Your employer is required to send your W-2 by January 31st every year. Most people glance at a few numbers, hand it to their tax software, and move on. But the W-2 contains a lot of information — some of it directly affects your tax liability, and some of it reveals errors that could cost you money if left uncorrected.
Here's every box on the W-2 explained in plain English.
The Basics: Boxes 1–6
Box 1: Wages, Tips, Other Compensation
This is your taxable federal income — not necessarily your total salary. Box 1 is reduced by pre-tax deductions you made during the year, including:
- 401(k) and 403(b) contributions
- Health insurance premiums paid through payroll (if your employer's plan is Section 125/cafeteria plan)
- HSA contributions through payroll
- Dependent care FSA contributions
This is why Box 1 is almost always lower than your actual salary. It's correct — those deductions reduced your taxable wages.
Box 2: Federal Income Tax Withheld
The total amount withheld from your paychecks and sent to the IRS throughout the year. This is a credit against whatever you owe on your tax return. If this number plus other withholding exceeds your total tax liability, you get a refund.
Box 3: Social Security Wages
The wages subject to Social Security tax. This is different from Box 1 — it's not reduced by 401(k) contributions, but it is capped at the Social Security wage base ($176,100 for 2025). If you have multiple employers and your combined Box 3 wages exceed the cap, you may have overpaid Social Security tax and can claim a credit.
Box 4: Social Security Tax Withheld
Should be exactly 6.2% of Box 3. If it's not, something is wrong — either a calculation error or your employer stopped withholding correctly mid-year.
Box 5: Medicare Wages and Tips
The wages subject to Medicare tax. Unlike Social Security, Medicare has no cap — all wages are subject to it. Box 5 is often equal to or slightly higher than Box 3.
Box 6: Medicare Tax Withheld
Should be 1.45% of Box 5 (plus an additional 0.9% if you earn over $200,000 as a single filer — though this additional Medicare tax is often handled on your return, not through withholding).
State and Local: Boxes 15–20
Boxes 15–17 cover state tax information (state employer ID, state wages, state tax withheld), and Boxes 18–20 cover local/city taxes. If you worked in multiple states, you may receive a W-2 with multiple state entries in these boxes.
If you lived in one state and worked in another, check your state's rules — many states have reciprocity agreements that determine where you owe tax.
The Important Middle Section: Boxes 7–14
Box 7: Social Security Tips
Tips you reported to your employer, which are included in Box 3 but reported separately here.
Box 8: Allocated Tips
Tips your employer allocated to you based on IRS rules (typically used in food service where tip reporting is required). These are added to your Box 1 wages on your tax return.
Box 10: Dependent Care Benefits
The amount your employer paid or you contributed to a dependent care FSA (Flexible Spending Account). Up to $5,000 is tax-free ($2,500 if married filing separately). Amounts in Box 10 are already excluded from Box 1.
Box 11: Nonqualified Deferred Compensation
Distributions from nonqualified deferred compensation plans. These are included in Box 1 wages — this box just identifies the source.
Box 12: The Most Misunderstood Box
Box 12 can contain multiple entries, each with a code. The most common ones:
| Code | What It Means | | ------ | ------------------------------------------------------------------------------------------------- | | D | 401(k) contributions — pre-tax retirement contributions (not in Box 1) | | E | 403(b) contributions — same as 401(k) but for nonprofits/schools | | W | Employer + employee HSA contributions — very important for your HSA tax form | | DD | Employer-paid health insurance premium cost — for informational purposes only, not taxable to you | | C | Taxable cost of group term life insurance over $50,000 — this IS included in your Box 1 wages | | G | 457(b) government deferred compensation plan contributions | | R | Employer contributions to your Archer MSA | | S | SIMPLE IRA contributions | | AA | Roth 401(k) contributions (after-tax, still excluded from Box 1) | | BB | Roth 403(b) contributions | | EE | Designated Roth contributions to a governmental 457(b) |
The W code is critical: If you contributed to an HSA through payroll, that amount appears in Box 12 with code W. You need this number when completing Form 8889 on your tax return. Many tax software programs prompt you for it directly.
The DD code does not affect your taxes — it's purely informational reporting required by the ACA.
Box 13: Three Checkboxes
- Statutory Employee: Independent contractors whose employers are required to withhold Social Security and Medicare taxes. If checked, your W-2 wages are reported as business income on Schedule C.
- Retirement Plan: Checked if you were eligible to participate in your employer's retirement plan, even if you didn't contribute. This affects whether you can deduct traditional IRA contributions.
- Third-Party Sick Pay: Indicates sick pay received from a third-party insurer.
Box 14: Other
Box 14 is a catch-all for employer-reported information that doesn't fit elsewhere. Common entries include:
- State disability insurance (SDI/SUI) — may be deductible as a state tax
- Union dues
- Educational assistance payments
- Employer-paid transit benefits
- FFCRA leave payments (pandemic-era)
Box 14 labels vary by employer — your company might use their own abbreviations here. If you're unsure what an entry means, ask your HR or payroll department.
What to Do If Your W-2 Is Wrong
Errors on W-2s happen more than you'd think. Common mistakes include:
- Wrong Social Security number (especially after a name change)
- Incorrect Box 1 amount (pre-tax deductions not applied correctly)
- Box 4 doesn't equal 6.2% of Box 3
- State wages don't reflect actual work location
If your W-2 has an error:
- Contact your employer's HR or payroll department immediately
- Provide the specific box numbers and what you believe the correct amounts are
- Request a corrected W-2 (Form W-2c)
- Do not file your tax return until you have the corrected form — or file with the incorrect W-2 and amend later once corrected
If your employer refuses to issue a corrected W-2 or you can't reach them, file Form 4852 (Substitute for Form W-2) with your return and use your own records to determine the correct amounts.
Handling Multiple W-2s
If you worked multiple jobs, you'll receive a W-2 from each employer. Key things to check:
- Social Security over-withholding: If your combined Box 3 wages across all W-2s exceed the annual wage base ($176,100 for 2025), you overpaid Social Security tax. Claim the excess as a credit on Form 1040 (Schedule 3, Line 11).
- Each employer's Box 2 is separate: Your total federal withholding is the sum of all W-2s, Box 2.
- Don't combine W-2s into one: Report each W-2 separately in your tax software.
Got a W-2, tax notice, or financial document you're not sure how to read? Upload it to PaperLens for a plain-English explanation of what it says and what to do next. Scan your document →