Understanding Your W-2, Part 2

This is part 2 of a series explaining the boxes that appear on your Form W-2.

In Part 1, I looked at Boxes 1-8.  Now we’ll start with Box 9:

Box 9 (advance Earned Income Credit):  Certain taxpayers who qualify for the Earned Income Credit have been able to take the credit in advance on their paychecks.  Starting in 2011, this option is no longer available, so Box 9 will be something else going forward (on the draft 2011 W-2, Box 9 is “grayed out”).

Box 10 (dependent care benefits):  This box reports amounts you deferred into a cafeteria plan for daycare expenses.  It also reports the amount of daycare expenses your employer paid on your behalf.

Box 11 (nonqualified plans):  This box reports amounts distributed to you from a “nonqualified plan” and from non-governmental 457(b) plans.  Nonqualified plans are deferred compensation plans that generally benefit key executives and are not required to meet the “non-discrimination” requirements that a 401(k) plan has to meet.

Box 12:  This box reports any number of transactions, but for most people this box will include salary deferrals into a 401(k) plan (shown as “Code D”)  This box may also include moving expenses reimbursed by your employer, and adoption benefits received during the year.  In total, there are approximately 25 different letter codes that could be shown in Box 12, but again, the most common will be Code D for 401(k) deferrals.

Box 13:  If you participated in an employer-provided retirement plan such as a 401(k), the “Retirement Plan” box will be marked.  If this box is marked, it means the amount of deduction you can take for contributions to an IRA is limited.  The “statutory employee” box will be marked if you are treated as an independent contractor under common law, but are treated as an employee for Social Security tax purposes (that’s the very short and sweet definition!).  The “Third-Party Sick Pay” box will be marked if the W-2 is reporting sick pay received from someone other than your employer.