Form W-2: Boxes, Codes, and How to Read It

Learning how to read a W-2 comes down to knowing what each numbered and lettered box reports, because the form is organized by type of pay and type of tax rather than by importance. Your employer sends this annual wage statement to both you and the IRS, showing what you earned in 2026 and what was withheld. Employers must deliver your copy by February 1, 2027.¹ The form runs to roughly 20 boxes, and several of them changed for 2026 under the One Big Beautiful Bill Act, so a form you thought you understood may have new codes and higher limits this year.

The Identification Boxes at the Top

Box a shows your Social Security number and Box b shows your employer’s nine-digit Employer Identification Number.¹ These two numbers tie every dollar on the form to a specific person and a specific employer. Boxes c, e, and f carry the employer’s and employee’s legal names and mailing addresses.

Your employee copy may show a truncated Social Security number like XXX-XX-1234. Federal rules let employers mask the first five digits on the copies given to you, though the full number still appears on the copy filed with the government.² Employers cannot truncate their own EIN. If your name or Social Security number is wrong, ask for a corrected form on Form W-2c before you file.³

Boxes 1 and 2: Federal Wages and Income Tax Withheld

Box 1 reports your total taxable wages, tips, and other compensation for the year. This is the figure that flows to your federal return as the starting point for what you owe. Box 2 shows how much federal income tax your employer withheld and sent to the Treasury on your behalf.¹

The Box 2 amount is driven by the Form W-4 you filed. Employers must withhold from every paycheck using IRS-prescribed tables and the filing status and other information you gave them on that form.⁴ If Box 2 looks too high or too low next to your actual tax bill, an outdated W-4 is almost always why.

Box 1 usually doesn’t match your gross pay. Pre-tax deductions like traditional 401(k) contributions, health insurance premiums, and flexible spending account elections reduce Box 1 while still showing up in your gross earnings on a pay stub. That’s the deductions doing what they’re supposed to do.

Boxes 3 Through 6: Social Security and Medicare

These four boxes handle payroll taxes under the Federal Insurance Contributions Act, and they follow different rules from income tax.

Box 3 shows wages subject to Social Security tax. For 2026, only the first $184,500 of earnings is taxable for Social Security purposes.⁵ Box 4 shows the actual Social Security tax withheld at 6.2% of the Box 3 wages.⁶ If you earned $184,500 or more, Box 4 should be $11,439. A higher figure usually means you had two employers in the same year and each withheld separately without knowing about the other; you claim the excess back on your return.

Box 5 reports wages subject to Medicare tax. Medicare has no earnings cap, so Box 5 typically equals or exceeds Box 3. Box 6 shows the Medicare tax withheld, usually 1.45% of Box 5. An additional 0.9% applies once your wages from that employer pass $200,000 in the calendar year, bringing the rate to 2.35% on earnings above that threshold.⁶ Your employer withholds this additional Medicare tax based on the $200,000 trigger regardless of your filing status, so married couples filing jointly may need to reconcile the difference on their return.

Employers must collect these payroll taxes by deducting them from your wages each pay period.⁷ Boxes 1, 3, and 5 often show different amounts because certain pre-tax deductions reduce income for income-tax purposes but not for payroll-tax purposes. Traditional 401(k) contributions are the classic example: they lower Box 1 while leaving Boxes 3 and 5 alone.

Boxes 7 and 8: Tips

Box 7 shows the Social Security tips you reported to your employer, and the amount is already folded into Boxes 1 and 5.¹

Box 8 works differently and trips people up. If you work at a large food or beverage establishment and total reported tips fall below 8% of the restaurant’s gross receipts, your employer must allocate the shortfall among tipped workers, and that allocated amount appears in Box 8.⁸ Allocated tips are not included in Boxes 1, 3, 5, or 7, and no taxes were withheld on them. You report them as income when you file and pay the tax yourself, unless your own records show your actual tips were lower.

Box 10: Dependent Care Benefits

Box 10 reports the total dependent care assistance your employer provided, whether through a dependent care flexible spending account or direct payments toward child care or elder care.¹ For 2026 you can exclude up to $7,500 of those benefits from taxable income ($3,750 if married filing separately). Anything above that limit is taxable and is already included in Box 1.⁹

That $7,500 cap is new. The exclusion sat at $5,000 for years before the One Big Beautiful Bill Act raised it for tax years beginning after December 31, 2025.

Box 11: Nonqualified Deferred Compensation

Box 11 reports distributions you received from a nonqualified deferred compensation plan or a nongovernmental 457(b) plan.¹ It helps the Social Security Administration figure out whether income in Box 1 was actually earned in a prior year. Most employees will see this box blank.

Box 12: Coded Compensation and Benefits

Box 12 is the densest part of the form. It uses letter codes to break out specific types of compensation. You may see up to four code-and-amount pairs on a single W-2. The codes employees encounter most often:

Code C: Taxable cost of group-term life insurance coverage above $50,000.
Code D: Your elective deferrals to a 401(k) plan.
Code E: Contributions to a 403(b) plan, common for teachers and nonprofit workers.
Code G: Deferrals to a 457(b) plan, typical for government employees.
Code W: Employer contributions (including amounts you elected through a cafeteria plan) to a Health Savings Account.
Code AA: Designated Roth contributions to a 401(k), made after tax.
Code DD: Total cost of your employer-sponsored health coverage. Informational only, not taxable.

