How Do I Add a W2 For My Dependent?

A W-2, or Wage and Tax Statement, reports an employee’s annual wages and taxes withheld. This form summarizes earnings and contributions to federal, state, and local taxes, and is used for filing income tax returns. Dependents often receive a W-2 if they work part-time, during the summer, or complete an internship.

Dependent Income and Filing Requirements

W-2 income is considered earned income, which plays a role in determining whether a dependent needs to file a tax return. Generally, a dependent must file their own federal income tax return if their gross income, including W-2 wages, exceeds the standard deduction amount for dependents. A filing requirement also arises if they had any federal income tax withheld by their employer.

However, a dependent might not need to file a return if their income is very low, they had no tax withheld, and they have no other filing obligations. W-2 income earned by a dependent is almost always reported on their own tax return, not directly added to a parent’s Form 1040.

Even if a dependent is not required to file based on income thresholds, filing a return can be beneficial. Many dependents choose to file simply to recover any federal income tax that was withheld from their paychecks throughout the year. This action allows them to receive a refund for overpaid taxes, even if their income falls below the mandatory filing threshold.

Required W-2 Information

Box 1 shows the total taxable wages, tips, and other compensation an employee received during the year. This amount represents the income subject to federal income tax. Box 2 reports the amount of federal income tax that was withheld from the employee’s paychecks, which is crucial for calculating any refund or tax due.

Boxes 3 and 5 detail the wages subject to Social Security and Medicare taxes, respectively. Box 4 indicates the amount of Social Security tax withheld, while Box 6 shows the Medicare tax withheld. These amounts contribute to an individual’s Social Security and Medicare benefits. For state income tax purposes, Box 16 displays the wages subject to state tax, and Box 17 reports the state income tax that was withheld, if applicable.

Entering W-2 Data for Tax Filing

When preparing a tax return for a dependent who has received a W-2, the information from the form must be accurately entered. Tax preparation software, such as those commonly available online, typically guides users through this process.

To begin, navigate to the income section of the tax software and select the option for “Wages & Salaries” or “W-2.” You will then be prompted to enter the Employer Identification Number (EIN) from Box b of the W-2, followed by the employer’s name and address. Subsequently, you will input the amounts from each relevant box:

• Box 1 (Wages, tips, other compensation)
• Box 2 (Federal income tax withheld)
• Box 3 (Social Security wages)
• Box 4 (Social Security tax withheld)
• Box 5 (Medicare wages and tips)
• Box 6 (Medicare tax withheld)

If state or local taxes were withheld, you will also enter the amounts from Box 16 (State wages, tips, etc.) and Box 17 (State income tax withheld). The software is designed to guide you through the entry of federal, state, and any local wage and withholding information, ensuring all necessary data is captured for the dependent’s tax return calculation.