Wage and Tax Statement, or better known as Form W-2 is the tax form that reports wages, salaries, and other compensation paid to employees during the tax year. Employers are responsible for filing and issuing this tax form to every employee that received at least $600 in the above payments.
While Form W-2 reports minimal information that goes into an employee’s income and tax withholdings, it can get quite confusing for starters. Here is a detailed explanation and instructions to file Form W-2 for the 2022 tax season.
Step by step instructions to file Form W-2
Wages, salaries, tips, and other income
On Form W-2, employees need to report the total amount of income paid for the tax year. Each box has a designated purpose and type of income. Make sure to enter everything as exact as shown on the employee’s last pay stub.
Box 1: Wages, tips, and other compensation h3
Report the total amount of income earned by the employee during the course of the 2021 tax year so that the employee can properly calculate gross income when filing a tax return in 2022.
Box 3: Social Security wages
Enter the total amount of wages earned by the employee that is subject to Social Security taxes.
Box 5: Medicare wages and tips
Enter the total amount of income earned from wages and tips by the employee that is subject to Medicare taxes.
Box 7: Social Security tips
Enter the total amount of tips earned by the employee that is subject to Social Security taxes.
Box 8: Allocated tips
Enter the tip income earned allocated by you, the employer.
Employees only: File Form 4137 with your tax return to report Social Security and Medicare taxes on the alllocated tips.
Box 10: Dependent care benefits
If the employer provided the employee with dependent care benefits under a dependent care assistance program, report the total amounts. However, amounts under $5,000 are included in Box 1. Only enter an amount to this part of Form W-2 if the dependent care benefits exceed $5,000.
Box 12: Different types of income
Whether taxable or not, enter different types of income and other payments made to your employee. Utilize the Form W-2 Box 12 codes to state the type of payment to both your employee and the Internal Revenue Service.
Box 14: Other
Use this box to report the following that is not reported on Box 12.
- A member of the clergy’s parsonage allowance and utilities
- Charitable contributions made through payroll deduction
- Educational assistance payments
- Health insurance premiums deducted
- Nontaxable income
- State disability insurance taxes withheld
- Uniform payments
- Union dues
For railroad workers only, use this box to report:
- Additional Medicare tax
- Medicare tax
- RRTA Compensation
- Tier I tax
- Tier II tax
Box 16: State wages, tips, etc.
Enter the total income subject to state income taxes.
Box 18: Local wages, tips, etc.
Enter the total income subject to local income taxes.
Federal, state, and local income tax withheld
Box 2: Federal income tax withheld
State the total amount of federal income you withheld during the tax year.
Box 4: Social Security tax withheld
Report the Social Security tax withheld during the tax year. This amount is generally 6.2 percent of the employee’s total income and is reported on the last pay stub.
Box 6: Medicare tax withheld
Report the Medicare tax withheld during the tax year. This amount is generally 1.45 percent of the employee’s total income, and again, reported on the last pay stub.
Box 17: State income tax withheld
Enter the state income tax withheld.
Box 18: Local income tax withheld
Enter the local income tax withheld.
Other parts of Form W-2 for 2022 tax season
Box 9: W-2 Verification Initiviate
Box 9 is for employers that are a part of the Internal Revenue Service’s Form W-2 Verification Initiviate. Enter the verification code here so that your employee can verify his or her W-2 when prompted by software.
Box 11: Nonqualified Plans
Report the amount distributed from your taxable, nonqualified plan distributed to your employee.
Box 13: Retirement plan and other information
The retirement plan box states the employee has a retirement plan. The statutory employee box indicates that the employee needs to carry the amount reported on Box 1 to the first line of Schedule C.
Box 15: Employer’s State ID number
Enter employer state identification number.
Box 20: Locality name
Enter the local government’s name.
Box 12 codes
If the type of payment/income paid to the employee cannot be reported on the above boxes, utilize Box 12 to report them. The Internal Revenue Service has a series of Box 12 codes for Form W-2 to help employers to report payments made to their employees. See the Box 12 codes for Forms W-2.