How to Read Your W-2 Form: Every Box Explained

Your employer sends a W-2 every January, and it’s the foundation of your tax return. Yet most people only look at boxes 1 and 2 — the rest might as well be a foreign language. Here’s a complete guide to every box on the W-2, why certain numbers are different from what you expected, and how to use it correctly when filing.

What Is a W-2?

The W-2 (Wage and Tax Statement) reports all wages paid to you and all taxes withheld during the calendar year. Your employer files a copy with the IRS and the Social Security Administration — so the IRS already knows your W-2 income before you even file.

You should receive your W-2 by January 31 of the year following the tax year. If you don’t receive it by mid-February, contact your employer’s payroll department.

The Main Boxes Explained

Box 1: Wages, Tips, Other Compensation

This is your federal taxable wages — and it’s almost certainly different from your total gross pay. Box 1 is reduced by:

• Pre-tax 401(k) contributions (traditional, not Roth)
• Health insurance premiums paid through a Section 125 cafeteria plan
• HSA contributions made through payroll
• Dependent care FSA contributions
• Other pre-tax benefits (commuter benefits, etc.)

Example: Gross pay $80,000, 401(k) contributions $10,000, health insurance $3,000 → Box 1 = $67,000

This is the number that determines your federal income tax bracket and the amount you report on line 1a of Form 1040.

Box 2: Federal Income Tax Withheld

The total federal income tax your employer sent to the IRS on your behalf throughout the year. This is based on the W-4 you filed, your filing status, and any additional withholding you requested.

If Box 2 is higher than your actual tax liability, you get a refund. If it’s lower, you owe the difference. Use the paycheck calculator during the year to check whether your withholding is on track.

Box 3: Social Security Wages

Your wages subject to Social Security tax. Unlike Box 1, this figure is not reduced by 401(k) contributions or most pre-tax deductions. It is reduced by health insurance premiums paid through a Section 125 plan.

Box 3 cannot exceed the Social Security wage base ($176,100 in 2026). If you have multiple employers and your combined Box 3 wages exceed this, you’ve overpaid Social Security and can claim a refund on your tax return.

Box 4: Social Security Tax Withheld

Should equal Box 3 × 6.2%. For example, if Box 3 is $70,000, Box 4 should be $4,340. This is your half of the FICA Social Security tax.

Box 5: Medicare Wages and Tips

Similar to Box 3 but for Medicare. There is no cap on Medicare wages, so Box 5 will always be at least as large as Box 3 (and could be higher if you have tips or certain benefits).

Box 6: Medicare Tax Withheld

Should equal Box 5 × 1.45%. If you earned over $200,000, your employer also withheld the additional 0.9% Medicare tax, making Box 6 = (wages up to $200K × 1.45%) + (wages over $200K × 2.35%).

Box 7: Social Security Tips

If you work in a tipped industry (restaurant, hotel, etc.), tips you reported to your employer are shown here. They’re included in Boxes 1 and 5 but broken out separately.

Box 8: Allocated Tips

Tips the IRS estimates you earned but didn’t report to your employer. Restaurants must allocate tips if tipped employees report less than 8% of gross receipts.

Box 10: Dependent Care Benefits

Employer-provided dependent care assistance up to $5,000 (or $2,500 if married filing separately). This amount is excluded from Box 1 wages but is reported here. You’ll reconcile it on Form 2441 (Child and Dependent Care Expenses).

Box 12: Codes

Box 12 uses letter codes to report various compensation and deductions. Common ones:

Code	Meaning
D	Traditional 401(k) contributions
E	403(b) contributions (for nonprofit/school employees)
G	Government 457(b) deferred compensation
W	Employer HSA contributions
AA	Roth 401(k) contributions
BB	Roth 403(b) contributions
DD	Cost of employer-sponsored health coverage
FF	Permitted benefits under a Qualified Small Employer HRA

Important: Code D (401k) shows your employee contributions. Code DD shows the cost of your health plan but is not income — it’s just informational.

Box 13: Checkboxes

Three checkboxes:

• Statutory employee: Special tax status (certain salespeople, etc.) — rare
• Retirement plan: Checked if you’re an active participant in an employer retirement plan. This limits your ability to deduct traditional IRA contributions at higher incomes.
• Third-party sick pay: Sick pay from an insurance company

Box 14: Other

A catch-all for employer-specific items. Common entries:

• State disability insurance (SDI or SUI) withheld
• Union dues
• Educational assistance
• Non-tax-deductible moving expenses
• Health insurance premiums if you’re self-employed and receiving W-2 wages from your own S-corp

Box 14 is largely informational, but some entries (like state SDI) may be deductible on Schedule A if you itemize.

Boxes 15–20: State and Local Tax Information

• Box 15: State and employer’s state ID number
• Box 16: State wages — often matches Box 1, but states differ in what’s included/excluded
• Box 17: State income tax withheld
• Box 18–20: Local wages, local income tax withheld, locality name (relevant for cities like New York City, Philadelphia, or Detroit that have their own income taxes)

Why Box 1 Doesn’t Match Your Total Pay

This is the most common point of confusion. Box 1 ≠ gross pay because several deductions reduce your federal taxable wages before withholding:

Reduces Box 1?	Item
✅ Yes	Traditional 401(k) / 403(b) contributions
✅ Yes	Health insurance premiums (Section 125)
✅ Yes	HSA payroll contributions
✅ Yes	FSA contributions
✅ Yes	Commuter benefits
❌ No	Roth 401(k) contributions (after-tax)
❌ No	Social Security / Medicare taxes
❌ No	Federal income tax withheld

To reconcile: take your last pay stub’s year-to-date gross pay, subtract all pre-tax deductions, and you should arrive at Box 1.

Multiple W-2s

If you worked multiple jobs or changed employers during the year, you’ll receive a separate W-2 from each. When filing, you report all W-2s. The IRS receives all of them and will flag your return if you omit one.

Common W-2 Errors

• Wrong name or SSN: Contact your employer immediately — the SSA needs correct information to credit your Social Security account
• Box 1 seems too high: Check if your pre-tax benefits were administered correctly
• Box 2 seems wrong: Compare to your pay stub YTD federal withholding
• Corrected W-2 (W-2c): If your employer sends a corrected form, use the W-2c, not the original

Key Takeaways

• Box 1 is your federal taxable wages — lower than gross pay because of 401(k), health insurance, and other pre-tax deductions
• Box 3 and 5 are FICA wages — often higher than Box 1, since Roth 401(k) contributions don’t reduce FICA wages
• Box 12 Code D shows your traditional 401(k) contributions; Code DD is health insurance cost (informational only)
• Box 13 retirement plan checkbox affects IRA deductibility
• State and local info is in Boxes 15–20 — check Box 17 matches your pay stub YTD state withholding
• If Box 1 and your paycheck pay stub details don’t reconcile, check all pre-tax deductions year-to-date