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Denver Accounting Firm Breaks Down Your W-2

January 17, 2018

Your Denver accounting firm can help with getting a head start on filing for our taxes. After every year, employers must gather the wages paid to their employees and report them for the purpose of tax benefits and requirements. Prior to January 31, these figures must be recorded on a form known as a W-2 and mailed or issued to each respective employee. These are then in turn, used by individuals and those filing as a household in an effort to summarize their tax implications from the prior year.

Employees often receive these forms and pay little to no attention to their contents. These forms are sometimes even left unopened and instead just forwarded to a taxpayers accountant to deal with the results. Instead, employees should take time to ensure their forms are completed accurately as the withholdings included go a long way in determining the impact on a taxpayers responsibilities.

According to the Internal Revenue Service (IRS) a W-2 Form must be issued by, “every employer engaged in a trade or business who pays remuneration, including non cash payments of $600 or more for the year (all amounts if any income, social security, or Medicare tax was withheld) for services performed by an employee must file a Form W-2 for each employee (even if there is a familial relationship between the employee and employer) from whom:
  • Income, social security, or Medicare tax was withheld.
  • Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee's Withholding Allowance Certificate.”
These papers, of which you should receive three copies include a wealth of information for different purposes. Boxes corresponding to letters A-F include identifying information such as an employee’s social security number, name, and address in addition to identifying numbers, name, and address of the issuing business where identified employee works.

Following are numbered boxes 1-20 which may or may not contain numerical figures and other identifying characteristics for tax purposes.

Box 1: Total taxable wages or reported salary
Box 2: Total amount withheld by the employer for federal income taxes
Box 3:  Amount of wages subject to social security tax
Box 4: Amount of social security tax withheld
Box 5: Amount of wages subject to medicare tax
Box 6: Amount of medicare tax withheld
Box 7: Any tip income reported to your employer
Box 8: Any tip income submitted by your employer
Box 9: Should be empty. Originally used for advanced Earned Income Credit reporting
Box 10: Reimbursed amount for dependent care (Taxable over $5,000)
Box 11: Amounts distributed by non-qualified deferred compensation
Box 12: Coded deferred compensation and benefits explained
Box 13: If subject to being a statutory employee, retirement plan, third-party sick pay the corresponding box will be checked
Box 14: Additional reported tax information
Box 15: Employers state and identifying number
Box 16: Taxable wages earned in the corresponding state
Box 17: Corresponding state income tax withheld
Box 18: Wages subject to other local taxes (i.e. city)
Box 19: Taxes withheld by localities above
Box 20: Description of entity being paid from local taxation

The experts at Bloch, Rothman, and Associates will be happy to help analyze your W-2, individual tax implications and filing status, assist you in determining which deduction would be right in your situation and answer any questions regarding individual or business income taxes. We can also assist with a variety of bookkeeping and other payroll options. It is recommended for those who are selected for an audit, that they enlist the services of a professional tax service before they begin engaging with the IRS auditor, especially before they submit any information.

Continuing further, associates at Bloch, Rothman can analyze and compile data for your unique tax situation, along with finding resolutions for your issues and estate complications. All services provided can and will be completed in a timely manner, and will account for any restrictions or tax deadlines. Whether you need a simple explanation on a random tax form, are in need of representation, or would like help in a variety of other services our tax experts are ready and willing to assist. Call 303-321-7160 or contact us for your initial free no obligation consultation.