Video transcript:
Hello, I’m Jill from TurboTax with some interesting information about the W-2 forms your employer sends you each year.
If you have been working for a number of years, you probably know that you will be receiving a W-2 from your employer by January 31 each year. But regardless of whether you are a seasoned employee or just completing your first year of employment—there are some things you may be interested to know about your W-2.
The first thing you should realize is that you only receive a W-2 for the income you earn as an employee. If you work as an independent contractor—meaning you are self-employed—you will receive a 1099 instead.
Your W-2 form has a number of boxes that report information about your earnings and taxes. However, for purposes of preparing your federal tax return, the key information is in boxes 1, 2, 17 and 19.
Box 1 is going to report your annual salary plus all bonuses and other types of compensation you receive.
And box 2 will report the federal income taxes your employer has withheld from your paychecks throughout the year. Your tax withholding is important because it is commonly the reason taxpayers receive tax refunds. If the tax you calculate on your tax return is less than the total amount of withholding reported in box 2 of your W-2, you will be receiving a refund from the IRS, because you have paid more tax than you owe.
There is other information on your W-2 that can increase your refund even more—but only if you itemize deductions.
Boxes 17 and 19 will report the state and local income taxes that your employer must also withhold from your wages. Although you need these amounts to prepare your state tax return, the payments are also deductible on your federal tax return as part of your itemized deductions. However, you should only itemize deductions if it saves you more in tax than taking the Standard Deduction for your filing status. The Standard Deduction is a set amount the IRS allows you to deduct if you choose not to itemize your deductions.
TurboTax can even import your W-2 information directly from more than 400,000 participating employers and financial institutions and put it directly in the right tax forms for you.
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