Your employer sends you a Form W-2 by January 31 each year. It reports how much you were paid and how much tax was withheld from your paychecks during the year. You’ll use it — or your tax software will use it — to complete your federal and state income tax returns. Entering W-2 information incorrectly is one of the most common filing errors, so understanding each box matters.
Before You Begin: The Basics
The W-2 has a left section with employer and employee identification, a right section with numbered boxes for dollar amounts and codes, and multiple copies. You’ll receive:
- Copy B — attach to your federal return if you file by mail (not needed if you e-file).
- Copy C — keep for your records.
- Copy 2 — attach to your state return if required.
If you work for more than one employer during the year, you’ll receive a separate W-2 from each employer. Enter each one on your return.
The Numbered Boxes Explained
Box 1: Wages, Tips, Other Compensation
This is the most important number on your W-2. It shows your taxable wages for federal income tax purposes. This is not your total gross pay — it’s your gross pay minus pre-tax deductions like:
- 401(k) or 403(b) contributions
- Health insurance premiums paid through employer
- FSA or HSA contributions through payroll
- Other pre-tax benefits
Box 1 is the amount that gets entered on your Form 1040 as wages. It’s what you pay federal income tax on.
Box 2: Federal Income Tax Withheld
The total federal income tax your employer withheld from your paychecks during the year. This is a credit against your final tax bill. If Box 2 is larger than your actual tax owed, you get a refund. If it’s smaller, you owe the difference.
Box 3: Social Security Wages
Your wages subject to Social Security tax. This differs from Box 1 because it includes 401(k) contributions (which are exempt from income tax but not Social Security tax) and excludes health insurance premiums. The Social Security wage base in 2025 is $176,100 — no Social Security tax is taken on wages above that amount.
Box 4: Social Security Tax Withheld
The Social Security tax withheld — 6.2% of Box 3, up to $10,918.20 for 2025. Your employer pays a matching 6.2%. If you had multiple jobs and your combined wages exceeded the $168,600 cap, you may have had too much Social Security tax withheld — you can claim the excess as a credit on your return.
Box 5: Medicare Wages and Tips
Medicare wages are similar to Social Security wages, but there’s no income cap for Medicare. All wages are subject to Medicare tax.
Box 6: Medicare Tax Withheld
Medicare tax withheld at 1.45% of Box 5. If your wages exceed $200,000 (single) or $250,000 (married filing jointly), an additional 0.9% Additional Medicare Tax applies — your employer withholds this extra 0.9% once your wages exceed $200,000 in a calendar year, but the final calculation happens on your return.
Box 7: Social Security Tips
If you work in a job where you receive tips (restaurant, hotel, etc.) and reported those tips to your employer, the reported tip amount appears here. Tips are subject to Social Security tax just like wages.
Box 10: Dependent Care Benefits
If your employer provided dependent care benefits (like a Dependent Care FSA), the amount appears here. Up to $5,000 is excludable from income ($2,500 if married filing separately). Amounts above the exclusion are taxable.
Box 12: Various Codes
Box 12 can contain several entries, each preceded by a letter code. Common codes:
- Code D: Traditional 401(k) contributions. Not in Box 1 (pre-tax), but shown here for reference.
- Code DD: Cost of employer-sponsored health coverage. Informational only — not taxable, not deductible by you.
- Code AA or BB: Roth 401(k) or 403(b) contributions (after-tax, already in Box 1).
- Code W: HSA contributions made by your employer or through payroll — these are excluded from income.
- Code E: 403(b) elective deferrals.
- Code S: SIMPLE IRA contributions.
Box 13: Checkboxes
Three checkboxes:
- Statutory employee: Certain workers classified as statutory employees for Social Security/Medicare purposes. Their Box 1 wages are reported on Schedule C, not as regular wages.
- Retirement plan: Checked if you were an active participant in an employer retirement plan (401k, 403b, pension). This affects whether your IRA contributions are deductible.
- Third-party sick pay: Indicates disability benefits paid by an insurer on your employer’s behalf.
Box 14: Other
Employers use Box 14 for informational items that don’t have a dedicated box: state disability insurance taxes withheld, union dues, after-tax pension contributions, or employer-specific codes. These are usually informational and don’t affect your federal return, though some (like state SDI) may be deductible on Schedule A.
Boxes 15-17: State Tax Information
State abbreviation, employer state ID number, state wages, and state income tax withheld. Enter these on your state return. If you worked in multiple states, you may have multiple state entries or multiple W-2s.
Common W-2 Errors and What to Do
- Wrong name or SSN: Request a corrected W-2 (Form W-2c) from your employer before filing. Filing with incorrect identifying information can delay your refund or create IRS matching problems.
- Missing W-2: Contact your employer first. If you can’t get it, you can use Form 4852 (substitute W-2) based on your last pay stub, but attach an explanation.
- Boxes don’t match your records: Compare to your final pay stub of the year. If numbers are off, ask HR or payroll to explain the discrepancy.
- Multiple W-2s, same employer: Can happen if your employer changed payroll systems mid-year or issued a corrected W-2c. Add the boxes together when entering on your return.
Further Reading
- Tax Withholding Explained
- Tax Forms Cheat Sheet: W-2, 1099, and More
- How to File Your Taxes: A Step-by-Step Guide
- What Is a W-2?
- Taxes Overview
This article is for general educational purposes only and does not constitute tax or financial advice. Tax laws change and individual situations vary – consult a qualified tax professional or the IRS for guidance on your specific situation.