How to Calculate W2 Income Tax Return

by Jane Meggitt ; Updated March 16, 2018

Any employer who paid you at least $600 during the tax year must provide you with a Form W-2 for income tax purposes. That amount includes non-cash payments, such as the withholding of Social Security and Medicare taxes, as well as income tax. From the information on this form, you can calculate the income taxes due from employment. Every piece of pertinent information needed is somewhere on this form.

Three Copies of Form W-2

For tax year 2017, your employer should have sent you the Form W-2 by January 31, 2018. You’ll receive three copies of the W-2: B, C and 2. Copy B accompanies your federal tax return, while copy C is your copy to keep for your records. Copy 2 is attached to your state tax return if you don’t file it electronically.

Wage and Tax Statement

The W-2 is formally known as the Wage and Tax Statement. Each box on the form contains specific information. Box a is your Social Security number. Always check to make sure this number is correct. If the number is wrong, get in touch with your employer as soon as possible. An error in the Social Security number means you aren’t receiving credit for your income tax, Medicare and Social Security payments. Box b states your employer’s federal identification number, and box c contains the employer’s name, address and Zip code. If there is a box d on your form, the number appearing there is the payroll department’s control number for your account. Box e and f contain your name and address. Check to make sure that all of the information is correct and report any inaccuracies to your employer.

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Numbered Boxes on the W-2

The numbered boxes contain financial information. Box 1 is the total amount of taxable wages and salary. Box 2 is the amount withheld by your employer for federal income taxes. Box 3 reports the amount subject to Social Security taxes, which was $118,500 in 2017, and Box 4 indicates the amount of Social Security taxes paid. Box 5 is the amount subject to Medicare taxes, which does not have an income limit. Box 6 shows the amount paid in Medicare taxes. Box 7 is any tip income reported to the employer, which obviously does not apply to all workers, and box 8 reports all tips allocated to the employee. Box 9 is empty, as it was used for the Earned Income Tax Credit, which expired in 2010. Box 10 includes dependent care expenses reimbursed through your flexible spending account. Box 11 shows any amounts distributed from your pension plan, and if you had distributions, the amount is added to the wage amount in box 1. Box 12 deals with deferred compensation and has a letter next to it, which is the code corresponding to the type of deferred compensation in question.

Box 13 checks off your particular employment situation. This box gets check marks if you’re a statutory employee and wages have not been withheld for income tax. If you participated in an employer-sponsored retirement plan during the year, there’s a check mark, as there is if you received sick pay from your employer’s insurance company rather than from the employer. Box 14 includes miscellaneous tax information, such as union dues. Box 15 is the employer’s state identification tax number. Box 16 is the total amount of taxable wages earned in a state. Box 17 indicates the total amount of taxable state wages withheld. Box 18 is all wages subject to state, city or local taxes, while box 19 the total amount of taxes withheld from the state, city or locality. Finally, box 20 shows exactly which state, city and local taxes to which you were subject.

About the Author

Jane Meggitt has been a writer for more than 20 years. In addition to reporting for a major newspaper chain, she has been published in "Horse News," "Suburban Classic," "Hoof Beats," "Equine Journal" and other publications. She has a Bachelor of Arts in English from New York University and an Associate of Arts from the American Academy of Dramatics Arts, New York City.

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