 in this presentation we're finally to the point we've all been waiting for the population of the form w2 this is a copy of a w2 from the irs website at irs.gov it's just an example form to show us what the form will look like support accounting instruction by clicking the link below giving you a free mug membership to all of the content on our website broken out by category further broken out by course each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a u2 page we also include added resources such as excel practice problems pdf files and more like quickbooks backup files win applicable so once again click the link below for a free month membership to our website and all the content on it will then use a mock form in excel to pick up our information note that the w2 form is one that we've all probably received the w2 form telling us how much we have earned and the withholdings that we then use in order to report our responsibility our taxes and related withholdings on our form 1040 it's also important to note that the w2 once we get it we should automatically think and know that when we receive a w2 that the another copy has been sent to the government so the government has a copy of the w2 so we're voluntarily required to report this information on the form 1040 however they're already aware of it on the on the IRS side as well so if we do not report our information from the w2 properly then we'll almost surely get noticed on it we'll get a notification saying that there's an error because it has been reported in other words we as the employer are going to send a copy to our employees as well as a copy to the government as we can see this form consists of the employer identification number the EIN number that we're going to have to report again that's the employer special number for reporting payroll taxes then the employer's name and address a control number the employees first name last name employees zip code so all the data information in order to know who we're talking about here and then we'll get into the boxes which can be more confusing than we may think when we first look at this meaning if we were to look at a w2 and say how much does someone earn most people would probably look at box one but box one it's probably the most deceiving to look at because box one is related to the federal income tax and it could be reduced by things like a cafeteria plan or a retirement plan so it could be significantly less than actual earnings in other words because earnings are you know retirement plan and cafeteria plan things like that are still significant they represent earnings they represent compensation and they're not included in the wages in box one so this this represents wages related to calculating our 1040 federal income tax box two is of course the withholdings for the federal income tax box three also represents wages but may different from box one because it has different deductions would be involved in other words the 401k or a retirement plan may not be included as a deduction from social security wages whereas it would for the wages in federal income tax and they may have hit the cap here which will change from year to year which means that this is not a reliable number either especially as to how much someone actually earns especially if they're a high earner because it's going to be capped that'll be used to calculate the social security tax so here's the social security tax in box four medicare wages probably the highest wages probably the of the three the highest most accurate box to look at for total wages it still may not represent total compensation because of deductions from gross wages for medicare which could include something like a cafeteria plan and we could find that would be reported in box 12 b in somewhere in box 12 and have a an indication which i believe would be a dd which would show us what that medicare or what of the insurance would be and then we have the medicare tax tax withheld here social security tips allocated tips verification code dependent care benefits and then not qualified plans and then we've got the box 12 which we're going to report amongst other things but we're going to report here what will often be reported here is if there's a retirement plan and if there's some kind of cafeteria or insurance plan here as well then we have these these items which are showing whether there is a retirement plan so we have to select whether there is or not other and then the state information down here state identification number state wages state income tax local taxes in the state withholdings if we move to the form w3 so the w3 form is going to be very similar to the w2 form in that it'll in essence just it will just basically summarize the data so if we were to in other words add up all the w2 forms for box one then that should add up in some two box one on the w3 so you can think of the w3 as sort of like a w2 as if all employees were combined into one individual it's going to be the reconciling form or the summing up form of all w2's so you got box one wages box two social security wages box three medicare wages which should add up to the sum of all w2 box one box two and three respectively same as box two federal income tax withheld box four social security tax withheld and box six medicare so let's we're going to look at it kind of a mock of this form here so that we can fill this out so we got a similar kind of form we're going to fill out the blue area here and we've tried to give a you know close representation of the of these boxes here okay so we're going to start with the w2 information and we're just going to try to fill this stuff out as we would from our register obviously it'd be very nice in a system what this would happen automatically or auto from a computer system but we're going to pick this up so we're going to go through the earnings records for each employee so if we go back to the register and I'm scrolling up to the top we've frozen the pains I still froze the pains up here that's going to be on cell m4 m4 then go to the view tab windows group frozen pains and freeze the pains and then we're going to scroll to the right to the earnings records