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

What Is a W-2?

Form W-2, Wage and Tax Statement, is issued by every employer to every employee by January 31 for the prior tax year. Your employer sends copies to you, the Social Security Administration, and the IRS. The IRS uses the employer's copy to cross-check the income you report on your tax return — if the numbers do not match, you will receive a notice.

If you worked for multiple employers during the year, you receive a separate W-2 from each. All W-2 income must be reported on your Form 1040, even if you do not receive a W-2 for a small side job from a previous employer. You also receive a W-2 (not a 1099) if you own more than 2% of an S-Corporation.

Box 1: Federal Wages, Tips, and Other Compensation

This is your taxable income for federal income tax purposes — the number that goes on Line 1a of Form 1040. Importantly, this is not your gross salary. Box 1 is reduced by pre-tax deductions that lower your federal taxable income:

• Traditional 401(k) contributions (but NOT Roth 401(k))
• Health, dental, vision insurance premiums paid through a Section 125 cafeteria plan
• HSA contributions made through payroll deduction
• Flexible spending account (FSA) contributions — dependent care and healthcare FSA
• Commuter benefits (transit passes, parking)

Example: You earn $70,000. You contribute $6,000 to a traditional 401(k), $3,600 to an HSA through payroll, and pay $4,800 in pre-tax health insurance. Box 1 = $70,000 − $6,000 − $3,600 − $4,800 = $55,600.

Box 2: Federal Income Tax Withheld

The total federal income tax your employer withheld from your paychecks throughout the year. This amount goes on Form 1040 as a credit against your tax liability. If Box 2 exceeds your tax liability, you get a refund. If it is less, you owe the difference. Use our tax withholding calculator to check if your withholding is on track for next year.

Boxes 3 and 4: Social Security Wages and Tax Withheld

Box 3: Wages subject to Social Security tax. This may differ from Box 1 because some pre-tax deductions (like 401(k)) reduce federal income tax but not Social Security tax. The maximum Social Security taxable wages in 2026 is $176,100. If you earn more than $176,100, Box 3 is capped at that amount.

Box 4: Social Security tax withheld — always 6.2% of Box 3 (up to $10,918.20 at the 2026 wage base cap).

Boxes 5 and 6: Medicare Wages and Tax Withheld

Box 5: Wages subject to Medicare tax. This is typically higher than Box 1 because Medicare tax applies to more income — it is not reduced by most pre-tax deductions (though HSA and FSA contributions through a cafeteria plan do reduce it). There is no cap on Medicare wages.

Box 6: Medicare tax withheld — 1.45% of Box 5. High earners above $200,000 pay an additional 0.9% Medicare surtax (the employer only withholds this on the employee's share, not the employer's portion).

Box 7: Social Security Tips

Cash tips of $20 or more per month that you reported to your employer. These are included in Box 5 (Medicare wages) but shown separately here so the IRS can verify proper Social Security tax was paid on tip income. Relevant primarily for food service, hospitality, and other tip-based industries.

Box 8: Allocated Tips

If you work in a restaurant or similar establishment where the IRS tip allocation rules apply, and your reported tips are below the IRS minimum percentage of sales, your employer may allocate additional tips to you. These allocated tips are included in income but Box 4 and Box 6 taxes are not withheld on them — you report the allocated tips on Form 4137 and pay the FICA taxes yourself.

Box 10: Dependent Care Benefits

Employer-provided dependent care assistance or the amount you contributed to a Dependent Care FSA through a Section 129 plan. Up to $5,000 ($2,500 if married filing separately) is excluded from income. Any amount above these limits is taxable and included in Box 1. You use this amount when completing Form 2441 (Child and Dependent Care Credit).

Box 11: Nonqualified Plans

Distributions from nonqualified deferred compensation plans (like a deferred bonus plan or certain executive compensation arrangements). These amounts are already included in Box 1 wages — Box 11 is informational, telling the IRS that some of the Box 1 income came from nonqualified plan distributions rather than current-year salary.

