W2

A W2 is a multi-part form produced by your employer that is distributed once the accounting balancing has been completed. It is a tax statement used to report the wages an employee has been paid, as well as the amount of taxes that have been withheld from their paycheck. In most cases, an individual receives four (4) copies of the W-2. One for inclusion with your Federal tax return, one for inclusion with your State tax return, the third is optional for inclusion with your local tax return, and the fourth copy is for your permanent record.

W2 Form

The W2 form is the backbone of federal and state income tax reporting. This form is required to be provided to all employees by their employers and it is required to be sent by the last day of January. The form contains a summary of all of the monetary transactions between the employer and the employee. There are twenty (20) separate boxes for information; each box is to be filled in with specific employment related information, if applicable.

The boxes on the W2 tax form denoted by the letter (a) through (f) are for identification purposes. They include the employee’s name, address, and social security number as well as the employers’ name, address, and employers’ identification number.

For most employees, the first six-(6) boxes are filled in with numbers. They are:

1.    Wages, salary, tips, other compensation
2.    Federal income tax withheld
3.    Social Security wages
4.    Social Security tax withheld
5.    Medicare wages and tips
6.    Medicare tax withheld

For employees who work in service environments where tips are a routine part of their pay, they may see numbers in the following boxes.

7. Social Security tips
8. Allocated tips

In special cases, number may appear in the next two boxes, but only at the request of the employee.

9. Advance EIC payment
10. Dependent care benefits

Box 11, for nonqualified retirement plan contributions, is rarely filled in.
Box 12 has several subsets, labeled 12a, 12b, 12c, 12d. These are filled in with such benefits as:

(a) Excess life insurance premium over $50,000
(b) Contributions to 401(k) plans
(c) Stock option gains

Box 13 has several squares representing yes or no status of the employee. Yes if the box is checked, No if the box is not checked. The three questions are:

13a. Statutory employee
13b. Retirement plan
13c. Third Party sick pay

Box 14 is for other information such as Union dues, Medical insurance premiums, etc that have been deducted from the employees’ paycheck.

Boxes 15 through 20 reports income earned and tax withheld for your state and or local taxing authority.

e-Filing

When tax filing is done electronically, such as through Jackson-Hewitt or H & R Block, the filing firm retains the Federal copy in their records and remits an electronic version to the Internal Revenue Service (IRS).

In general, tax returns should be retained for three (3) years from the date of filing. The IRS is allowed to go back these three years for normal audits of filed tax returns. If you have committed a fraudulent act of some sort, the Internal Revenue Service can go back as far as their records allow them to search for evidence substantiating the fraud.