Every January, your employer sends you a form. It's the most important document for filing your taxes, yet most people have no idea what all those boxes mean.
Let's fix that.
What Is a W-2?
A W-2 (Wage and Tax Statement) summarizes:
- How much you earned
- How much was withheld for taxes
- Benefits that affect your taxes
Your employer sends copies to you AND the IRS, so your tax return must match.
The Essential Boxes
Box 1: Wages, Tips, Other Compensation
This is your taxable income from this employer. It's NOT your gross salary if you have pre-tax deductions.
Why it might differ from your salary:
- 401(k) contributions reduce it
- premiums (pre-tax) reduce it
- contributions reduce it
- FSA contributions reduce it
Pro Tip
If Box 1 is lower than your salary, that's good—it means you're using pre-tax benefits that lower your tax bill.
Box 2: Federal Income Tax Withheld
This is what your employer sent to the IRS on your behalf throughout the year. When you file taxes:
- If you owe less than Box 2: You get a refund
- If you owe more than Box 2: You owe the difference
Box 3: Social Security Wages
The amount subject to Social Security tax. For 2024, the cap is $168,600. If you earned more, Box 3 stops at this amount.
Box 4: Social Security Tax Withheld
Should be 6.2% of Box 3. Your employer pays another 6.2%.
Box 5: Medicare Wages and Tips
Usually equals or exceeds Box 1. No income cap for Medicare.
Box 6: Medicare Tax Withheld
Should be 1.45% of Box 5. High earners pay an additional 0.9%.
When Carlos got his first W-2, Box 1 showed $52,000 but his salary was $55,000. Confused, he checked his pay stubs. The difference? $3,000 in 401(k) contributions that reduced his taxable income—saving him about $660 in federal taxes.
Other Important Boxes
Box 12: Coded Items
This box uses letter codes for various things. Common codes:
| Code | Meaning |
|---|---|
| D | 401(k) contributions (pre-tax) |
| DD | Cost of employer health coverage (informational) |
| E | 403(b) contributions |
| W | HSA employer contributions |
| AA | Roth 401(k) contributions |
Box 13: Checkboxes
- Statutory employee: Special self-employment status
- Retirement plan: You're covered by employer plan (affects IRA deductions)
- Third-party sick pay: Sick pay from insurance company
Box 14: Other
Employers put various items here—union dues, state disability insurance, educational assistance. Check your pay stubs if unclear.
State and Local Boxes (15-20)
Box 15: State/Employer's State ID Number
Your employer's state tax ID.
Box 16: State Wages
Taxable wages for state income tax. Often matches Box 1.
Box 17: State Income Tax Withheld
What was sent to your state.
Boxes 18-20: Local Taxes
For city or local taxes if applicable.
Common W-2 Mistakes to Watch For
Do This
Check your W-2 against your final pay stub of the year. They should match.
Common errors:
- Wrong Social Security number - Can delay refund
- Incorrect name spelling - May cause IRS mismatch
- Wrong Box 1 amount - Compare to pay stubs
- Missing state taxes - If you work in multiple states
Avoid This
Don't ignore W-2 errors. Request a corrected W-2c from your employer before filing.
What If Box 1 Seems Wrong?
Your salary minus these pre-tax items should equal Box 1:
- Traditional 401(k) contributions
- Health insurance premiums
- HSA contributions
- FSA contributions
- Commuter benefits
Example calculation:
| Item | Amount |
|---|---|
| Annual salary | $60,000 |
| Minus: 401(k) | -$6,000 |
| Minus: Health insurance | -$2,400 |
| Minus: HSA | -$1,800 |
| = Box 1 | $49,800 |
Multiple W-2s
If you worked multiple jobs, you'll get a W-2 from each employer. When filing:
- Add all Box 1 amounts for total taxable wages
- Add all Box 2 amounts for total federal
- Each W-2 is entered separately
Watch Out
With multiple jobs, you might have underwithholding if each employer assumes they're your only job. Check your withholding mid-year using the IRS Tax Withholding Estimator.
When W-2s Arrive
Deadline: January 31st
- Mailed W-2s: Postmarked by Jan 31
- Electronic W-2s: Often available earlier
If you don't receive yours:
- Check if electronic delivery is enabled
- Contact your employer's HR/payroll
- After Feb 14: Call IRS at 1-800-829-1040
Saving Your W-2s
Quick Win
Keep copies of your W-2s for at least 4 years. The IRS can audit returns from the past 3 years (6 years if income is significantly underreported). Digital copies work fine.
Your W-2 and Tax Software
When using tax software, you'll enter:
- Box 1: Wages (main income entry)
- Box 2: Federal tax withheld
- Boxes 3-6: Usually auto-calculated but verify
- Box 12 codes: Various credits/deductions
- State boxes: For state return
Most software can import W-2 data directly from major employers, making entry easier and more accurate.