What the hell is a W-2? Why did my boss give this to me?

So for those of you kids that work part time you probably received a form called W-2 from your boss in past few weeks. Before you throw it away, there are a few boxes you may want to take a look at before.

Box 1: Wage, tips , other compensation is the gross (before taxes) income that you earned last year. Does it seem low? It probably will considering as a part timer you haven’t worked much. Here are a few tips to make the numbers in that box increase next year. Work more or ask for a raise!

Okay so the most important box you want to look at is Box 2: Federal income tax withheld. Depending on what you filled out on your W-4 when you first started working and how much you made, you will either have nothing in that box or something. The more you have in that box the larger the refund or the less taxes you will owe when you file. That’s right! You already paid taxes on your paycheck and now they make you pay more taxes? Double taxation! What a county..

*Information below is based off me assuming you are a dependent meaning your parents have you down on their tax return as their child. If you are under age 24 and a fulltime student, you are probably a dependent*

So back to Box 1, if it’s larger than $5,700 you are required to file a tax return because you will owe the federal government money and Uncle Sam wants it.

If it’s less than $5,700 you are not required to file a tax return. However, if you have anything in Box 2, you will want to file because you will get 100% of that money back as a refund.

For California purposes, if box 16 is larger than $3,637 you will have to file a tax return because you will owe money.

If you make less than that you are not required to file a California state tax return, but if you have a number in box 17 (state income tax), you may want to consider filing your taxes because like above, you will get 100% of that money back as a refund.

And to conclude, if your parents claim you as a dependent on their tax return, the chances are high that they are collecting money off you and not saying anything! They are getting a $1,000 refund just by having you as a child. Claim what is rightfully yours! Ask your parents to share it with you.

- CP

1 comment:

401k said...

This post would be easier if you showed us an example of a W2! Like maybe YOUR W2?