Wages and salaries are payments received by an employee for performing services for an employer.
Generally, any payment received for performing personal services must be included in your gross income.
Amounts withheld from pay for income tax, social security and medicare taxes, pensions, insurance,
and union dues are considered "received" and must be included in gross income in the year they are withheld.
Generally, your employer's contribution to a qualified pension plan for you are not
included in income at the time contributed. However, amounts withheld under certain
salary reduction agreements with your employer may have to be included in gross income
in the year they are withheld.
If an employer pays your Social Security and Medicare taxes without withholding them from your pay,
that amount is considered pay and must be included in your gross income.
Payments received as severance pay are included in your gross income. Payments received for
cancellation of employment are included in gross income, in the year received, and should be reported
as other wages and salaries. This is true even if the payment was received as settlement under the
Age Discrimination and Employment Act.
Your employer provides a Form W2 showing your total income and withholding for the year.
Total the wage and salary amounts reported on all your W2 forms. (If filing a joint return,
you must include amounts reported to your spouse on W-2 forms). Enter the amount on the appropriate
line for wages, salaries, and tips on your tax return. Also total the federal income tax withheld
from all your W-2 forms, and your spouse's W-2 forms if filing a joint return.
(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 W2 as indicated on the front of your tax return.
Please note that Form 1099 income is generally not reported as wages or salaries.
If you receive another Form W-2 after your return is filed, you must file an amended tax return,
Form 1040X. Topic 308 provides information on amended returns.
If it is after January 31, 2001, and you have not received your 2000 Form W-2, see
Topic 154 for assistance.
For more information see Publication 17,
Your Federal Income Tax, Chapter 6, Wages, Salaries, and Other Earnings;
Publication 525, Taxable and Nontaxable Income;
or Frequently Asked Questions, Types of Income.
Forms and publications may be downloaded from this web site,
or ordered by calling 1-800-829-3676.
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