Tax time is upon us! Whether you are doing your own taxes or having a tax preparer formulate them for you, you are responsible for what is ultimately submitted to the Internal Revenue Service (IRS).http://www.irs.gov/individuals/article/0,,id=133088,00.html What this means is that you will have to understand your taxes as well as know how to read a W2 form.

If an employer has withheld income or taxes from your pay then they are required by law to provide you with a W2 form.http://www.irs.gov/pub/irs-pdf/iw2w3.pdf The form must be mailed or couriered by January 31st of each year. If by mid February you still have not received your form, call the IRS for help and file a Form 4852: Substitute for Form W-2.http://www.irs.gov/newsroom/article/0,,id%3D106470,00.html You should receive a W2 for each job you work in a calendar year. If you are self-employed then you will go by income reported on Form 1099 and fill out a Schedule C.http://www.taxinformation.org/article/tax-basics/tax-forms-explained.html

The W2, also referred to as the Wage and Tax Statement consists of 6 parts. Your employer sends one of those parts to the Social Security Administration (Copy A), another to your state, city or local tax department (Copy 1) and three more to you (Copy B for federal, Copy 2 for state filings, and Copy C for your records). They also keep a part for themselves (Copy D).http://www.irs.gov/pub/irs-pdf/iw2w3.pdf

There are many portions to the W2. Some are meaningful and others you will never use. All have purpose. If you want to fathom what the different portions represent and how they coincide with Form 1040, then you'll want to find out what each box illustrates. Formatting may vary but every W2 contains the same information.

Box A represents the 'Control Number'. Its is the employers record number of the transmittal. It's assigned by the company's payroll processing software and is optional.http://www.taxesindepth.com/info-w2-form.html

Box B - Employer Identification Number (EIN): This is the unique number the IRS has issued to identify the business. It is also referred to as a tax identification number. This number must be included on your 1040.

Box C - Employer's Information: This is the employers name, address, city, state, and zip code. If your employer has more than one location, their headquarters address will appear here.

Box D - Employee's Social Security Number: Confirm that this number is correct. If it is not you'll need to present your social security card to your employer and obtain a corrected W2.http://taxes.about.com/od/formw2/a/IRSFormW2_2.htm

Box E - Employee's Name: This identifies your full name (first name, middle initial, and last name). If you have changed your name your company will have to issue an correction as well as a new W2.

Box F - Employee's Address: This identifies your mailing address. If you have recently moved, notify your employer so that there are no problems obtaining future W2s.

Box 1 - Wages, Tips, and Other Compensation: This is your total taxable wages for federal income tax purposes. The figure includes wages, salary, tips, bonuses, back pay, commissions, severance, vacation pay and other taxable compensation. Fringe benefits such as group term life insurance are considered taxable compensation and also appear here.

Box 2 - Federal Income Tax Withheld: This amount is the total of federal income taxes withheld and paid to the IRS. Withholdings throughout the year were determined by your Form W4http://www.irs.gov/pub/irs-pdf/fw4.pdf

Box 3 - Social Security Wages: This is the total amount of wages subject to the Social Security tax. If your total wages are under $106,800, then the amounts reported in Boxes 1 and 3 should be the same. The amounts in Box 3 and Box 7 should equal either the amount in Box 1 or the $106,800 maximum Social Security tax wage base.http://www.irs.gov/pub/irs-pdf/iw2w3.pdf

Box 4 - Social Security Tax Withheld: The Social Security tax is a flat tax of 6.2% up to a maximum wage base of $106,800 (for 2009 and 2010). Wages above $106,800 are not subject to the Social Security tax. Accordingly, the maximum figure shown in Box 4 should be $6,621.60 ($106,800 maximum wage base times 6.2%).http://www.ssa.gov/pubs/10003.html

Box 5 - Medicare Wages and Tips: Here is the total amount of wages subject to Medicare taxes. This is typically your entire compensation from your job so the amount may be larger than the amount in Box 1. There is no maximum wage base for Medicare taxes. Medicare wages include deferred compensation, 401k contributions, or other fringe benefits that are normally excluded from the regular income tax.http://www.irs.gov/taxtopics/tc761.html

Box 6 - Medicare Tax Withheld. This is a flat tax of 1.45% of your total Medicare wages, withheld from your paycheck.http://www7.acs.ncsu.edu/hr/payroll/ficatax.asp

Box 7 - Social Security Tips: The amount of tip income that you reported to your employer is recorded here. The box will have no amount if you did not report tips. Box 7 and Box 3 amounts should total Box 1, or the $90,000 maximum wage limit for Social Security taxes.http://taxes.about.com/od/formw2/a/IRSFormW2_3.htm

Box 8 - Allocated Tips: If there is an amount in this box then taxpayers are advised to seek a professional tax preparers advice and file Form 1040. This is because this amount does not show up in Boxes 1, 3, 5, or 7 but must be added to your taxable wages. Your employer reports this amount to the SSA as tips you possibly earned but did not report. This amount must be the sum of your Social Security and Medicare taxes, and reported on Form 1040 Line 7 using IRS Form 4137.http://www.irs.gov/pub/irs-pdf/f4137.pdf

Box 9 - Advance EIC payment: If you have submitted Form W5 requesting that your employer add some of your anticipated EIC to your paycheck, repayment will occur on the Form 1040 or 1040A.http://www.irs.gov/pub/irs-pdf/f1040a.pdf

Box 10 - Dependent Care Benefits: Amounts over $5,000 are reported as taxable wages in Boxes 1, 3, and 5. Non-taxable benefits are excluded and can be claimed on IRS Form 2441.http://www.irs.gov/pub/irs-pdf/f2441.pdf Any amounts reimbursed for dependent care expenses, or the dollar value of dependent care services provided by your employer are taxable over $5000.http://www.irs.gov/newsroom/article/0,,id=106189,00.html

Box 11 - Nonqualified Plans: Any amounts distributed to you from your employer's non-qualified deferred compensation plan or non-government Section 457 pension plan are reported here in addition to already being included in box 1.

