Based on a typical Form W-2, which of the following boxes shows the total taxable wages, tips, and other compensation subject to federal income tax withholding?

• A. Box 2
• B. Box 3
• C. Box 4
• D. Box 1

Answer: (D)

Verified step by step guidance

1. Understand the purpose of Form W-2: It is a tax form used by employers to report wages paid to employees and the taxes withheld from those wages during the year.
2. Review the contents of Box 1 on Form W-2: Box 1 reports the total taxable wages, tips, and other compensation subject to federal income tax withholding. This includes salary, bonuses, and other taxable income, but excludes pre-tax deductions like contributions to retirement plans or health insurance premiums.
3. Compare Box 1 with other boxes: Box 2 reports the amount of federal income tax withheld, Box 3 reports Social Security wages, and Box 4 reports Social Security tax withheld. These boxes serve different purposes and do not represent total taxable wages.
4. Understand why Box 1 is the correct answer: Box 1 specifically reflects the taxable income that is subject to federal income tax withholding, making it the relevant box for this question.
5. Apply this knowledge to similar scenarios: When analyzing Form W-2, always identify the purpose of each box to ensure accurate interpretation of taxable wages and other tax-related information.