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.)
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.
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 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!