Wages and salaries are payments you receive as an employee for performing services for your employer. Generally, everything you receive in payment for personal services must be included in your gross income. Amounts withheld from your pay for income tax, social security and Medicare taxes, pensions, insurance, and union dues are considered received by you and must be included in your gross income in the year they are withheld. Amounts withheld under certain salary reduction plans are not included in gross income in the year they are withheld.

If your employer pays your social security and Medicare taxes without deducting them from your gross wages, the amount of tax paid is extra pay to you and must be included in your gross income.

Amounts you receive as severance pay are taxable. Amounts you receive for cancellation of your employment are taxable in the year received and should be reported with your other salary and wages. This is true even if the payment was received as settlement under the Age Discrimination and Employment Act.

Your employer should give you a Form W-2 showing your total income and withholding for the year. Total the amounts from all your Forms W-2. If you are filing a joint return, also include your spouse's wages. Enter the amount on the appropriate line for wages, salaries, and tips on your tax return. Then total the federal income tax withheld from all Forms W-2. Do not confuse this with the social security and Medicare taxes withheld. Enter the total federal income tax withheld on the line for withholding on your tax return. Attach copy B of each Form W-2 to the spot indicated on the front of your tax return.

If you receive another Form W-2 after you file your return, you must file an amended tax return, Form 1040X. Topic 308 provides information on amended returns.

If it is past January 31, 1998, and you have not yet received your 1997 Form W-2, see Topic 154 for assistance.

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