5 Key Things A W-2 Form Tells You On Everfi

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As an employee, understanding your W-2 form is crucial for tax purposes and ensuring you receive the correct compensation. Everfi, a financial education platform, provides valuable insights into the world of personal finance, including the intricacies of W-2 forms. In this article, we'll delve into the 5 key things a W-2 form tells you, helping you navigate the complex landscape of taxation and employee benefits.

What is a W-2 Form?

Before diving into the details, let's briefly discuss what a W-2 form is. A W-2 form, also known as the Wage and Tax Statement, is a document employers provide to their employees and the Social Security Administration (SSA) at the end of each year. It outlines an employee's income, taxes withheld, and other relevant details. As an employee, you'll use this form to file your tax return with the IRS.

1. Your Income and Wages

The first and most obvious piece of information on a W-2 form is your income and wages. Box 1 on the form displays your total wages, tips, and other compensation for the year. This amount includes your regular salary, overtime pay, bonuses, and any other forms of income you received from your employer.

2. Federal Income Taxes Withheld

Federal Income Taxes: A Breakdown

Your W-2 form also shows the amount of federal income taxes withheld from your paycheck throughout the year. This amount is calculated based on your income, filing status, and the number of dependents you claim. Box 2 on the form displays the total federal income taxes withheld.

• Single filers: 12% to 37% of income
• Married filing jointly: 10% to 37% of income
• Married filing separately: 10% to 37% of income

3. Social Security and Medicare Taxes

In addition to federal income taxes, your W-2 form also shows the amount of Social Security and Medicare taxes withheld from your paycheck. These taxes fund social security benefits and healthcare for seniors, people with disabilities, and low-income individuals.

• Social Security tax: 6.2% of income (employer matches this amount)
• Medicare tax: 1.45% of income (employer matches this amount)

4. State and Local Taxes

State and Local Taxes: A Brief Overview

Depending on your location, you may also see state and local taxes withheld from your paycheck. These taxes fund various state and local government programs, such as education, transportation, and public safety.

• State income tax: varies by state (some states have no income tax)
• Local income tax: varies by locality (some localities have no income tax)

5. Other Benefits and Deductions

Finally, your W-2 form may also include information about other benefits and deductions, such as:

• Health insurance premiums
• Retirement plan contributions
• Flexible spending account (FSA) contributions
• Other benefits, such as life insurance or disability insurance

In conclusion, your W-2 form provides valuable insights into your income, taxes, and benefits. By understanding these key details, you'll be better equipped to navigate the complex landscape of taxation and employee benefits. Take the time to review your W-2 form carefully, and don't hesitate to reach out to your employer or a tax professional if you have any questions or concerns.

What's Next?

Now that you've learned more about the 5 key things a W-2 form tells you, take the next step in your financial education journey. Explore Everfi's resources on personal finance, tax planning, and employee benefits to become a more informed and empowered individual.

Share Your Thoughts!

Have you ever had questions about your W-2 form or taxes in general? Share your thoughts and experiences in the comments below! We'd love to hear from you and help you navigate any financial challenges you may be facing.