What information does Box 3 of the W-2 report?

Box 3 of the W-2 form specifically reports the amount of Social Security wages. This figure reflects the total wages earned by the employee that are subject to Social Security tax. It is important for both the employee and the IRS, as it determines the amount of Social Security benefits the worker may receive in the future based on their earnings.

Understanding this box is crucial for tax preparation because it quantifies how much of the employee’s income contributes to their future Social Security benefits, distinct from wages that might be taxed differently under Medicare or federal and state tax systems. This differentiated reporting helps ensure accurate tax calculations and compliance with the federal requirements regarding Social Security contributions.

Other options listed pertain to different aspects of income reporting. Federal tax withheld would be reported in a different box along with state income tax withheld and Medicare wages listed separately as well. Each serves its specific purpose in the context of tax filing and reporting.