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Deciphering Your W-2

January 31 has passed, so by now you (and about 116 million other taxpayers) should have gotten a little three-carbon-copy piece of paper in the mail from your employer, complete with the lovely little slogan “Important Tax Information Enclosed” stamped on the envelope. This is your W-2 form, and depending on how many jobs you have had during the past year, you may have one, two, or eight of the things piled up in your room. These little slips are important for dealing with the year’s contributions to Uncle Sam, but just what does all this info mean? YB is here to fill you in on those little boxes.

The Basics

If you’ve gotten in more than one W-2, you’ll notice that while they’re laid out differently (the format is seemingly up to the whim of the employer), they provide the same basic, and very important, information. They all have alphabetical boxes ‘a’ through ‘e’ and numeric boxes through 1 through 21. Here’s a breakdown of what those boxes show:

• All about the alphabet ­ Boxes ‘a’ through ‘e’ act as the I.D. for the W-2. Here you’ll see your name, address, and social security number (make sure that number is right!). You’ll also find the employer’s info, so you can keep track of who sent you what.

• Down to the numbers ­ The numeric boxes get down to the juicy stuff — the cash amounts. You’re probably going to want to focus on boxes 1 through 6. Boxes 1, 3, and 5 will say how much your employer’s paid you through the year. Box 2 is the big one — it tells how much Federal income tax has been taken out of your check this year (this one can hurt to look at!). Number 4 shows how much social security tax was taken out. The sixth box tells you what’s been taken out for Medicare.
  
• Other important tidbits ­ If you live in certain parts of the U.S., you’ll also have state and local income taxes. In this case, there will be some figures in boxes 16 through 21. The state will mail you stuff to handle the bill for those numbers.

Filing for a Refund

Along with the W-2 forms, you’ll usually (but not always) get a tax booklet full of forms and instructions. If you don’t get one, check your local public library for free copies. There are more tax booklets than there are Ben and Jerry’s Ice Cream flavors. The simplest of these forms has a catchy title — 1040EZ. There are a few restrictions for using it though. If you’ve gotten a lot of interest from a bank, or made over $50,000 in taxable income, you can’t use 1040EZ. If you’re one of the lucky ones using 1040EZ, check out the TeleFile or E-file methods the IRS now offers for online filing. It saves on mailing time, so you can catch that refund faster (if you are getting one).

If you want to be more assured of receiving of a refund rather than owing Uncle Sam, you can have an extra amount taken out of your paycheck for taxes each pay period. This is done on your W-4 form, which your employer asks you to fill out as soon as you’ve landed the job. File early, too! Filing early not only gets an unpleasant task out of the way, it gets your refund sooner because your tax return won’t be swimming in with all those others who do it at the last minute and clog up the works.