Three codes are new for 2026, all created by the One Big Beautiful Bill Act.¹

Code TA: Employer contributions to a Trump account, a new retirement account that can be set up for a child under 18. Employers may contribute up to $2,500 per year under a written plan, and that amount is excluded from your taxable income.¹⁰
Code TP: Total cash tips you reported to your employer during the year. This code supports a new deduction for qualified tips when you file.
Code TT: Total qualified overtime compensation. This figure feeds a new above-the-line deduction of up to $12,500 ($25,000 on a joint return) for the premium portion of overtime pay, the “half” in time-and-a-half. The deduction phases out once modified adjusted gross income exceeds $150,000 ($300,000 for joint filers).¹¹

One boundary on Code TT: only overtime required under the federal Fair Labor Standards Act qualifies. If your overtime pay comes solely from a union contract or state law and you aren’t covered by the FLSA’s overtime requirement, that pay doesn’t count as qualified overtime.¹¹

Box 13: The Three Checkboxes

Box 13 has three checkboxes that flag specific situations.

Statutory employee applies to a narrow group (certain delivery drivers, life insurance agents, and home-based workers, among others) whose pay is subject to Social Security and Medicare withholding but not regular income tax withholding. If this box is checked, you report those wages on Schedule C rather than as regular W-2 income.

Retirement plan signals that you were eligible to participate in an employer-sponsored retirement plan during the year. This box carries more weight than it looks: it directly controls whether you can deduct traditional IRA contributions on your return. If the box is checked and your income exceeds certain thresholds, the deduction shrinks or disappears. For 2026, the phase-out ranges are:¹²

Single filers: Full deduction with MAGI up to $81,000; partial between $81,000 and $91,000; none above $91,000.
Married filing jointly and you’re the plan participant: Full deduction up to $129,000; partial between $129,000 and $149,000; none above $149,000.
Married filing jointly and your spouse is the participant, not you: Full deduction up to $242,000; partial between $242,000 and $252,000; none above $252,000.
Married filing separately: Partial deduction if MAGI is under $10,000; none at $10,000 or above.

If the Retirement plan box is not checked, these limits don’t apply and you can deduct the full IRA contribution regardless of income.

Third-party sick pay is used when a separate insurance carrier paid your sick leave benefits. Most employees will see all three boxes unchecked.

Box 14: Other Information

Box 14 is a catch-all for items that don’t fit anywhere else: union dues, uniform allowances, educational assistance, state disability insurance contributions, and similar entries. There is no standard code system, so what you see depends on your employer. Labels are usually self-explanatory (“Union Dues,” “SUI/SDI”). Some Box 14 items are informational only, while others may affect your state return or support a deduction on your federal return, so ask payroll if a label is unclear.

Boxes 15 Through 20: State and Local Taxes

The bottom of the form handles income taxes beyond the federal level. Box 15 shows the two-letter state abbreviation and the employer’s state ID number. Box 16 reports wages subject to state income tax, which may differ from Box 1 because states have their own rules about what counts as taxable income. Box 17 shows the state tax actually withheld.¹

Boxes 18, 19, and 20 do the same for local jurisdictions with their own income taxes. If you worked in multiple states or localities during the year, your W-2 may include separate lines for each; employers use additional forms when there are more than two of either.

If you live in one state and commute to another with a reciprocity agreement between them, your employer withholds only for your home state and the work state doesn’t appear at all. Withholding for a state where you don’t live, when reciprocity exists, points to a payroll setup error worth flagging.

What to Do if Your W-2 Is Wrong or Missing

If mid-February arrives and you don’t have your W-2, start with your employer. Payroll departments handle a flood of forms in January, and copies get lost or sent to old addresses.

Still nothing by the end of February? Call the IRS at 800-829-1040. You’ll need your name, address, Social Security number, dates of employment, and your employer’s name and contact information. The IRS will contact the employer and send you Form 4852, a substitute W-2.¹³ You can file on time using Form 4852 with your best estimates from pay stubs and bank records. If the real W-2 arrives later with different numbers, amend on Form 1040-X.

If your W-2 arrived with errors (wrong Social Security number, incorrect wages, a misspelled name, or the Retirement plan box checked when it shouldn’t be), ask your employer to issue Form W-2c. Don’t file with numbers you know are wrong. Common errors include Box 1 missing a mid-year salary change and Box 12 leaving out a 401(k) contribution.

1
Internal Revenue Service. 2026 General Instructions for Forms W-2 and W-3
2
eCFR. 26 CFR 301.6109-4 – IRS Truncated Taxpayer Identification Numbers
3
Internal Revenue Service. About Form W-2 C, Corrected Wage and Tax Statements
4
Office of the Law Revision Counsel. 26 USC 3402 – Income Tax Collected at Source
5
Social Security Administration. Contribution and Benefit Base
6
Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
7
Office of the Law Revision Counsel. 26 USC 3102 – Deduction of Tax from Wages
8
Internal Revenue Service. Topic No. 761, Tips – Withholding and Reporting
9
Office of the Law Revision Counsel. 26 USC 129 – Dependent Care Assistance Programs
10
Office of the Law Revision Counsel. 26 USC 128 – Employer Contributions to Trump Accounts
11
Internal Revenue Service. Questions and Answers About the New Deduction for Qualified Overtime Compensation
12
Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Cost of Living
13
Internal Revenue Service. Form 4852, Substitute Form W-2, Wage and Tax Statement