even if you have other insurance at your job.
Your health insurance at work is not taxed so you can’t claim a deduction for it.
What does INSUR mean in box 14 of a W-2 tax form? Do I have to put in my tax returns. I was working in Alaska, so somebody said it could be SDI. Can I add it to my state taxes in Schedule A. Any help would be appreciated. Thank you.
Hi Polina, Thanks for the post. I am an independent contractor for one job, and buy my own private health insurance, (and want to deduct that on my schedule C). However, I have a different part time job, at a restaurant, where I have their part time insurance plan (just for dental and vision; their medical is lacking so I chose to have my own private health insurance plan). Anyways, in order to put my private health insurance premiums on my schedule C, it says I must not be eligible to participate in any employer subsidized health plan. I am trying to figure out of if the insurance offered by the restaurant is subsidized (if the employer contributes to it). I’ve read that this number would be provided in Box 12 of my W-2 if they did contribute. My box 12 is blank…does this mean they did not contribute?
Hi Polina,
this year you don’t have to do anything with the DD in box 12.
Hi, thank you so much for the advice. I do have a question. On my W2 I have an amount specified in box 12 DD – the health insurance the employer paid. Do I have to do something with that amount? I am trying to fill in the 1040 NR EZ. where does the amount in box 12 DD go in the 1040 NR EZ document/? thank you!!
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