Preparing and Reading a W-2 Form
A-F boxes on W 2
The boxes contained in your W-2 will seem slightly different depending on how your company processes them. Some of the identifying information boxes are designated with letters. Boxes A through F includes your Social Security number, your employers tax ID number, and your and the employers addresses and names.
You must double-check this information; an incorrect address or Social Security number might result in tax delays. They will also need to be changed if you relocate or alter your name. Box D serves as a unique identifier for your employers records and does not require double-checking by the employee.
Boxes 1-20
Box 1: Enter your entire taxable income for the fiscal year. Wages, tips, and other remuneration are included, but pre-tax benefits like health insurance or contributions to a 401(k) plan are not.
Box 2: Enter the total amount withheld for taxes in the previous year. The employee can change the amount withheld by submitting a new W-4 form to their employer. This can be done if an employee has a unique dependant or changes their marital status.
Box 3: This is the sum of your earnings subject to Social Security tax. This might be the same as Box 1, but it does not have to be.
Box 4: The total amount of Social Security tax taken from your paycheck. This should be a flat 6.2% of the amount in Box 3 up to the taxable income limit, which is set at $132,900 for 2019 and $137,700 for 2020.
Box 5: This is the sum of your earnings subject to the Medicare tax. Boxes 1 and 3 may or may not have the same values.
Box 6: The total amount of Medicare tax taken from your paycheck. If the total amount in box 5 is less than $200,000, this will be a 1.45% flat tax on your income. If you earned more than $200,000 in the previous year, anything beyond that amount is taxed at a rate of 0.9% higher.
Box 7: The number of tips you got in the previous year, as recorded by your employer. Boxes 7 and 3 will add up to the sum in box one if there are no pre-tax advantages.
Box 8: This is the number of tips your company has given you. If this box is not empty, you must complete Form 4137 and may wish to consult with a tax professional for assistance.
Box 9: This used to display any Earned Income Credit advances, but since that terminated in 2010, it should be blank.
Box 10: Enter the amount you were reimbursed for dependent care expenditures through a flexible spending account last year. Any sum in this box over $5,000 is taxable and will be included in boxes 1, 3, and 5. If this box has a value, you must complete Form 2441.
Box 11: This is the amount you received from your employers deferred compensation plan. These are taxable salaries and are included in box 1.
Box 12: Deferred pay or other forms of remuneration may be shown in this unique box. Employers use a single- or double-letter code to denote the kind of pay and the monetary value.
Box 13: Within this box, there are three checkboxes: statutory employee, retirement plan, and third-party sick pay. If “statutory employee” is ticked, you must complete Form 1040 Schedule C, and box two should be left blank. If a “retirement plan” is selected, it implies you took part in a retirement plan, such as a 401(k) (k). If “third-party sick pay” is ticked, it suggests you got disability compensation from a firm other than your employer as part of your wage.
Box 14: This is for any extra information that may or may not be included in other areas on your sheet. The numbers in this field are specific to your company or business, although they may include uniform expenditures, union dues, etc.
Box 15: Enter your employers state and tax ID number.
Box 16: Enter the amount of taxable income you earned in your state.
Box 17: The state tax taken from your salary the previous year.
Box 18: The amount of taxable income you received in your municipalities, such as a city or township, is shown here.
Box 19: This is the amount of municipal, city, or other state taxes taken from your payment. Schedule A may allow you to deduct this amount.
Box 20: If boxes 18 or 19 have a value, box 20 offers a summary of the tax paid.
How to start LLC in American Samoa
Setting up a limited liability company (LLC) in American Samoa can help you establish an independent legal entity for conducting business operations and holding cryptocurrencies such as NFTs. LLCs are available in states, territories, and insular areas such as Puerto Rico and American Samoa. Also known as Limited Liability Companies, LLCs are special entities created under state laws that provide liability protection to owners involved in business activities.