Understanding 2015 W-2 Forms

It’s that time of year again. People are getting their W-2s in the mail — and getting ready for tax time. But do you know the basics of W-2s and what every section means? It’s a good idea to familiarize yourself. We walk you through it all below. (Remember, this post is for educational purposes — for specific tax questions related to your business, be sure to consult with a professional).

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What is the deadline for employers to send out W-2s?

The deadline for employers to file 2015 W-2s to the Social Security Administration is February 29 for paper filings and March 31 for online filings.

How to read your W-2 Wage and Tax Statement

Here’s a walkthrough, looking at a W-2 a California employee might receive through Square Payroll:

Wages and taxes withheld

This is the most important box: It summarizes how much money you made before and after taxes.

  • Box 1: Wages, tips, other compensation — This is how much you made from this employer last year in the form of wages, tips, and any other compensation. This is added to Line 7 of your federal personal income tax return.

  • Box 2: Federal income tax withheld — This is how much federal income tax was withheld from your pay. This is based on the Form W-4 you filled out when you started working. Taxes vary based on your filings status (being single, married, etc.), allowances for dependents, etc.

  • Box 3: Social Security wages — This is how much of your pay was subject to Social Security tax, not including tips.

  • Box 4: Social Security tax withheld — This is how much Social Security tax you paid.

  • Box 5: Medicare wages and tips — This is how much of your pay was subject to Medicare tax, including tips.

  • Box 6: Medicare tax withheld — This is how much Medicare tax you paid.

  • Box 7: Social Security tips — This is total amount of reported tips that were subject to social security tax.

Other but equally important:

  • Box 14 — This box includes any other taxes you paid, union dues, uniform payments, health insurance premiums deducted, etc. In this case, it shows the amount of CA state disability insurance paid.

  • Box 15 — This box has your employer’s state identification number.

  • Box 16 — State, wages, tips, etc. — This is the total of your wages, tips, and other compensation that was used to calculate how much state income tax you paid for the year.

  • Box 17 — This is how much state income tax you paid.

Most payroll services will mail Form W-2 to each of your employees. But sometimes, they’ll charge you for each one they produce and send. This isn’t the case with Square Payroll. There are no hidden fees or surprises. We want to make the W-2 process as hassle-free as possible for your business, so you can, well, get back to business.