Tax season and understanding your forms

in Financial Wellness

Some people enjoy tax season and look forward with great anticipation to that tax rebate, others not so much, as they may owe taxes. Whichever tax situation you find yourself in, you will need information to file those returns.

One very important piece for filing your taxes for you full time wage earners is your W-2 form. These are due to you, the employee, by Jan. 31 each year. The W-2s can be sent in paper or digital form.

A W-2 tax form tracks how much you earned, how much you were taxed on and how much that tax was. You’ll find your personal information and your employer’s contact information.

Wages and withholding

The remainder of the W-2 tax form aims to identify your income for the past business year and how much money was withheld for federal income tax, social security tax, Medicare tax and applicable state and local taxes.

• Box 1 – Wages, tips, other compensation: This outlines the total taxable income for the entire year. If you worked less than a year, it’ll be from day one.
•  2 – Federal income tax withheld: This is the amount of money that your employer withheld for federal income taxes.
•  3 – Social security wages: This is the amount of income that is subject to the social security/FICA tax. This is different from income tax because there is a maximum amount that can be taxed with FICA each year. In 2015 and 2016 the amount of wages subject to Social Security tax is $118,500.
• 4 – Social security tax withheld: This is the total amount of social security tax that was withheld. There is a maximum amount because of the cap.
• 5 – Medicare wages and tips: This is the amount of income that can be taxed for Medicare. There is no cap on this. For 2015 and 2016 the Medicare portion of the FICA tax remains at 2.9 percent of which the employee pays 1.45 percent and the employer 1.45 percent.

If you received other income

• 12a to 12d: These are filled with a letter code so that you know what applies to you. For example, if 12AA is filled in, that means money was contributed to your designated Roth under a 401 K plan.
• 13: This is just a check box to let the government know you are a part of a retirement account.
• 14 – Other: If there is any other additional tax information that the government needs, there will be information here.
• 15 – State and Employer’s State ID Number: What state are you earning money in? And what is your employer’s state ID number?
• 16 – State wages, tips, etc: The amount you earned in that particular state. This can be different than where you live.
• 17 – State income tax: This is the amount that you paid in income tax to the state where your job is.
• 18 – Local wages, tips, etc: This is the amount you earned in that specific locality (if that happens).
• 19 – Local income tax: The amount that was taken out of your taxes for local tax purposes.
• 20 – Locality name: What is the location of the job?

Once you have received your W-2 form, you’ll notice that there are three copies unless you also have to pay locality tax. Copy C is for your records, Copy B is for the Federal Return, copies one and two for State and local.

A new piece of information is called the 1095-C form. It provides proof of the health insurance offered to you and your family during the 2015 tax year. This form will be provided to you if you were a full time employee of an Applicable Large Employer in 2015 regardless of whether you opted to enroll in health insurance benefits through your employer. This is due to employees by March 31 of 2016. For more information on this new form, please click here to visit the IRS website.

You have requested an external link.

 By clicking this link, you are leaving SouthPoint’s website and entering a website hosted by another party. We do not operate this site, nor are we responsible for its content. Please review the privacy and security policies of the site you are entering, as they may differ from those practiced by the credit union.

Cancel Accept