Form W-2 (2016) Employee Checklist
Purpose and Reporting Requirements
Form W-2 reports your 2016 wages, federal income tax withholding, state and local tax withholding, and Social Security and Medicare taxes paid throughout the year. Your employer must provide this form to document all taxable compensation you received during the calendar year.
The form includes employer-sponsored health coverage costs reported in Box 12 using Code DD, which remains informational only and does not increase your taxable income. Box 6 reflects both the standard 1.45 percent Medicare tax and the 0.9 percent Additional Medicare Tax when your wages exceed the $200,000 withholding threshold.
Wage and Federal Tax Withholding Verification
Box 1 reports your total wages, tips, and other compensation subject to federal income tax withholding for the 2016 calendar year. Verify this amount matches your personal records and includes all taxable compensation, such as wages, salaries, bonuses, taxable fringe benefits, and taxable tips you reported to your employer.
Allocated tips appear separately in Box 8 and require you to file Form 4137 even when your actual tip receipts differ from the allocated amount. Box 2 shows the total federal income tax your employer withheld from your 2016 wages, and any overpayment may generate a refund or allow you to claim credits.
Medicare Tax and Additional Medicare Tax
Box 5 reports your total Medicare wages and tips for 2016, while Box 6 shows the Medicare tax your employer withheld from your compensation. When your Box 5 wages exceed $200,000, your employer must withhold both the standard 1.45 percent Medicare tax on all wages and the additional 0.9 percent Additional Medicare Tax on wages exceeding the threshold.
Box 6 combines both Medicare tax components into a single withholding amount for reporting purposes. You must complete Form 8959 when filing your tax return to calculate any additional Medicare tax liability or reconcile amounts withheld throughout the year.
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
Dependent Care and Nonqualified Plan Benefits
Box 10 reports the total dependent care benefits your employer provided or that you incurred under a qualified dependent care assistance program during 2016. The first $5,000 of dependent care benefits remains nontaxable and does not appear in Box 1 wages.
Any amount exceeding $5,000 becomes taxable compensation, appears in Box 1, and requires you to complete Form 2441 to determine proper tax treatment. Box 11 reports distributions from nonqualified deferred compensation plans or Section 457(b) nongovernmental plans, with amounts appearing in Box 1 or Boxes 3 and 5 based on prior-year deferral status.
Elective Deferral Limits for 2016
The 2016 elective deferral limit for 401(k), 403(b), and governmental 457(b) plans is $18,000, with an additional $6,000 catch-up contribution allowed for employees age 50 or older. SIMPLE IRA and SIMPLE 401(k) plans have a separate deferral limit of $12,500, with an additional $3,000 catch-up contribution for employees age 50 or older.
Employees of qualifying organizations with 15 or more years of service may contribute additional amounts to 403(b) plans under the special 15-year rule. Box 12 uses specific letter codes to report these deferrals and other compensation items requiring separate identification.
Box 12 Reporting Codes
Use these codes in Box 12 to identify specific types of compensation and benefits:
- Code D: Elective deferrals to 401(k) plans
- Code E: Elective deferrals to 403(b) plans
- Code F: Elective deferrals to 408(k)(6) plans
- Code G: Elective deferrals to 457(b) plans
- Code S: Salary reduction contributions to SIMPLE plans
- Code DD: Cost of employer-sponsored health coverage (informational only)
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
Code DD reporting became mandatory for most employers beginning with the 2012 tax year. The amount reported is informational only and does not increase your taxable income. This reporting requirement supports Affordable Care Act transparency without changing the tax treatment of employer-provided health benefits.
Retirement Plan Coverage Impact
Box 13 contains checkboxes indicating your participation in employer-sponsored retirement plans during any part of 2016. The retirement plan checkbox signals coverage by an employer retirement plan, which may limit your ability to deduct traditional IRA contributions based on your modified adjusted gross income.
This designation applies regardless of whether you made elective deferrals or received employer contributions during the year. Coverage under an employer retirement plan triggers income phase-out rules that reduce or eliminate your IRA deduction depending on filing status and total income.
Social Security Tax Credit for Multiple Employers
The 2016 Social Security wage base was $118,500, with an employee tax rate of 6.2 percent, resulting in a maximum Social Security tax of $7,347. When you work for multiple employers, and your total wages exceed $118,500, each employer withholds Social Security tax independently up to the wage base limit.
You can claim a credit for Social Security tax withheld exceeding $7,347 on your Form 1040 when combined wages from all employers surpass the annual wage base. Railroad employees with multiple railroad employers may claim a credit for excess Tier 1 Railroad Retirement Tax Act tax.
Allocated Tips and Form 4137
Box 8 reports the allocated tips your employer assigned to you under the large food or beverage establishment allocation rules. These allocated tips do not appear in Box 1 and were not subject to withholding at allocation.
You must report allocated tips on your tax return and pay Social Security and Medicare taxes by filing Form 4137 with your return. You may exclude allocated tips from income only when your records demonstrate actual tip receipts were smaller than the allocated amount.
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
State and Local Tax Information
Boxes 15 through 20 report state and local tax information, including employer state identification number, state wages, state income tax withheld, locality name, local wages, and local income tax withheld. Verify this information matches your filing jurisdiction requirements and corresponds to amounts you report on state and local tax returns.
State and local wage amounts may differ from Box 1 federal wages due to state-specific inclusions or exclusions. Request Form W-2c from your employer to correct discrepancies in name, Social Security number, address, or reported amounts.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
