Wages and Salaries

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Wages and salaries are payments received by an employee for performing services for an employer. Generally, any payment received for performing personal services must be included in your gross income. Amounts withheld from pay for income tax, social security and Medicare taxes, pensions, insurance, and union dues are considered "received" and must be included in gross income in the year they are withheld. Generally, your employer's contribution to a qualified pension plan for you is not included in gross income at the time it is contributed. However, amounts withheld under certain salary reduction agreements with your employer may have to be included in gross income in the year they are withheld.

If an employer pays your social security and Medicare taxes without withholding those amounts from your pay, that amount is considered pay and must be included in your gross income.

Payments received for cancellation of employment are included in gross income, in the year received, and should be reported the same as wages and salaries. This statement is true even if the payment was received as settlement under the Age Discrimination and Employment Act.

Your employer should provide a Form W-2 (PDF) showing your total income and withholding for the year. Total the wage and salary amounts reported on all your W-2 forms. (If filing a joint return, you must also include all amounts reported to your spouse on your spouse's W-2 forms). Enter the amount on the appropriate line for wages, salaries, and tips on your tax return. Also total the federal income tax withheld from all your W-2 forms, and your spouse's W-2 forms if filing a joint return. The federal income tax withheld is in Box 2 of your W-2 form. Enter the total federal income tax withheld on the line for withholding on your tax return. Attach a copy of each Form W-2 to the front of your tax return as indicated in the instructions for your return. Please note that Form 1099-MISC (PDF) generally reports self-employment income. Note: Topic 407 provides information on Business Income.

If you receive another Form W-2 after your return is filed, you must file an amended tax return, Form 1040X (PDF). Amended Returns provides information on amended returns.

If you have not received your 2004 Form W-2 by January 31, 2005, select 2004 Forms W-2 and Form 1099-R (What to Do if Not Received) for assistance.

Source: IRS.gov

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