People who work as employees need to use the Form W-2 issued by their employers to file their tax returns. If you're not sure the information on your W-2 is correct, you'll need to do some research before you begin filling out your tax return or give your W-2 to your tax preparer. Understanding what goes into Box 1 of your W-2 is one of the most important things you'll need to know about this form.
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What Is Box 1?
Box 1 on a W-2 is the wages, tips and other compensation section of the W-2. What does this include? According to the IRS instructions for filling out Form W-2, that means your salary, wages, tips, bonus, commission and other compensation you received that is considered taxable income. You can see a detailed list of what is considered taxable wages, tips and other compensation in IRS publication titled "General Instructions for Forms W-2 and W-3" on page 16 under the heading, "Box 1 – Wages, tips other compensation."
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Different From Your Last Stub?
If the amount in Box 1 differs from the gross pay listed on your last pay stub, there could be several reasons, explains Automatic Payment Systems. This is because your pay stub shows your gross earnings before deductions, while your W-2 shows only your income after pre-tax deductions.
Pre-tax deductions include a 401(k) or other tax-advantaged retirement account contribution you make, employer-provided health insurance or other benefits like a Flexible Spending Account, Health Savings Account, child care plans or dental, life, disability or vision insurance.
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What Does it Not Include?
Box 1 does not include all reimbursements you received from your employer. For example, if you had $1,200 worth of travel expenses (such as airfare, hotel, meals, taxis and parking) and your company reimbursed you via an expense report, this $1,200 is not included as wages, tips or other compensation. If your Box 3 and Box 5 wages differ from your Box 1 amount, that's because they show your wages subject to Social Security tax (Box 3) and Medicare (Box 5).
Need Your W-2?
Your employer is required to get you a copy of your W-2 by January 31 in the year following the past tax year. If you are looking for a copy of your W-2 for a previous tax year, you can do an online search (companies like TurboTax, ADP and H&R Block have free search tools). You can call the IRS at 800-908-9946 or go to the IRS website and request a copy of your tax return for a specific year using Form 4506.