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. (Amounts withheld
under certain salary reduction plans are not included in gross income in
the year they are withheld.)
If an employer pays your Social Security and Medicare taxes without
withholding them from your pay, that amount is considered pay and must
be included in your gross income.
Payments received as severance pay are included in your gross income.
Payments received for cancellation of employment are included in gross
income, in the year received, and should be reported as other wages and
salaries. This is true even if the payment was received as settlement under
the Age Discrimination and Employment Act.
Your employer provides a Form W2 showing your total income and withholding
for the year. Total the wage and salary amounts reported on all your Forms
W2. (If filing a joint return, you must include amounts reported to your
spouse on Forms W-2). 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 Forms W2. (Do not confuse this with the Social Security
and Medicare taxes withheld.) Enter the total federal income tax withheld
on the line for withholding on your tax return. Attach copy B of each Form
W2 to the spot indicated on the front of your tax return. Please note that
Form 1099 income is generally not reported as wages or salaries.
If you receive another Form W2 after your return is filed, you must
file an amended tax return, Form 1040X. Topic 308
provides information on amended returns.
If it is after January 31, 1999, and you have not received your 1998
Form W2, Select Topic 154 for assistance.
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