What Does A W2 Income Statement Look Like?
Looking at a W2 income form can be a confusing site, especially when you've never used one before. As if filing taxes wasn't scary enough though on its own, trying to understand what seems like a cryptic code can be petrifying.
Have no fear, understanding your taxes is easier than it looks, and once you've got it down, you'll be breezing through your W2 in no time. Read on to find out more about how to read and understand your W2 income statement!
So What Exactly is a W2 Income Statement?
When you are employed by a company, unless you are a contracted employee or freelance worker, your employer is responsible for deducting taxes from your income throughout the year. If you are a contractor or freelancer, check out this information of 1099 tax forms.
At the end of the year, around tax season, your employer will take this information and compile it into a single page form known as a W2, which both you and the IRS will receive a copy of. This form is necessary for filing your federal and state income taxes and depending on your tax situation can land you a check in the mail known as a tax return. Sounds simple enough right?
What Will My W2 Look Like?
You should either be sent your W2 in the mail or be given it directly from your employer as a sealed document. Once you tear it open and unfold it, you'll see three identical copies of the same form. This is in the case you will be mailing in your taxes, as you'll need to attach a separate copy to your state and federal returns.
You'll notice many boxes filled with all sorts of information and numbers that can seem a bit overwhelming at first glance. Don't get stressed out, however, it's simpler to understand than you may think. Boxes A-F include your personal and employer information such as your social security number, your employer's tax ID, the address of your job, your full name, and your current address.
Breaking Down the Numbers
Where it starts getting a bit more complicated is all the numbered boxes. Box 1 shows how much of your total income during the fiscal year was taxable, not all income is taxable, so it's important to know exactly what income was.
Boxes 2 through 6 show you what income was withheld for taxes based on federal income tax, state income tax, Medicare, social security tax, and so on. You'll need all of this information when filing your taxes.
Boxes 7 through 10 on your W2 income form will include any special forms of income through that employer, such as tips, reimbursement, and income credits. Boxes 11 and 12 have to do with deferred compensation plans, if you are unsure as to what this is or whether or not it applies to you, talk to your employer.
Box 13 has three checkboxes that depict whether you're a statutory employee, if you've participated in your employer's retirement program, or if you received any third-party sick pay. Box 14 includes any additional tax information your employer would find important. The rest of the boxes, 15 through 20 go through a similar procedure as boxes 2 through 6, just with state income tax information.
And There You Have It!
See, it's much easier to understand than it appears, it just takes a bit of breaking down and simplifying to take all of those crazy numbers and make sense of them. Of course, there is always people and resources out there willing to help you better understand your taxes and forms so that you can cruise through your returns this year!
So when your W2 income statements arrive in the mail this year, don't get stressed out, you've got the information you need to get through it successfully. Try our form W-2 generator now!