We all like getting paid. When payday rolls around, it can be the happiest time of the month, at least until the next one. But did you know any salary, wages or tips you receive are considered part of your gross income and must be included at tax time. Withholdings, such as Medicare, income tax, and Social Security, are included in your income for the tax year they were withheld.
If you contribute to a pension through your employer, you typically don’t have to report those contributions as part of your gross income, as well as withholdings that were part of a salary reduction plan. It’s important to note that such withholdings are still subject to Social Security and Medicare taxes for the year they were withheld.
Your employer will provide a Form W-2, stating the total amount of income you received from them, as well as withholdings they took. You’ll need this information to complete a tax return, and should you chose to file jointly with your spouse, you’ll also have to include their gross income.
You may receive multiple W-2s if you have multiple employers. If you file your return, and then receive another W-2, you’ll have to file an amended return through Form 1040X. You’ll need to receive all of your W-2s by January 31st, so you can file before the deadline.
Self-employed individuals will report their income on a Form-1099 MISC, which is used like a W-2 to file a tax return.
