IRS Form W2 Instructions for
2023 Tax Year

1. What is the purpose of the Form W-2?

Form W-2 is a wage tax form used to report the gross wages paid to employees and the taxes (social security, income, and Medicare) withheld from these employees to the SSA (Social Security Administration).

2. Line by Line Instructions to complete your Form W2

Completing your W-2 accurately is as important as paying the taxes. Incomplete or incorrect information in your W-2s may attract penalties. To stay away from unnecessary penalties, complete your W2s free of errors. To help you with this, we will explain each box of Form W2 and the information to be entered in it.

Let’s have a quick look at W2 instructions:

• Box a - Employee’s Social Security Number

  Enter the employee’s 9-digit SSN.

• Box b - Employer Identification Number (EIN)

  Enter the EIN assigned by the IRS. You should not truncate the EIN or use your SSN. If you don’t have an EIN when e-filing, you can enter all 0s. You can then apply for EIN by filing SS-4.

• Box c - Employer name, address, and ZIP code

  Enter the employer’s name and complete address, including ZIP code. As per the U.S. Postal Service, do not use commas or periods in return addresses.

• Box d - Control number

  You may use this box to provide a reference number to identify each W-2. This is an optional box.

• Box e - Employee’s name

  Enter the complete name, including first name, middle initial, and last name.

• Box f - Employee’s address and ZIP code

  Enter the number, street, and apartment or suite number. As per the U.S. Postal Service, do not use commas or periods in return addresses.

• Box 1 - Wages, tips, other compensation

  Enter the total taxable wages, tips, prizes, bonuses, and other compensation that you paid to your employee for the year. Box 1 does not include any tax benefits such as savings contributions to a 401(k) plan, 403(b) plan, or health insurance.

• Box 2 - Federal income tax withheld

  Enter the total federal income tax that was withheld from your employee's wages for the year.

• Box 3 - Social security wages

  Enter the total wages paid subject to the employee Social Security tax. For the 2023 tax year, the maximum social security wage base is $160,200. The sum of boxes 3 and 7 should not exceed $160,200.

  If you’re reporting for Household Employees for the tax year 2023, the sum of Social Security Wages and Tips must be equal to or greater than $2,600.00.

  If this sum is less than $2,600.00, enter zeros in the Social Security Wages & Social Security Tips boxes.

  

  Note: The SSA will reject your return if the sum is non-zero and less than $2,600

• Box 4 - Social security tax withheld

  Enter the total employee social security tax (excluding employer share) withheld, including social security tax on tips. For 2023, the amount should not exceed $9,932.4 ($160,200 × 6.2%).

• Box 5 - Medicare wages and tips

  Enter the employee’s wages and tips subject to Medicare tax. There is no wage base for Medicare taxes.

  If you’re reporting for Household Employees for the tax year 2023, the sum of Medicare Wages and Tips must be equal to or greater than $2,600.00.

  If this sum is less than $2,600.00, enter zeros in the Medicare Wages & Tips boxes.

  

  Note: The SSA will reject your return if the sum is non-zero and less than $2,600.

• Box 6 - Medicare tax withheld

  Enter the total amount of Medicare tax withheld. This amount includes:

  • 1.45% Medicare tax withheld on all Medicare wages and tips shown in Box 5
  • 0.9% Additional Medicare tax on any FICA or RRTA compensation paid above $200,000

  Include only the tax withheld for 2023 wages and tips, do not include employer share.

• Box 7 - Social security tips

  Enter any tips the employee reported to the employer. The sum of boxes 3 and 7 should not exceed $160,200 (for 2023).

• Box 8 - Allocated tips (not applicable to Forms W-2AS, W-2CM, W-2GU, or W-2VI)

  Enter any tips that were allocated to the employee. Allocated tips amount should not be included in
  Boxes 1, 3, 5, or 7.

  

• Box 10 - Dependent care benefits (not applicable to Forms W-2AS, W-2CM, W-2GU, or W-2VI)

  Enter the total dependent care benefits provided under a dependent care assistance program. Include any amounts over $5,000 in boxes 1, 3, and 5.

• Box 11 - Nonqualified plans

  Enter the total amount distributed to employees from the employer’s non-qualified deferred compensation plan or non-government Section 457 pension plan.

