Anatomy of a 2014 W-2 Statement

Tax season is upon us, and W-2 tax forms must be issued by January 31 so that employees will have time to complete their tax returns. Information on the W-2 determines whether the individual owes tax or is due a refund, and those who expect a refund are, of course, most anxious to get their returns in early. Because a picture is worth a thousand words, below is a graphic that may help you navigate the form.

The Affordable Care Act again requires employers to report any "applicable employer-sponsored coverage" provided under an employer-sponsored group health plan. The cost of employer-sponsored health coverage is reported in Box 12 with the code DD, and is not taxable. It should include both the portion paid by the employer and the portion paid by the employee. Also, Box 12a is where employees can see 401k contributions.

Key Changes to W-2 Reporting for 2014

For Employees: Rejected wage reports from the SSA

The Social Security Administration (SSA) will not accept 2014 electronic or paper wage reports (Form W-2) with the following conditions:

  • Medicare wages and tips are less than social security wages and tips.
  • Social security tax is greater than zero; social security wages and tips are equal to zero.
  • Medicare tax is greater than zero; Medicare wages and tips are equal to zero.

For Employers: Third Party Sick Pay

For 2014, employer third party sick pay reports now go to the IRS on Form 8922. More information on sick pay reporting, including third party sick pay recap reporting, can be obtained from IRS Publication 15-A, Employer’s Supplemental Tax Guide.

More Helpful Information

We have developed this guide you can download and hand out to employees who need more information on how to read their W-2s. As always, if you have any questions or want more information, please feel free to contact us.

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