so here's the earnings records this is the information per employee and that's of course what we need when we're working with the payroll so we'll start with Anthony here so Anthony is our first employee and we'll just pick this information up so first we're starting with the the wages and compensation I'm going to say that's going to be equal to and then go back to our register for Anthony now you would think it'd be total earnings but remember we're going to subtract from that the 401k any retirement plan if it if the cafeteria if this was a cafeteria plan then it would be subtract two we're saying it's not here so this is not going to be a reduction from gross wages so it's just the 401k so there we have that and then the federal withholdings the f it so i'm in i uh i5 equals we'll go back to our earnings and we're going to pick up the f it this is the 921 and enter and then we'll go to the social security wages which equals when we go back to our register and we've got the social security wages it's the same as the total earnings it would only it would differ if they hit the cap or if there's some deduction for social security which would include a cafeteria plan uh which this is we're saying again that's not so it's going to be the 20 note that they're going to be different social security tax withheld we're going to say equals and go back to our form or uh our records and earnings records and we're looking for the social security withheld which is this item and enter and then medicare wages equals back to our records now we're going to say it's the total it would only differ if there was something deductible from medicare which would be something like a cafeteria plan so we don't have anything so we're just going to pick that it's just going to be equal to the total earnings then we have the medicare tax withheld so we're just going to say that that equals and go back to our register we're looking for so that's medicare hi hospital insurance then we got that so that's going to be the major components here so note that the most accurate numbers typically the medicare this one's going to be accurate here in terms of total wages earned and wage compensation here is actually the least accurate because it's it could be reduced significantly depending on someone took advantage of something like a retirement plan which we highly recommend doing if you have the opportunity to do so okay so then we're going to go down to box 12 a and box 12 a is where we're going to put that retirement plan so within box 12 a we're going to say equals and go back to the register and we're going to pick up that 1001 15 and that's the retirement plan so of course if you look at a w2 then typically the difference between say the medicare 2812.5 and box 1 1970 96.85 is represented down here and if you look up the symbol d typically will be for some type of retirement plan now if if this was a cafeteria plan then we would have the cafeteria plan with the dd so we're not or if there's an employer sponsor plan it would be here we're not going to have that here because we're saying that that's included in the wages up in line five would just note that if you had something like a dd down here that would mean that you had something like a cafeteria plan and then this number really wouldn't even represent of the three numbers this being the highest number the most representative of income would still be low too low in order to get to the actual income by the amount of cafeteria plan that would be then reported on 12 b in line 13 usually there's going to be different types of you know three boxes here i'm just going to say the retirement plan and put an x to say that we have the retirement plan here that's basically going to be it here so i've got the employees name and we're going to leave it at that we just want to go through these numbers broadly and see how this thing will tie out to then the w3 so if we scroll back down we're going to take a look at the next w2 we got four of these to fill out so the next w2 is going to be here and we're looking for cindy louis so if we go back to our register i'm just going to scroll down so if i go to the to the left a little bit i'm going to scroll down just so we can see cindy's data so there's that and then go back to our w2 okay so we're just going to do the same thing in box one we've got the wages compensation equals back to our register it's going to be the total earnings i'm going to scroll to the right minus minus the 401k right and not not that it would be subtracting insurance if it was a cafeteria and then we're going to the federal withholding equals we're going to go back to the register and we're going to pick up the fit then we're going to go to the social security wages equals we're going to go back to the register and pick up the social security differing from or it could differ it's not differed now but it could based on if they hit the cap or if there's a cafeteria or some other uh reduction for social security those being the main ones and then social security taxes withheld equals back to our earnings records we're going to go to this item and then our medicare wages equals going back to our earnings it's going to be equal to the total and again that one would only differ because there is no cap if there was some deduction for medicare such as the cafeteria plan so enter and then we're going to go to i33 equals back to our earnings records and we're picking up medicare hi and enter okay so that's going to be the main components social security tips vacation dependent care non-qualified and then we're going to pick up the retirement plan equals we're going to go back to our records and pick up the 401k and again if this was a cafeteria um then it would be here and not included in these lines as income however it for us is included in these lines and therefore we're not reporting it here on 12b okay so then we're going to scroll down to the next employee so and we're going to go over to our register and do the same thing we're going to scroll down to the next employee uh and that's going to be jill jackson so we're going to scroll down okay i'm going to scroll to the right a bit so we