Check your W-2 Now!
If you haven’t already received your W-2 for 2017 you will this week. Your employer is required to send it to you by the end of January.
You should take a close look at it to make sure it’s accurate.
The W-2 is a tax form required to be sent by every employer to every employee who has incurred taxable wages. Employers are also required to report your wages and taxes withheld to the IRS and SSA via Form W-3.
According to the IRS directions:
“Every employer engaged in a trade or business who pays remuneration, including noncash payments of $600 or more for the year (all amounts if any income, social security, or Medicare tax was withheld) for services performed by an employee must file a Form W-2 for each employee (even if the employee is related to the employer) from whom:
- Income, social security, or Medicare tax was withheld.
- Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee’s Withholding Allowance Certificate.”
Some items to make sure to check follow below. If you identify any mistakes report to your employer ASAP.
- Make sure your name, is correct in Box e
- Confirm that your social security number is correct.
- The entries for dollar amounts should include dollars and cents separated by a decimal point.
- Confirm that fields are properly formatted to fit your name (box e) and other entries.
- Dollar signs should not be used in money-amount fields.
- If you work for a company utilizing a PEO (Professional Employer Organization), which is an outsourced provider utilizing a co-employment scenario, the PEO company name is the reporting company rather than your actual employer.
- Box 1—Wages, tips, other compensation: should not include elective deferrals (such as employee contributions to a section 401(k) or403(b) plan) except section 501(c)(18) contributions.
Box 2—Federal income tax withheld. Show the total federal income tax withheld from the employee’s wagesfor the year.This box should include the 20% excise tax withheld on excess parachute payments.
Box 3—Social security wages. Show the total wages paid (before payroll deductions) subject to employeesocial security tax but not including social security tips and allocated tips.
Box 4—Social security tax withheld. Show the total employee social security tax (not your share) withheld,
including social security tax on tips.
Box 5—Medicare wages and tips. The wages and tips subject to Medicare tax are the same as those subject tosocial security tax (boxes 3 and 7) except that there is no wage base limit for Medicare tax. Enter the total Medicare wages and tips in box 5. This should include tips that the employee reported even if your employer did not have enough employee funds to collect the Medicare tax for those tips.
Box 6—Medicare tax withheld. Enter the total employee Medicare tax (including any AdditionalMedicare Tax) withheld. Should not include the employers share. Should include only tax withheld for 2013 wages and tips.
Box 7—Social security tips. This box should show the tips that you reported even if your employer did not have enough of your funds to collect the social security tax for the tips. The total of boxes 3 and 7 should not be more than$117,000 (the maximum social security wage base for 2013). Report all tips in box 1 along with wages and other compensation. Include any tips reported in box 7 in box 5 also.
Box 8—Allocated tips (not applicable to Forms W-2AS, W-2CM, W-2GU, or W-2VI). If you work for a food orbeverage establishment, this box should show the tips allocated to you.
Box 9. Do not enter an amount in box 9.
Box 10—Dependent care benefits (not applicable to Forms W-2AS, W-2CM, W-2GU, or W-2VI).Show the total dependent care benefits under a dependent care assistance program (section 129) paid or incurred by your employer for you. This box should include the fair market value (FMV) of care in a daycare facility provided or sponsored by your employer for you and amounts paid or incurred for dependent care assistance in a section 125 (cafeteria) plan. Report all amounts paid or incurred (regardless of any employee forfeitures), including those in excess of the $5,000 exclusion. This may include (a) the FMV ofbenefits provided in kind by the employer, (b) an amount paid directly to a daycare facility by the employer or reimbursed to the employee to subsidize the benefit, or (c) benefits from the pre-tax contributions made by the employee under a section 125 dependent care flexible spending account. Include any amounts over $5,000 in boxes 1, 3, and 5. For more information, see Pub. 15-B.
Box 11—Nonqualified plans. The purpose of box 11 is for the SSA to determine if any part of the amountreported in box 1 or boxes 3 and/or 5 was earned in a prior year.
- Box 12—Codes. There is a large list of codes on the instructions. See below for more info on Box 12 due to the ACA.
Box 13—Checkboxes. Check all boxes that apply. Again, there are a wide variety of items here. Please consult the instructions.
Box 14—Other. If your employer included 100% of a vehicle’s annual lease value in the employee’s income, it also must be reported here or on a separate statement to you. Your employer also may use this box for any other information that you want to give to you and must be labeled.
Boxes 15 through 20—State and local income tax in-formation (not applicable to Forms W-2AS, W-2CM,W-2GU, or W-2VI). These boxes report state and local (if needed) income tax information.
Box 12–Code DD
Employers that provide “applicable employer-sponsored coverage” under a group health plan are subject to the reporting requirement. This includes businesses, tax-exempt organizations, and federal, state and local government entities (except with respect to plans maintained primarily for members of the military and their families). However, federally recognized Indian tribal governments are not subject to this requirement.
In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee.
You can find a very in-depth summary of everything you need to know about Box 12-Code DD here.
For the full IRS instructions please visit: IRS Form W-2
If you have any questions on your W-2, or if you are an employer, have any questions on your responsibilities, don’t hesitate to contact me.
FireWalker Development Group
mitchz at firewalkerdevgroup dot com