Box 2: Federal income tax withheld. Box 2 reports the total amount withheld from your paychecks for federal income taxes. This represents the amount of federal taxes you have paid-in throughout the year.
Box 3: Social Security wages. Box 3 reports the total amount of wages subject to Social Security taxes. For 2005, the Social Security tax is assessed on wages of $90,000 or less. If Box 3 shows an amount over $90,000, you will need to have your employer correct your W-2. If your total wages are under $90,000, then the amounts reported in Boxes 1 and 3 should be the same. Tips reported to your employer are not included in the Box 3 amount. Tip income is reported in Box 7. The amounts in Box 3 and Box 7 should equal either the amount in Box 1 or the $90,000 maximum wage base for Social Security taxes.
Box 4: Social Security tax withheld. Box 4 reports the total amount of Social Security taxes withheld from your paychecks. The Social Security tax is a flat tax rate of 6.2% for wages up to a maximum of $90,000. Wages above $90,000 are not subject to the Social Security tax. The maximum figure shown in Box 4 should be $5,580 ($90,000 maximum wage base times 6.5%). If you have two or more jobs during the year, and your total wages exceed $90,000, you may have excess Social Security taxes paid-in. You will claim the excess as a refund on Form 1040, Line 67.
Box 5: Medicare wages and tips. Box 5 reports the amount of wages subject to Medicare taxes. There is no maximum wage base for Medicare taxes. The amount shown in Box 5 may be larger than the amount shown in Box 1. Medicare wages includes any deferred compensation, 401k contributions, or other fringe benefits that are normally excluded from the regular income tax.
Box 6: Medicare tax withheld. Box 6 reports the amount of taxes withheld from your paycheck for the Medicare tax. The Medicare tax is a flat tax rate of 1.45% of your total Medicare wages.
Box 7: Social Security tips. Box 7 reports the amount of tip income that you reported to your employer. If you did not report tips to your employer, you will not have an amount in this box. The amounts in Box 7 and Box 3 should add up to the amount in Box 1, or the $90,000 maximum wage limit for Social Security taxes.
Box 8: Allocated tips. Box 8 reports any tip income that your employer thinks you may have earned, but failed to report. This amount is not included in the wages reported in Boxes 1, 3, 5, or 7. Instead, you must add this to your taxables wages on Form 1040 Line 7, and must calculate your Social Security and Medicare taxes on this tip income using IRS Form 4137 (PDF). Taxpayers with any amount shown in Box 8, Allocated Tips, should seek the advice of a tax preparer to figure out the best strategy for handling this situation. Employees with allocated tips must file Form 1040.
Box 9: Advance EIC payment. Box 9 reports any advance against your Earned Income Tax Credit paid to you by your employer. This only happens if you submitted IRS Form W-5 (PDF) requesting your employer to add a portion of your anticipated EIC to your paycheck. Advance EIC payments are repaid on Form 1040 as an additional tax payment, where it offsets the total amount of EIC you will receive as a tax refund. Employees with advance EIC payments must file Form 1040A or Form 1040.
Box 10: Dependent Care Benefits. Box 10 reports any amounts reimbursed for dependent care expenses, or the dollar value of dependent care services provided by your employer. Amounts under $5,000 are non-taxable benefits. Any amount over $5,000 is reported as taxable wages in Boxes 1, 3, and 5. Non-taxable benefits must be excluded from expenses claimed for the child and dependent care tax credit on IRS Form 2441 (PDF).
Table of Contents
Form W-2 Basics
Where to Send Copies of Your W2, and Instructions for Boxes A-F
Form W-2 Boxes 1-10
Form W-2 Boxes 11-20
Form W-2 Box 12 Codes and Explanations