• Box 12 - W2 instruction Codes For Compensation and Benefits

  Enter the appropriate W2 box 12 codes and enter the amount in this box. Codes and its description are given below:

  Box 12 Codes	Description
  A	Enter the code "A" to show the uncollected social security or RRTA tax on tips. Do not include this amount in box 4.
  B	Enter the code "B" to show the uncollected Medicare tax on tips. Do not show any uncollected Additional Medicare Tax. Do not include this amount in box 6.
  C	Taxable cost of group-term life insurance over $50,000
  D	Enter the code "D" to show the elective deferrals under a section 401(k) cash or deferred arrangement (plan).
  E	Enter the code "E" to show the elective deferrals under a section 403(b) salary reduction agreement.
  F	Enter the code "F" to show the elective deferrals under a section 408(k) (6) salary reduction Simplified Employee Pension plan (SEP).
  G	Enter the code "G" to show the elective deferrals and employer contributions (including non elective deferrals) to any governmental or nongovernmental section 457(b) deferred compensation plan.
  H	Enter the code "H" to show the elective deferrals under section 501(c) (18)(D) tax-exempt organization plan.
  J	Enter the code “J” to show the non-taxable sick pay.
  K	Enter the code “K” to show the 20% excise tax on excess golden parachute payments.
  L	Substantiated employee business expense reimbursements.
  M	Enter the code "M" to show the uncollected social security or RRTA tax on taxable cost of group-term life insurance over $50,000 (for former employees).
  N	Enter the code "N" to show the uncollected Medicare tax on taxable cost of group-term life insurance over $50,000 (for former employees).
  P	Enter the code “P” to show the excludable moving expense reimbursements paid directly to a member of the U.S. Armed Forces.
  Q	Nontaxable combat pay (only for military personnel).
  R	Enter the code “R” to show the employer contributions to an Archer MSA.
  S	Enter the code “S” to show the Employee salary reduction contributions under a section 408(p) SIMPLE plan.
  T	Enter the code “T” to show the adoption benefits.
  V	Enter the code “V” to show the Income from the exercise of nonstatutory stock option(s). Include this amount in boxes 1, 3 (up to the social security wage base), and 5.
  W	Enter the code “W” to show the Employer contributions to a health savings account (HSA).
  Y	Enter the code “Y” to show the deferrals under section 409A on a nonqualified deferred compensation plan.
  Z	Enter the code “Z” to show the income under a nonqualified deferred compensation plan that fails to satisfy section 409A.
  AA	Enter the code "AA" to show the designated Roth contributions under a section 401(k) plan.
  BB	Enter the code "BB" to show the Designated Roth contributions under a section 403(b) plan.
  DD	Enter the code "DD" to show the cost of employer-sponsored health coverage.
  EE	Enter the code “EE” to show the designated Roth contributions under a governmental section 457(b) plan.
  FF	Enter the code “FF” to show the permitted benefits under a qualified small employer health reimbursement arrangement. The maximum reimbursement for an eligible employee for 2022 is $5,450 and $11,050 for families.
  GG	Enter the code “GG” to show the Income from qualified equity grants under section 83(i).
  HH	Enter the code “HH” to show the aggregate deferrals under section 83(i) elections as of the close of the calendar year.

• Box 13 - Checkboxes

  • Check the Statutory employee box for statutory employees whose wages are subject to social security and Medicare taxes, but not subject to federal income tax withholding.
  • Check the Retirement plan box if the employee is an active participant in any of the following.
    • A qualified pension, profit-sharing, or stock-bonus plan described in section 401(a) (including a 401(k) plan).
    • An annuity plan described in section 403(a).
    • An annuity contract or custodial account described in section 403(b).
    • A simplified employee pension (SEP) plan described in section 408(k).
    • A SIMPLE retirement account described in section 408(p).
    • A trust described in section 501(c)(18).
    • A plan for federal, state, or local government employees or by an agency or instrumentality thereof (other than a section 457(b) plan).
  • Check the W2 Third-party sick pay box if you are a third-party sick payer filing a Form W-2 for an insured employee or an employer reporting sick pay payments made by a third party.
  

  Note: Check all boxes that apply.

• Box 14 - Other

  Employers use this box 14 to report information such as:

  • State disability insurance taxes withheld
  • Union dues
  • Uniform payments
  • Health insurance premiums deducted
  • Nontaxable income
  • Educational assistance payments
  • A member of the clergy’s parsonage allowance and utilities
  • Charitable contributions made through payroll deduction
  

• Box 15 - State Information

  Report the employer's state and state tax identification number

• Box 16 - State wages, tips, Information

  Report the total amount of taxable wages employees earned in that state.

• Box 17 - State income tax

  Report the total amount of state income taxes withheld from the paychecks for the wages reported in Box 16.

• Box 18 - Local wages, tips, etc

  Report the total amount of wages subject to local or city income taxes.

• Box 19 - Local income tax

  Report the total amount of taxes withheld from wages for local or city income taxes.

• Box 20 - Locality name

  Provide information on your locality name for which the tax is being paid.

General Instruction for Boxes 15 to 20

These boxes can be used to report wages and taxes for two states or localities. Enter state and local information in separate lines.

3. What is Box D on W2 form?

Box D in Form W-2 is used to report the control number. It may or may not be left blank, depending on whether or not your business uses control numbers. A control number is used to identify your form. It allows for organized record-keeping. It is usually assigned by an employer’s payroll software. The lack of a w2 control number will not affect your return in any way.

4. How to fill out Form W-2 with TaxBandits?

Generally, the SSA accepts both the paper filing and electronic filing of W2 online. However, e-filing is the most preferred method because of its convenience and faster processing rate.

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