Box 12 - Deferred compensation and other compensation: Several types of compensation and benefits are reported in Box 12. They are all needed to complete your tax return. See additional information in the next section below regarding box 12.

Box 13 - Three check boxes: They will be checked off if the following applies to you:

As a 'Statutory Employee' you must use Form 1040 Schedule C to report W2 wages. Since your wages are not subject to income tax withholding, there will be a zero or blank amount in Box 2. You are subject to Social Security and Medicare taxes which appear in Boxes 3 through 6.http://www.irs.gov/charities/article/0,,id=131138,00.html

As a participated in your employer's 'Retirement Plan' during the year, your ability to participate in a traditional IRA may be limited. Your retirement plan may be a 401(k), profit-sharing, or pension plan.

As a recipient of 'Third Party Sick Pay' under your employer's third-party insurance policy. Sick pay is not considered taxable wages.

Box 14 - Other Tax Information: If your employer reports any amounts in Box 14, they will have a brief description. For example, union dues, tuition assistance, after-tax retirement plan contributions and certain state and local taxes such as State Disability Insurance (SDI) premiums.http://www.irs.gov/publications/p525/ix01.html

Box 15 - State and State Employer's Identification: This is your employers state tax identification number and state. If you worked for the same employer in different states, there will be multiple entries here.

Box 16 - State Wages: This amount is the total taxable wages earned in one state. If you worked for the same employer in multiple state, there may be multiple entries.

Box 17 - State Income Tax Withheld: This is the total amount withheld from your paycheck for state income taxes and is included in the wages reported in Box 16.

Box 18 - Local Wages: This is the total amount of your wages subject to local, city, or other state income taxes.

Box 19 - Local Income Tax Withheld: This is the total amount withheld from your paycheck for local, city, or other state income taxes.

Box 20 - Locality Name: A brief description of the local, city, or other state tax being paid. For example a city name or a state tax such as State Disability Insurance (SDI) payments.http://taxes.about.com/od/formw2/a/IRSFormW2_4.htm

Form W-2 Box 12 - Deferred compensation and other compensation. Several types of compensation and benefits can be reported in Box 12. The different types will be represented by a letter code and are as follows:

Code A – Uncollected Social Security or RRTA tax on tips.*

Code B – Uncollected Medicare tax on tips.*

Code C – Taxable benefit of Group Term life Insurance over $50,000: already included in Boxes 1, 3, and 5.

Code D – Non-taxable elective salary deferrals to a 401(k) or SIMPLE 401(k) Retirement Plan.http://www.irs.gov/taxtopics/tc424.html

Code E – Non-taxable elective salary deferrals to a 403(b) Retirement Plan.http://www.403bwise.com/

Code F – Non-taxable elective salary deferrals to a 408(k)(6) SEP retirement plan.http://www.irs.gov/retirement/article/0,,id=111419,00.html

Code G – 457(b) retirement plan and non-taxable elective salary deferral contributions.http://www.irs.gov/retirement/article/0,,id=172437,00.html

Code H – Non-taxable elective salary deferrals to a 501(c)(18)(D) tax-exempt plan.http://www.irs.gov/charities/charitable/article/0,,id=96099,00.html

Code J – Non-Taxable sick pay. This is not a taxable amount.

Code K – Excise Tax: A 20% tax on excess "golden parachute" payments.*http://www.taxesindepth.com/info-w2-form-codes.html

Code L – Employee business non-taxable expense reimbursements.

Code M – Uncollected Social Security or RRTA tax on taxable Group Term life insurance over $50,000 for former employees.*

Code N – Uncollected Medicare tax on taxable Group Term life insurance over $50,000 for former employees.*

Code P – Non-taxable reimbursements for employee moving expenses: Amount paid directly to employee.http://www.taxesindepth.com/info-w2-form-codes.html

Code Q – Non-taxable combat pay: Combat pay may be included when calculating Earned Income Credit.http://apps3.irs.gov/newsroom/article/0,,id=129833,00.html

Code R – Employer contributions to an Archer Medical savings account: Use Form 8853 for IRS reporting.http://www.irs.gov/pub/irs-pdf/i8853.pdf

Code S – Non-taxable salary deferral to a 408(p) SIMPLE retirement plan.http://www.irs.gov/pub/irs-tege/irc408.pdf

Code T – Employer paid adoption benefits. Form 8839 must be used to calculate the taxable and non-taxable portion of these benefits.http://www.irs.gov/pub/irs-pdf/i8839.pdf In Code V – Income from the exercise of non-statutory stock options. This is taxable income included in Boxes 1, 3, and 5.http://www.irs.gov/pub/irs-drop/a-01-92.pdf

Code W – Employer contributions to your health savings account. Report this amount on IRS Form 8889.http://www.irs.gov/pub/irs-pdf/i8889.pdf

Code Y – 409A and other non-qualified compensation plan deferrals.http://www.irs.gov/newsroom/article/0,,id=172883,00.html

Code Z – 409A non-qualified deferred compensation plan income which is subject to additional tax and interest but is already included in Box 1.http://apps.irs.gov/newsroom/article/0,,id=172883,00.html

Code AA – After-tax contributions to a Roth 401(k) retirement plan.

Code BB – After-tax contributions to a Roth 403(b) retirement plan.http://www.irs.gov/pub/irs-pdf/fw2.pdf

• This amount is part of your total tax included on Form 1040.