Instructions For Forms W-2 And W-3 - Wage And Tax Statement And Transmittal Of Wage And Tax Statements - 2006 Page 14

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12. The amount includible as wages because you paid
Taxable cost of group-term life insurance over $50,000
your employee’s share of taxes. See Employee’s taxes paid
included in box 1. See Group-term life insurance on page 6.
by employer on page 6.
Cost of accident and health insurance premiums for 2% or
13. All other compensation, including certain scholarship
more shareholder-employees paid by an S corporation, but
and fellowship grants (see page 7). Other compensation
only if not excludable under section 3121(a)(2)(B).
includes taxable amounts that you paid to your employee
Employee and nonexcludable employer contributions to
from which federal income tax was not withheld. You may
an MSA or HSA. See Archer MSA on page 4 and Health
show other compensation on a separate Form W-2. See
Savings Account (HSA) on page 6.
Multiple forms on page 9.
Employee contributions to a SIMPLE retirement account.
14. Distributions to an employee or former employee
See SIMPLE retirement account on page 7.
from a nonqualified deferred compensation plan (including a
Adoption benefits. See Adoption benefits on page 4.
rabbi trust) or a nongovernmental section 457(b) plan.
Box 4 — Social security tax withheld. Show the total
15. Amounts includible in income under section 457(f)
employee social security tax (not your share) withheld,
because the amounts are no longer subject to a substantial
including social security tax on tips. Do not reduce this
risk of forfeiture.
amount by any advance EIC payments made to the
16. Payments to statutory employees who are subject to
employee. For 2006, the amount should not exceed
social security and Medicare taxes but not subject to federal
$5,840.40 ($94,200 × 6.2%). Include only taxes withheld (or
income tax withholding must be shown in box 1 as other
paid by you for the employee) for 2006 wages and tips. If
compensation. See Statutory employee on page 13.
you paid your employee’s share, see Employee’s taxes paid
17. Cost of current insurance protection under a
by employer on page 6.
compensatory split-dollar life insurance arrangement.
Box 5 — Medicare wages and tips. The wages and tips
18. Employee contributions to a Health Savings
subject to Medicare tax are the same as those subject to
Account (HSA).
social security tax (boxes 3 and 7) except that there is no
19. Employer contributions to a Health Savings Account
wage base limit for Medicare tax. Enter the total Medicare
(HSA) if includible in the income of the employee. See
wages and tips in box 5. Be sure to enter tips that the
Health Savings Account (HSA) on page 6.
employee reported even if you did not have enough
20. Amounts includible in income under a nonqualified
employee funds to collect the Medicare tax for those tips.
deferred compensation plan because of section 409A.
See Box 3 — Social security wages above for payments to
See Nonqualified deferred compensation plans on page 7.
report in this box. If you paid your employee’s share of
21. Designated Roth contributions made to a section
taxes, see Employee’s taxes paid by employer on page 6.
401(k) plan or under a section 403(b) salary reduction
If you are a federal, state, or local agency with employees
agreement. See Designated Roth contributions on page 5.
paying only the 1.45% Medicare tax, enter the Medicare
Box 2 — Federal income tax withheld. Show the total
wages in this box. See Government employers on page 6.
federal income tax withheld from the employee’s wages for
Example of how to report social security and
the year (do not reduce the wages by any advance EIC
Medicare wages. You paid your employee $140,000 in
payments made to the employee). Include the 20% excise
wages. Enter in box 3 (social security wages) 94200.00 but
tax withheld on excess parachute payments. See Golden
enter in box 5 (Medicare wages and tips) 140000.00. There
parachute payments on page 6.
is no limit on the amount reported in box 5. If the amount of
Box 3 — Social security wages. Show the total wages paid
wages paid was $94,200 or less, the amounts entered in
(before payroll deductions) subject to employee social
boxes 3 and 5 would be the same.
security tax but not including social security tips and
Box 6 — Medicare tax withheld. Enter the total employee
allocated tips. See Box 7 — Social security tips and
Medicare tax (not your share) withheld. Include only tax
Box 8 — Allocated tips below. Generally, noncash payments
withheld for 2006 wages and tips. Do not reduce this
are considered to be wages. Include employee business
amount by any advance EIC payments made to the
expense reimbursements reported in box 1. If you paid the
employee. If you paid your employee’s share of the taxes,
employee’s share of social security and Medicare taxes
see Employee’s taxes paid by employer on page 6.
rather than deducting them from wages, see Employee’s
Box 7 — Social security tips. Show the tips that the
taxes paid by employer on page 6. The total of boxes 3 and
employee reported to you even if you did not have enough
7 cannot exceed $94,200 (2006 maximum social security
employee funds to collect the social security tax for the tips.
wage base). Include in box 5 any amounts reported in box 3.
The total of boxes 3 and 7 should not be more than
Report in box 3 elective deferrals to certain qualified
$94,200 (the maximum social security wage base for 2006).
cash or deferred compensation arrangements and to
Report all tips in box 1 along with wages and other
retirement plans described in box 12 (codes D, E, F, G,
compensation. Include any tips reported in box 7 in box 5
and S) even though the deferrals are not includible in box 1.
also.
Also report in box 3 designated Roth contributions made to
Box 8 — Allocated tips. If you are a large food or
a section 401(k) plan or under a section 403(b) salary
beverage establishment, show the tips allocated to the
reduction agreement described in box 12 (codes AA
employee. See the Instructions for Form 8027, Employer’s
and BB).
Annual Information Return of Tip Income and Allocated Tips.
Amounts deferred under a nonqualified or section
Do not include this amount in boxes 1, 3, 5, or 7.
457(b) plan must be included in boxes 3 and/or 5 as social
Box 9 — Advance EIC payment. Show the total paid to the
security and/or Medicare wages as of the later of when the
employee as advance earned income credit (EIC)
services giving rise to the deferral are performed or when
payments.
there is no substantial forfeiture risk of the rights to the
deferred amount. Include elective and nonelective deferrals
Box 10 — Dependent care benefits. Show the total
for purposes of section 457(b) plans.
dependent care benefits under a dependent care assistance
Also include in box 3:
program (section 129) paid or incurred by you for your
Signing bonuses an employer pays for signing or ratifying
employee. Include the fair market value (FMV) of
an employment contract. See Rev. Rul. 2004-109. You can
employer-provided or employer-sponsored day-care
find Rev. Rul. 2004-109 on page 958 of Internal Revenue
facilities and amounts paid or incurred for dependent care
Bulletin 2004-50 at
assistance in a section 125 (cafeteria) plan. Report all
-10-

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