If you were employed during 2016, you should receive your Form W-2 (officially known as the Wage and Tax Statement) from your employer soon since employers were required to send them out by January 31, 2017. If you were self-employed, or worked on a contract basis with no taxes withheld, your income may be reported to you on different tax forms: a 1099-MISC or 1099-K, which you should also see soon.
The Affordable Care Act requires employers to report the cost of offered employee insurance coverage under an employer-sponsored group health care plan on the W-2 they issue to you. That information will appear in Box 12 of your Form W-2, identified by the Code DD. But don’t worry– just because the information appears on your W-2 doesn’t mean it is taxable to you. These benefits have always been tax-free, and the information is there so you can better understand the cost of the health insurance benefit you receive through your employment.
Here are some tips for reviewing your W-2:
- Notify your employer if your social security number is wrong in Block A, and ask your employer to issue you a corrected form. Don’t try to change it yourself – your employer must send a correct copy to the government for the change to be effective.
- Don’t assume your W-2 is correct – employers make mistakes more often than you might imagine. Compare the figures in Box 1 (federal wages), Box 2 (federal income tax withheld), Box 16 (state wages) and Box 17 (state income tax withheld) to the figures on your final paycheck stub for 2016.
- If your employer paid for your moving costs during the year, review Box 1 to see if those payments are included there. If they are, you’ll be able to claim the moving expense deduction. Skip this step and you may be overpaying your income taxes by missing an important deduction.
- If you don’t receive your W-2 form by the first week of February, contact your employer. If the employer refuses to provide the W-2 to you, contact the IRS at 1-800-829-1040 with the employer’s name, address, telephone number and employer ID number, if you know it. If you still can’t get a W-2 form, file Substitute W-2 Form 4852 with your tax return, based on your final pay stub from that employer for 2016.
Knowing how to read a Form W-2 can help you understand your salary, and also help you get a head-start when preparing your taxes. TurboTax let’s you get a jump start on your taxes by allowing you to snap a photo of your W-2 from your phone or tablet no matter what your tax situation is. TurboTax can also import financial information from 1.3 million employers and financial institutions allowing effortless tax preparation.
There may be other forms you may start seeing soon like Form 1098 for mortgage interest or Form 1095-A, B or C for health insurance information. Don’t worry: TurboTax makes filing your taxes effortless by asking simple questions related to you. You don’t need to know anything about tax forms or tax laws. And keep in mind: per the IRS, you only need to file form 1095-A if you purchased 2016 health insurance in the Health Insurance Marketplace, but you don’t need to wait for a form 1095-B or C. They are for information purposes only. Now get to filing…and that tax refund!