Code Z: Income under a nonqualified deferred compensation plan that fails to satisfy section A. This amount is laso included in box 1. See "Other Taxes" in teh Form instructions. Code DD: Cost of employer-sponsored health coverage. The amount reported with code DD is not taxable. Retirement plan: This box is checked if you are a member of the UC retirement plan. Other: This box is used by the University to report other information to you. State code and employer's state I.
This figure includes your wages, salary, bonuses, and other taxable compensation. Any taxable fringe benefits such as group term life insurance, personal use of a College vehicle, rent-free housing, etc.
Box 2: Federal income tax withheld. Box 2 reports the total amount withheld from your paychecks for federal income taxes. This represents the amount of federal taxes you have paid-in throughout the year. Box 3: Social Security wages. Box 3 reports the total amount of wages subject to the Social Security tax.
This limit is called the Social Security wage base. Box 4: Social Security tax withheld. Box 4 reports the total amount of Social Security taxes withheld from your paychecks. The Social Security tax is a flat tax rate of 6. You will claim the excess Social Security tax withholding as a credit on your Form if applicable. Box 5: Medicare wages and tips. Box 5 reports the amount of wages subject to Medicare taxes. There is no maximum wage base for Medicare taxes. The amount shown in Box 5 may be larger than the amount shown in Box 1.
Medicare wages include any deferred compensation, retirement contributions, or other fringe benefits that are normally excluded from the regular income tax. In other words, the amount in Box 5 typically represents your entire compensation from your job. Box 6: Medicare tax withheld. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors.
Your Money. Personal Finance. Your Practice. Popular Courses. Taxes Income Tax. Part Of. Medicare Basics. How Medicare Works. Medicare Part D Prescriptions. Medigap Insurance. Medicare Advantage Part C. Medicare vs. Table of Contents Expand. What Are Medicare Wages? Understanding Medicare Wages. Medicare Tax for the Self-Employed. Special Considerations. Key Takeaways Medicare is funded by a payroll tax of 1. The Medicare tax for self-employed individuals is 2.
Employees should also consider having money deducted from their wages to fund their retirement through an employer-sponsored plan or IRA. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.
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