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.

Birth of a Child

The birth of a child is not just a blessed event; it's the beginning of a whole new set of tax breaks for your family. Learn how the newest addition to your family can help trim your tax bill, and how to save for your child's future in the most tax-efficient manner.

Read More

Brought to you by TurboTax.com

What is Form 8332: Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent

Having custody of your child usually means you can claim that child as a dependent on your taxes. But if you don't have to file a tax return, or you reach an agreement with your child's noncustodial parent, you can let them take the child as a dependent instead with Form 8332.

Read More

Brought to you by TurboTax.com

How Does Your Charitable Giving Measure Up?

Giving is truly better than receiving, especially when your generosity can provide income tax benefits.

Read More

Brought to you by TurboTax.com

Real Estate Tax Tips: Owning Property as a Tenancy in Common

"Tenancy in common" (or TIC) refers to a situation in which ownership of a piece of property is divided among multiple people. When the owners of a piece of real estate have a tenancy in common, it can create a number of complications related to taxes.

Read More

Brought to you by TurboTax.com
Read Full Story