Box 12: Codes and Special Compensation

Box 12 uses letter codes to report various types of compensation and benefits. Your W-2 may have up to four Box 12 entries. The most common codes you will encounter:

• Code D: Traditional 401(k) contributions. Important: if you contributed to both a 401(k) and a Roth 401(k), you will see both Code D (traditional) and Code AA (Roth).
• Code E: 403(b) contributions (common for teachers, healthcare workers, and nonprofit employees).
• Code G: 457(b) plan contributions (government employees).
• Code W: Employer contributions to your Health Savings Account (HSA). Report this on Form 8889.
• Code DD: The cost of employer-sponsored health coverage. This is informational only — it is not taxable and does not affect your return. It is reported here as part of ACA transparency requirements.
• Code AA: Roth 401(k) contributions. Unlike Code D contributions, these are already included in Box 1 taxable wages (because Roth contributions are after-tax).
• Code BB: Roth 403(b) contributions.
• Code J: Non-taxable sick pay (from third-party sick pay plans).
• Code L: Substantiated employee business expense reimbursements (nontaxable).
• Code P: Employer-paid moving expenses. After 2017 tax law changes, these are generally taxable and included in Box 1.
• Code V: Income from exercise of non-statutory stock options — included in Box 1.

Box 13: Checkboxes

Three checkboxes on Box 13:

• Statutory employee: Workers who are technically independent contractors but treated as employees for FICA purposes (certain direct sellers, life insurance agents, etc.). They report their wages on Schedule C, not as regular wages.
• Retirement plan: Checked if you were an active participant in your employer's retirement plan (401k, pension, etc.) during the year. This affects the deductibility of your IRA contributions if your income is above certain thresholds.
• Third-party sick pay: Checked if sick pay was paid by a third party (insurance company) rather than directly by your employer.

Box 14: Other

Box 14 is a catch-all box where employers report additional information that does not fit elsewhere. Common items:

• State disability insurance (SDI) contributions (California, New York, New Jersey, etc.)
• Union dues paid through payroll deduction
• Employer-paid educational assistance above the $5,250 exclusion limit
• Nontaxable income from certain employer programs
• Family leave contributions (New York, California, etc.)

Box 14 items labeled "SDI" or "SUI" or "CASDI" may be deductible as state and local taxes (subject to the $10,000 SALT cap) if you itemize. Check your state's specific rules.

Boxes 15–20: State and Local Tax Information

Box 15: Your employer's state and state tax ID number.

Box 16: State wages subject to state income tax — often equal to Box 1 but may differ.

Box 17: State income tax withheld — enter this on your state tax return.

Boxes 18–20: Local wages and local income tax withheld for cities or counties that have local income taxes (New York City, Philadelphia, certain Ohio and Kentucky cities, etc.).

What to Do If Your W-2 Is Wrong

If you spot an error on your W-2 — wrong name, wrong SSN, incorrect wages, or missing amounts — act immediately:

1. Contact your HR department or payroll team and document the error in writing.
2. Request a corrected W-2, called Form W-2c (Corrected Wage and Tax Statement). Employers must provide W-2c forms promptly when errors are discovered.
3. If the correction cannot be made before the filing deadline, file Form 4852 (Substitute for Form W-2) using your best estimate of the correct amounts, or file for an extension (Form 4868) to buy time.
4. If you already filed with the incorrect W-2, file an amended return (Form 1040-X) once you receive the corrected W-2.

Never deliberately file with incorrect W-2 information. The IRS matches every W-2 the employer files with income reported on your return. Discrepancies trigger CP2000 notices with proposed additional tax, penalties, and interest.

Multiple W-2s: What to Do

If you worked for multiple employers during the year, you receive a separate W-2 from each. Report all of them on your tax return — add all Box 1 wages together, all Box 2 federal tax withheld together, and so on. Your total income goes on Line 1a of Form 1040.

Watch for excess Social Security withholding: if your total wages from all employers exceeded the Social Security wage base ($176,100 in 2026), each employer may have withheld Social Security tax up to their own cap, resulting in too much withheld overall. The excess is refundable — claim it as a credit on Form 1040.

Frequently Asked Questions