At this point in the year, you should have or should be expecting your W-2 or 1099 this week. I wanted to provide you with some information to help you review your document before file your taxes. You should review your W-2 or 1099 against your last paystub for 2013 or your payment history for each client. The goal is to have your documentation match what is being reported to the IRS on your behalf.
Brief Overview of the W-2
Box 1= Wages, tips, other compensation: This is the amount that will be entered on the wages line of your tax return.
Box 2= Federal income tax withheld by your employer.
Box 3 = Social security tax withheld
Box 6= Medicate tax withheld.
Box 16= Wages, tips, other compensation taxable by your state.
Box 17=State income tax.
Other information on the W-2:
Box 8= Allocated tips.
Box 10= Dependent care benefits. Total dependent care benefits that were paid to you by your employer or incurred on your behalf.
Boxes 11 through 14= Information regarding benefits your received from your employer.
If you are still not quite sure about some boxes on the W-2, there are descriptions on the back.
Brief Overview of the 1099-MISC
Box 1= The sum of payments $600 when someone pays you rent for office space, farmland or pasture, or machinery.
Box 2= Any royalties you received in excess of $10. Royalties generally cover license fees for copyrights, patents and trademarks.
Box 3= Payments over $600 that do not fit into any other category not like prize winnings or termination payments not considered wages.
Box 5 = Payments made to you from the sale of fish if you’re a fisherman.
Box 6= Payments received for providing health care services.
Box 7= Payments of $600 or more you earn from an individual or business. This box is used typically work as an independent contractor. Boxes 4 and 16, which report federal and state income tax withholding, should be empty.
Box 9= Money received from the sale of certain consumer goods.
This form provides a brief description of each box on the back.
If you still have questions about these two forms or any other tax form, you can always ask me!
Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”.
"Putting My Money Where My Mouth Is" is a journal about real life experiences and concerns of Jéneen R. Perkins. The purpose of the blog is to exhibit the real life challenges and answer the tough questions posed by the concepts of business, entrepreneurship and money.