can see the data we're going to be using most and then go back to our information here so uh i'm going to delete this for now okay we'll start with box one equals go back to our register it's going to be the total earnings minus the 401k enter then the federal income tax equals we can go back to our register federal income tax is going to be the fit then the social security wages equals back to the register it's going to be this one still the same because there's no cap didn't hit the cap and there's no other deduction for social security and then uh whoop i put it in the wrong area it's going to be here social security wages will be this item and then social security in box 12 the amount that we actually withheld it's going to be equal to the oast i and then we're going to go to the medicare wages which will equals back to the earnings record we're going to say medicare wages is going to be equal to the total earnings unless there was some other type of deduction from it like a like cafeteria so we're going to say no it's going to be that medicare withholding equals back to our earnings and we're going to say that that is the hi here enter and then social security nothing here we got a retirement plan we should have a retirement plan here and then the other thing we want is our 401k here we're going to say this equals go back and pick up the 401k okay and again no cafeteria plan because it's included it's not going to be dd at least because this would mean that it would not be included in uh one three and five and ours is all right last employee we're going to scroll back down we've got the big earner big earner down here which is judy jones so we're going to go back scroll down to judy jones if we scroll over we're looking judy jones here we're going to scroll back down and we're going to go all the way to the right to the data that we are working with uh with total earnings here so go back to here box one is going to equal back to our register it's going to be equal to the total earnings uh minus the 401k and enter and then box two is going to equal and we're back to our register the fit and enter then box three is going to equal the social security wages and this is where she has hit the limit so that's why we have a different social security wages that she's capped out at the 128 400 so this number will be different than this number social security taxes equals and we go to the social security tax which is this number enter note in essence that's the max tax you can pay because it's maxed out at the cap and then the medicare wages for this particular problem that cap could change over time so medicare wages back to the register it's going to be the same as the total earnings because there is no cap and we don't have any other reductions from medicare and then the medicare tax equals back to the register the hi enter okay and that's going to be main the most of it we're going to say that there is a retirement plan and we're going to pick up the 401k here in 12a equals back to the register the 401k and enter okay so now we're just going to sum this information up on the w3 so we're just going to basically pick up all box ones box twos box fives from our information over here so box one equals and scroll back over this number plus this number for our next employee plus same number for our third employee plus same number for our fourth employee okay and there's our total wages we want to reconcile that it should be equal to our totals if we scroll down to our totals down here it should be equal to the 241 206 minus the 1313 871 for all employees 227 335 so here's the 227 335 and then the federal income tax is going to be equal and we'll go back to all the way back up federal this number for our first employee same number for our second employee same number for our third employee where's the third employee same number for our fourth employee and enter and then again that number 42 215 if we go back to our earnings record for all employees 42 215 for f it 42 215 66 and then we'll go back to our records here social security it's going to equal on the w3 it's going to equal social security for our first employee wages social security wages for our second employee social security wages for our third employee social security wages for our fourth employee and enter if we double check that number on the w3 to our records we're looking at this number 194 606 that should be equal to the 194 606 then the social security tax withheld for the w3 will equal the tax withheld for our w2 first employee for the w2 second employee for the w2 third employee for the w2 fourth employee enter and then that number social security tax withheld should match our earnings records for all employees 12 65 57 back to our w2 12 65 57 medicare last one we're going to scroll over medicare wages for the first employee plus medicare wages for the second employee plus medicare wages for the third employee plus medicare wages for the fourth employee enter if we double check that number 241 202 to our records for medicare we're going to say medicare wages is total rate wages 241 206 241 206 yeah that's right and then taxes for medicare equals taxes for the first employee taxes for the second employee taxes for the third employee for medicare and finally taxes for the fourth employee and then we can double check that medicare taxes here 3497 49 that's going to be equal to 3497 49 for the total so that in essence is the w2 and the w3 you can see the w3 is just basically summing up all of the w2s and providing that information note that when we look at these numbers the most accurate number really is this medicare wages and it may not even represent all wages that have been earned if there's something that was deducted from medicare such as a cafeteria plan this number often is not very representative of actual earnings because the social the a retirement plan is significant to reduce and if there's a high earner this number will not be representative of all if someone earns you know if you have a lot of people over the cap that'll be too low so this number is actually probably closest it is usually closest to actual earnings uh for for the w2 and the w3