Última actualización: 8 abr 2026, 10:03 a.m.
| NEW for 2026: The One Big Beautiful Act has "no taxes on tips" and "no taxes on overtime" provisions. This means individual employee tax deductions are available for eligible employees when they file their 2025 personal income tax return in 2026. To aid in this personal tax filing, Toast payroll has indicated these tip amounts and overtime premium amounts on employee profiles in Toast Payroll under My Profile > Taxes & Documents > Year End Documents. Toast Payroll: No Tax on Tips and/or Overtime offers more information. See an accountant or tax professional for advice. |
| Be aware of the possible federal tax benefits available to you. See Notice 797. |
Use this short video to quickly find your Form W-2 in Toast Payroll and review the different boxes on the form.
Box 1 on a W-2 reports an employee's total taxable wages or salary. The number also includes any tips an employee reported to their employer, bonuses, and other taxable compensation. Taxable fringe benefits such as group term life insurance are included here, but box 1 does not include any pretax benefits such as savings contributions to a 401(k) plan, 403(b) plan, or health insurance (pre-tax medical, dental, & vision).
Example 1: Hourly + tipped employee
Earnings:
Total regular earnings: $43,100
Total tips: $8,600
Total bonus: $1,000
Total gross earnings: $52,700
Deductions:
401(k): $5,000
Medical: $2,100
Garnishment: $500
Total deductions: $7,600
Total box 1 wages: (regular + tips + bonus) - (401(k) + medical) = 52,700 - 7,100 = $45,600
Note: In this example, we do not need to exclude the garnishment amount since it is a taxable deduction.
Example 2: Salaried employee
Earnings:
Salary earning: $65,000
Total mileage reimbursement (non-taxable): $450
Group term life: $60
Total gross earnings: $65,510
Deductions:
401(k): $11,500
Roth: $8,000
Medical: $2,000
Dental: $500
Vision: $200
Total gross deductions: $22,200
Total box 1 wages: (salary + group term life) - (401(k) + medical + dental + vision) = 65,060 - 4,200 = $50,860
Note: In this example, we exclude the mileage reimbursement in the earnings calculation since it is considered exempt from taxes. The Roth deduction is not exempt from taxes so we do not need to subtract this amount from the gross taxable income.
Box 2 on a W-2 is the total federal income tax (FIT) amount withheld from an employee's checks over the year.
Box 3 on a W-2 starts with the employee's gross earnings, then the following amounts are subtracted, if applicable:
Using the examples from box 1, here we will calculate box 3 (social security wages):
Example 1: Hourly + tipped employee
Earnings:
Total regular earnings: $43,100
Total tips (box 7): $8,600
Total bonus: $ 1,000
Total gross earnings: $52,700
Deductions:
401(k): $5,000
Medical: $2,100
Garnishment: $500
Total deductions: $7,600
Total box 3 wages: (regular earnings + bonus) - (medical) = 44,100 - 2,100 = $42,000
Note: In this example, tips are not included in the calculation since this amount will be reported on box 7. 401(k) is also not included in this calculation since 401(k) is subject to social security taxes.
Example 2: Salaried Employee
Earnings:
Salary earning: $65,000
Total mileage reimbursement (non-taxable): $450
Group term life: $60
Total gross earnings: $65,510
Deductions:
401(k): $11,500
Roth: $8,000
Medical: $2,000
Dental: $500
Vision: $200
Total gross deductions: $22,200
Total box 3 wages: (salary + group term life) - (medical + dental + vision) = 65,060 - 2,700 = $62,360
Box 4 on a W-2 is the total social security tax amount withheld from an employee's checks over the year. This must be 6.2% of box 3 (+ box 7 if applicable).
Box 5 of a W-2 starts with an employee's gross earnings and then the following amounts are subtracted, if applicable:
Using the examples from box 1 & box 3, here we will calculate box 5 (Medicare wages):
Example 1: Hourly + tipped employee
Earnings:
Total regular earnings: $43,100
Total tips (box 7): $8,600
Total bonus: $1,000
Total gross earnings: $52,700
Deductions:
401(k): $5,000
Medical: $2,100
Garnishment: $500
Total deductions: $7,600
Total box 5 wages: (regular + tips + bonus) - (medical) = 52,700 - 2,100 = $50,600
Note: In this example, tips are included in the calculation since they are subject to Medicare taxes.
