How To Read Your W-2

January 31, 2014 | Kate Horrell

W-2 Wage and Tax Statements are out for 2013, and you may be wondering what all those numbers really mean.  Let’s see if I can help.  (Click on the image to make it bigger.)

W-2 without identifying information

 

First, the lettered blocks: There, you should find your Social Security Number and unit information.

The numbered blocks are the important information.

Box 1 Wages, tips and other compensation

This box shows all your taxable income. If you have tax-exempt income, it will not be included in this figure.

Box 2 Federal income tax withheld

This box shows the total amount you had withheld for payment of federal income taxes.

Box 3 Social Security wages

This is the amount of your income that is subject to Social Security Taxes.   For most people, this will be the amount in Box 1 plus the amount in Box 12, Code Q (if any).   Income earned in combat zone tax exclusion areas are included in this amount.  You are only taxed on the first $113,700 of income each year, so if your income exceeds $113,700, then this box will only say $113,700.

Box 4 Social Security tax withheld

This amount shows how much Social Security tax you’ve had withheld during the year.  It should be equal to 6.2% of your Social Security wages shown in Box 3.

Box 5 Medicare wages

This is the amount of your income that is subject to Medicare tax.  This should equal the amount listed in Box 1 plus the amount listed in Box 12, Code Q (if any.)  Income earned combat zone tax exclusion areas are included in this amount.

Box 6 Medicare tax withheld

This amount shows how much Medicare tax you’ve had withheld during the year.  It should be equal to 1.45% of your Medicare wages shown in Box 5.

Box 12

This box lists a wide variety of important figures with codes next to them for identification. The most frequently seen codes on military W-2s are AA, D, and Q.

Code AA represents Roth TSP contributions. The AA will have a number next to it that designates the tax year for which the contributions were made.

Code D represents traditional TSP contributions. It can also have a year code.

Code Q indicates income that was earned in a combat zone tax exclusion area. You may elect to use this amount for inclusion in calculations for certain tax credits such as the Earned Income Credit.

Box 14

Box 14 also shows miscellaneous important figures.  The most frequently seen code on military W-2s is code E

Code E represents traditional TSP contributions made with income earned in combat zone tax exclusion areas.

Boxes 15 through 20 include similar information for state and local taxes.

My smart accounting-type friend recommends that you check these numbers against your records, as sometimes they are wrong. You can not correct your own W-2. You have to ask the issuer to correct it.

I hope this helps make the W-2 a little easier to understand.  If you have questions, please ask in the comments and then I can improve this explanation.

Happy tax filing!

Comments

  1. ILYA says:

    GREAT HELP, THANKS!

  2. Kathy says:

    Shouldn't the difference on the W2 in box 1 & 3= the amount in box 12, Code Q? Nothing is in box 7,8,9,10, or 14.

    • Kate says:

      Kathy, military members should not have any numbers in boxes 7, 8, 9 or 10. Militayr members usually only have an amount in box 14 if they contributed tax exempt income to a traditional (non-Roth) TSP account.

      In most cases, you are correct: Box 3 (Social Security Wages) should equal Box 1 (taxable wages) plus any non-taxable income. For military members, the most frequent non-taxable income is income earned a combat zone tax exempt area, and that would be reported in box 12 with a Q code. There are, however, a variety of issues where those numbers won't add up. For example, there is a cap on Social Security taxes. Once you've reached that income level, no more tax is collected. For 2013, box 3 would never have an amount higher than 113,700. Other issues can have the same effect.

      Does that make sense?

  3. Floyd C. Denney says:

    I need a w2 for 2013