How to Read a W-2 Earnings Summary: Boxes, Codes, and Fixes

Reading a W-2 comes down to knowing what each numbered and lettered box reports, which figures are taxable, which are informational, and which ones flow directly onto your tax return. Your employer must furnish the 2026 form by February 1, 2027, because the usual January 31 deadline falls on a Sunday.¹ The IRS matches what appears on the form against what you report, so catching errors before you file is worth the few minutes it takes to read through every box.

The Identification Boxes at the Top

The lettered boxes tell the IRS who paid you and who you are. Box a is your Social Security number, which links your earnings to your tax account. Box b is your employer’s nine-digit Employer Identification Number. Box c shows the employer’s name and address, and boxes e and f show yours. Box d may hold an internal payroll control number, or it may be blank; it does not affect your taxes.¹

Check your name and SSN first. If either is wrong, contact payroll before you file. A mismatch between your W-2 and IRS records can delay processing or trigger a notice.

Box 1 and Box 2: The Numbers That Drive Your Return

Box 1 reports your total taxable wages, tips, and other compensation. It has already been reduced by pre-tax items like traditional 401(k) contributions, HSA contributions, and health premiums paid through a cafeteria plan. If you contributed to a retirement plan at work, expect Box 1 to be lower than your gross pay for exactly that reason.

Box 2 is the federal income tax your employer withheld across the year, based on what you told them on Form W-4. That number gets credited against your total tax bill when you file. If Box 2 looks low, either your W-4 elections reduced it or something went wrong at payroll. Employers who willfully fail to collect and pay over the correct tax can face a penalty equal to the full amount that went uncollected.²

When several W-2s land in your mailbox from different jobs, you add the Box 1 amounts together on your 1040 and do the same with the Box 2 amounts.

Why Box 1, Box 3, and Box 5 Rarely Match

Traditional 401(k) deferrals reduce Box 1 but not Box 3 or Box 5, because Social Security and Medicare taxes still apply to those contributions. Defer $10,000 into a 401(k) and Box 3 will typically run about $10,000 higher than Box 1. Health premiums paid through a cafeteria plan, on the other hand, reduce all three. This is the single biggest reason employees think their W-2 is wrong when it is not.

Social Security and Medicare (Boxes 3 Through 6)

Box 3 reports wages subject to the 6.2% Social Security tax. For 2026 it is capped at the Social Security wage base of $184,500. Anything you earn above that from a single employer is not subject to Social Security tax and should not appear in Box 3.³ Box 4 shows the actual Social Security tax withheld, which should be 6.2% of Box 3, up to a maximum of $11,439 for 2026.¹

If you worked for two or more employers and your combined wages topped $184,500, each employer withheld independently. You can claim a credit for the excess Social Security tax on your return, so it is worth checking after a mid-year job change.

Box 5 lists wages subject to the 1.45% Medicare tax. There is no wage cap on Medicare, so Box 5 usually reflects your full compensation. Box 6 shows the Medicare tax withheld. Employers must withhold an additional 0.9% Medicare tax on wages above $200,000 from any single employee, but whether you actually owe that additional tax depends on your filing status: $250,000 for joint filers, $200,000 for single filers, and $125,000 for married filing separately.⁴

Tips, Dependent Care, and Deferred Compensation (Boxes 7 Through 11)

Many W-2s show zeros in this stretch. When they do not, the amounts matter.

Box 7 reports Social Security tips you reported to your employer. Those tips are already in Box 1 and Box 5. Boxes 3 and 7 combined should not exceed the $184,500 wage base.¹

Box 8 applies only to employees of large food and beverage establishments and shows allocated tips: the employer’s estimate of tips you should have reported, not tips you actually claimed. Allocated tips are not included in Boxes 1, 3, 5, or 7, and no tax was withheld on them. A number in Box 8 usually means additional taxable income on your return.¹

Box 9 is no longer used. It once reported advance Earned Income Credit payments, which ended in 2010. Ignore it.