Example 2: Salaried Employee
Earnings:
Salary earning: $ 65,000
Total mileage reimbursement (non-taxable): $450
Group term life: $60
Total gross earnings: $65,510
Deductions:
401(k): $11,500
Roth: $8,000
Medical: $2,000
Dental: $500
Vision: $200
Total gross deductions: $22,200
Total Box 5 wages: (salary + group term life) - (medical + dental + vision) = 65,060 - 2,700 = $62,360
Box 6 on a W-2 is the total Medicare tax amount withheld from an employee's checks over the year. This must be 1.45% of box 5.
Note: This amount will be more than 1.45% of box 5 for employees that are subject to the Additional Medicare Tax withholding of 0.9% on any wages over $200,000 for the year.
| The total amount of tips reported in the year, as reported in box 7, may be eligible for tax exemption per One Big Beautiful Bill. This number can also be found in My Profile > Taxes & Documents > Year End Documents. |
If tips are reported throughout the year, the amount of those tips will be in box 7 of a W-2 (even if an employee did not have enough funds to pay the Social Security tax for the tips).
Note: This amount reflects the total tips recorded in Toast Payroll. It does not determine whether all or part of your tips are exempt from income tax. Eligibility for tip exemptions under the One Big Beautiful Bill varies based on your state and how you file your return. Toast cannot provide tax advice; consult an accountant, CPA, tax pro, or other professional if you're unsure how to use this value.
If your employer allocated tips to you, the allocated tips are shown in box 8 of your Form W-2. The allocated tips aren't included in box 1 with your wages and reported tips.
Allocated tips are amounts your employer assigned to you in addition to the tips you reported. Your employer is required to allocate tips only if:
Nothing will be entered in box 9 of the W-2.
Box 10 of a W-2 is the total dependent care benefits the employer has paid or incurred. This number will be the Fair Market Value (FMV) of care in a daycare facility provided or sponsored by the employer.
Box 11 is used by the Social Security Administration (SSA) to determine if any part of the amounts reported in box 1, 3, 4, or 5 was earned in a prior year. The SSA uses this information to verify that an employee has properly applied the Social Security earnings test and paid the correct amount of benefits.
Box 12 codes show specific amounts of interest for the IRS. See below for an explanation of what each box 12 code means. No more than 4 codes can be listed on a Form W-2. If more than 4 codes pertain to an employee, they will receive an additional Form W-2 to display that information.
If a person is a statutory employee, the first box will be checked.
The second box will be checked if an employee participated at any time in the year in a retirement plan, included: 401(k), 403(a) or 403(b), 408(k) or 408(p), 501(c)(18), federal, state or local government plan other than a 457(b) plan.
If an employee receives third-party sick pay, the third box will be checked.
This box is used to report items that the employer has opted to have reported or items certain states have required, including: but not limited to
This is the 2-digit alphabetic code of the state in which an employee is eligible to have state taxes withheld. The fields can be left blank if the employee is in a state that has no withholding.
This box is used to report the taxable state wages an employee was paid. Many times, this will be the same number as the earnings listed in box 1. This could be different from box 1 earnings if an employee moved from one state to another or if the withholding state doesn’t follow the IRS definition of income tax withholding wages.
This is the total state income tax (SIT) amount withheld from an employee's checks over the year.
This box is used to report the taxable local wages an employee was paid. Many times, this will be the same number as the earnings listed in boxes 1 and 16. This will be blank if an employee does not pay any local taxes.
This is the total local income tax amount withheld from an employee's checks over the year. This will be blank if an employee does not pay any local taxes.
If an employee paid any local taxes during the year, a code for the local tax authority will show in this box. This will be blank if the employee does not pay any local taxes.
Form W-2 is an Internal Revenue Service tax form used in the United States to report wages paid to employees and the taxes withheld from them. Form W-2s will be made available for download on January 19, 2026. Learn more about Form W-2s by reading Toast Payroll: Manage the Form W-2 Experience.
This video covers how to find your Form W-2 in Toast Payroll and how to understand the information on it.
Taxable wages include hourly wages, salaries, bonuses, commissions, and other forms of compensation that are subject to taxation by the government.
To review total earnings, deductions, and taxes for the year, an employee can navigate to My Profile > Recurring. Navigate between the Earnings, Deductions, Taxes, and Taxable Wages tabs. Review the total amount of each code in the Total Amount column and the Totals of each tab at the bottom of the page.
There's a few categories which affect the taxation of an employee. These include, but are not limited to:
Toast Payroll cannot advise how taxes are calculated or how to fill out a Form W-4. Check how the categories above apply to this employee and if you still have questions, consult a CPA or tax professional.
This content is for informational purposes and is not intended as legal, tax, HR, or any other professional advice. Please contact an attorney or other professional for advice.