HR, Payroll, and Benefits » How to Read your W2

How to Read your W2

W-2 Overview
Employers are required to report taxable wages and related compensation, income taxes, and certain payroll deductions to employees, the Internal revenue service (IRS) and the State of Minnesota. The wages are always reported for the year they are paid. W-2s are sent to employees by January 31st of the following year.
 

How to Read Your W-2

Following are instructions on how to interpret the amounts shown in the boxes on your Form W-2, when comparing it to your pay statement.
  • Box 1 – Wages,tips, other compensation
  • Box 2 – Federal income tax withheld
  • Box 3– Social security wages
  • Box 4– Social security tax withheld
  • Box 5 – Medicare wages and tips
  • Box 6 – Medicare tax withheld
  • Box 8 – Dependent care benefits
  • Box 12 – List of codes
  • Box 11 – Retirement plan indicator 
  • Box 17 – State wages and taxes

Boxes 1 and 2

Box 1 on your Form W-2 indicates your federal taxable wages and other compensation. Your year-to-date federal taxable wages are located on your pay statement under the heading FED TAXABLE GROSS. Your federal taxable wages are determined by the following calculation.
  • You must first add together your year-to-date (YTD) earnings, including taxable benefit earnings. This is found in the "Hours and Earnings" section of your pay stub. Note: The total YTD earnings line in that section of your pay statement does NOT include any taxable benefits listed in the earnings section. They must be added to your total YTD gross pay.
  • To that total, add any YTD taxable "Employer Paid Benefits" indicated by an asterisk (*) in that section of your pay statement.
  • Lastly, subtract all YTD "Before-Tax Deductions". The amount remaining is equal to your Federal Taxable Gross reported in Box 1 on your Form W-2.
Box 2 equals the year-to-date Fed Withholding as shown in the "Taxes" section of your pay statement.

Boxes 3 and 4

Box 3 indicates your Social Security wages. The Social Security wage limit for 2002 is $84,900. To determine your Social Security wages, you must add your YTD gross earnings (including any taxable benefits listed in YTD earnings), and your YTD taxable Employer Paid Benefits indicated by an asterisk (*).
From that total, subtract the following applicable "Before Tax Deductions". The remaining amount is the taxable Social Security wages reported in Box 3.
  • Medical
  • Dental
  • Vision
  • Dependent Care Reimbursement
Box 4 equals the year-to-date Fed OASDI/EE taxes as shown in the "Taxes" section of your pay statement.

Boxes 5 and 6

Box 5 indicates your Medicare wages. The calculation to determine your Medicare wages is the same as your Social Security wages except there is no limit on Medicare wages.
To determine your Medicare wages, you must add your YTD gross earnings (including any taxable benefits listed in YTD earnings), and your YTD taxable Employer Paid Benefits indicated by an asterisk (*).
From that total, subtract the following applicable "Before Tax Deductions". The remaining amount is the taxable Medicare wages reported in Box 5.
  • Medical
  • Dental
  • Vision
  • Dependent Care Reimbursement
 
Box 6 equals your year-to-date Fed MED/EE taxes as shown in the "Taxes" section of your pay statement.

Box 10

This amount equals the total "before-tax" dependent care benefits paid. Any amount in excess of $5,000 is also included in boxes 1, 3, 5, and 16.

Box 12

The following list explains the codes shown in box 12. Other before-tax deductions, including Medical, are not reported in box 12.
You may need this information to complete your tax return.
  • Code C — Cost of group term life insurance over $50,000, included in boxes 1, 3, 5, and 16. This amount is indicated by an asterisk (*) in the "Employer Paid Benefits" section of your pay statement.
  • Code D — Elective deferrals into 401(k) cash or deferred arrangement. This includes those enrolled in Thrift Savings Plan and UMP 401(k) Deferral Plan.
  • Code E — Elective deferrals into section 403(b) salary reduction agreement. This is the total paid to the Optional Retirement Plan.
  • Code G — Elective deferrals and employer contributions (including nonelective deferrals) to a section 457(b) deferred compensation plan.
  • Code J — Non-taxable sick pay. This amount is not included in taxable wages in Boxes 1, 3, or 5.
  • Code H — Section 501(c)(18)(D) tax-exempt organization plan. See "Adjusted Gross Income" in form 1040 instructions for how to deduct. This includes the GCIU Pension deduction.
  • Code P — Excludable moving expense reimbursements paid directly to employees (not included in boxes 1 and 16).
  • Code W — Employer contributions to a health savings account (HSA).  This code shows any employer contributions (including amounts the employee elected to contribute using a section 125 (cafeteria) plan) to an HSA.
  • Code DD – Reports the cost of health insurance provided through your employer.

Box 13

Box 13 is the Retirement Plan indicator. If the "Retirement Plan" box is checked, special limits may apply to the amount of traditional IRA contributions you may deduct. The Retirement Plan box will be checked if you are an active participant in the following plans:

  • Minnesota State Retirement System

  • Teachers Retirment Association

  • Public Employees Retirement Association

  • Optional Retirement Plan (See Code E in box 12 above)

  • 403b Plans

Boxes 15, 16, and 17

Box 15 indicates the State for which your wages and taxes in boxes 16 and 17 are being reported. The University of Minnesota withholds income taxes for the state of Minnesota as well as the three reciprocal states of Wisconsin, Michigan, and North Dakota. If you had income taxes withheld for more than one state, the wages and taxes for each state will show separately.

To determine the total shown in Box 16, see instructions for Box 1, Wages, tips, other compensation. If you had wages for more than one state, the total of all state wages will equal your federal taxable gross as shown on your pay statement.

Box 17 equals the year-to-date State Withholding as shown in the "Taxes" section on your pay statement.

 

For More Information

Contact the Kathleen Heider at KHeider@brookcntr.k12.mn.us or 763-450-3386 X1302