Your W-2 Tax Form Is Coming: 3 Key Numbers to Review

w-2 formAs tax season ramps up, tens of millions of workers will soon be getting W-2 tax forms from their employers. Your W-2 has the key information that will determine whether you get a refund or owe more taxes to the IRS this year. And it also has numbers you can use to improve your tax planning for the future.

Here are three numbers to pay special attention to on your W-2.

Box 1: Your Total Pay

The most important part of the W-2 is at the top in Box 1, which gives you your total taxable compensation. Note that it will be higher than your take-home pay -- typically much higher due to the big amounts that most people have withheld from their paychecks for taxes. But as you'll see below, it doesn't include some important benefits that qualify for special tax treatment.

Box 2: Federal Income Tax Withheld

This box holds the key to whether you'll owe money or get a refund come tax due day. If you've completed your tax withholding forms correctly, this number should correspond pretty closely to your total tax liability. If it doesn't, then you can fix it by going to your HR department and completing a new Form W-4. That won't fix anything for your 2012 tax returns, but it should make next year's returns a bit closer to your actual liability.

Box 12: Special benefits

The reason this box is so important is that it includes all the special tax breaks you're entitled to. Contributions to 401(k) retirement plans, flexible spending accounts, and other benefits that let you divert what would ordinarily be taxable wages and convert them to pre-tax piggybanks show up here. And the more you have listed, the lower your taxes will be -- and the better you're taking advantage of everything your employer offers.

Get the whole story

To learn more about the other lines of your W-2, take a look at H&R Block's infographic with line-by-line descriptions of what's on this important tax form.

Click image to see a larger versionUnderstanding Your W2 Form
The Complete Guide To The W-2 Form
via H&R Block

You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger.

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