Box 10 shows the total value of dependent care benefits your employer provided, including amounts you set aside through a dependent care FSA. Any benefits above the annual exclusion are taxable and will also appear in Boxes 1, 3, and 5.¹

Box 11 reports distributions from nonqualified deferred compensation plans. The Social Security Administration uses it to determine whether the wages in Box 1 were actually earned in an earlier year, which can affect benefit calculations. These amounts also appear in Box 1.¹

Box 12: The Alphabet Soup

Box 12 uses letter codes to break out specific types of pay and benefits that need separate tracking. Up to four entries can appear. The codes most employees see:

Code C: taxable cost of group-term life insurance coverage above $50,000. Already included in Box 1.
Code D: elective deferrals to a traditional 401(k). For 2026, the limit is $24,500, or $32,500 if you are 50 or older. These reduce Box 1 but not Box 3 or Box 5.⁵
Code DD: total cost of employer-sponsored health coverage, both the employer’s and your share. Informational only, not taxable.⁶
Code E: elective deferrals to a 403(b), common for teachers, hospital workers, and nonprofit employees.¹
Code G: deferrals and employer contributions to a 457(b) plan, typically offered by state and local governments.
Code W: employer plus employee cafeteria-plan contributions to a health savings account. For 2026, the combined limit is $4,400 for self-only coverage and $8,750 for family coverage. Code W amounts are reported on Form 8889 with your return.⁷

Code DD trips people up more than any other entry on the form. A five-figure number can look alarming, but it has zero effect on your taxable income. The Affordable Care Act simply requires the disclosure so you can see what your health coverage costs.

Box 13: Three Checkboxes That Change Your Filing

Box 13 has three checkboxes, and each one carries a real consequence.

Statutory employee. If checked, the Box 1 income goes on Schedule C rather than the wages line of your 1040. You can deduct business expenses against it, and you do not owe self-employment tax on those earnings because Social Security and Medicare were already withheld.⁸

Retirement plan. If checked, you were an active participant in an employer retirement plan during the year. That can reduce or eliminate your deduction for contributions to a traditional IRA depending on income and filing status.⁹

Third-party sick pay. If checked, sick pay on the form came from an insurance company or other third party rather than directly from your employer.

Box 14: Everything Else Your Employer Wants to Tell You

Box 14 is the catch-all. For 2026 it has been split. Box 14a works like the old Box 14: employers use it for things like union dues, uniform payments, state disability withholdings, educational assistance, or after-tax health premiums. Each entry should carry a label so you know what it is. Box 14b is new for 2026 and is reserved for Treasury Tipped Occupation Codes, which identify the type of work in which tipped income was earned.¹

State and Local Boxes (15 Through 20)

Box 15 shows the two-letter state abbreviation and your employer’s state tax ID. Box 16 is wages subject to state income tax, which can differ from Box 1 because states set their own rules. Box 17 is the state income tax withheld.¹

Box 18 shows wages subject to local income tax, Box 19 the local tax withheld, and Box 20 the name of the local jurisdiction. Living in one taxing jurisdiction and working in another can produce entries for both. The form fits up to two state and local rows, so employees who crossed state lines during the year may receive more than one W-2 from the same employer. In states without an income tax, expect these boxes to be blank or partly blank.

If Your W-2 Is Wrong or Missing

Start with your employer. Whether a name is misspelled, a number looks wrong, or the form never arrived, contact payroll first. Your employer can issue a corrected Form W-2c to fix any error on a previously issued W-2.¹⁰

If the problem is not resolved by the end of February, call the IRS at 800-829-1040 or visit a Taxpayer Assistance Center. The IRS will send your employer a letter demanding a corrected form within ten days, and will send you Form 4852 to use as a substitute W-2. You complete Form 4852 using your final pay stub to estimate wages and withholding.¹¹

Filing with Form 4852 beats not filing at all, but it can delay your refund while the IRS verifies the estimates. If a corrected W-2 shows up later with different numbers, you will need to file an amended return on Form 1040-X.

1
Internal Revenue Service. 2026 General Instructions for Forms W-2 and W-3
2
Office of the Law Revision Counsel. 26 USC 6672 – Failure to Collect and Pay Over Tax, or Attempt to Evade or Defeat Tax
3
Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
4
Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
5
Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs
6
Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage
7
Internal Revenue Service. Rev. Proc. 2025-19 – 2026 HSA Contribution Limits
8
Internal Revenue Service. Instructions for Schedule C (Form 1040)
9
Internal Revenue Service. Common Errors on Form W-2 Codes for Retirement Plans – Section: Form W-2, Box 13
10
Internal Revenue Service. About Form W-2 C, Corrected Wage and Tax Statements
11
Internal Revenue Service. W-2 – Additional, Incorrect, Lost, Non-Receipt, Omitted