Lots of people are confused by W-2s, but there’s a method to the IRS’s madness.  The W-2’s title is Wage and Tax Statement.  We can, therefore, reasonable assume that it contains wage and tax information for the person identified in box e.

 

Box 1 contains your taxable wages, tips, other compensation, and taxable fringe benefits.  This is the main component of the W-2 and contains the one of the most important pieces of information for the entire tax return process.  Because this box is a “catch all” and includes things like the personal-use portion of a company car, disability pay, back pay, bonuses, commissions, severance, dismissal, or vacation pay, the amount in Box 1 may be more that your actual cash salary.

 

If you worked in a restaurant and didn’t report all of your tip income to your employer, Box 8 includes your share of at least 8 percent of the restaurant’s food sales and what you reported.  If you don’t have to be concerned with this, be grateful.

If you filed a Form W-5 Earned Income Credit (EIC) Advance Payment Certificate with your employer, you may have already received some (or all) of the Earned Income Credit you’re entitled to.  Any EIC prepayments will be in Box 9.

 

Box 10 will contain figures if your employer has a daycare plan or provides daycare services.  Also included will be the amount (up to $5,000) you elected to put into a Section 125 (cafeteria plan) to pay qualified dependent care expenses.

 

For Box 12, you’ll have to take a peek at the reverse side of your W-2.  It’s got lots of good information to help you decipher your W-2.  Do does the IRS web site (www.irs.gov).