What Is a W-2?
A W-2 (Wage and Tax Statement) is the official document your employer sends you by January 31 each year showing:
- How much you were paid
- How much federal, state, and FICA tax was withheld from your paychecks
You use your W-2 to file your tax return. The IRS also receives a copy directly from your employer.
Key W-2 Boxes Decoded
Box 1: Federal Wages, Tips, and Other Compensation
This is your taxable federal income — not your gross salary.
It's calculated as:
Gross Pay − Pre-Tax Deductions = Box 1
Pre-tax deductions that reduce Box 1:
- 401(k) / 403(b) contributions
- Health/dental/vision premiums (employer plan)
- HSA contributions
- FSA contributions
- Commuter benefits
This is why Box 1 is almost always lower than your annual salary.
Box 2: Federal Income Tax Withheld
The total federal income tax your employer withheld from your paychecks all year. This number flows directly to Line 25a of your Form 1040.
If this is higher than your actual tax liability → you get a refund. If this is lower → you owe money.
Box 3 & 4: Social Security Wages and Tax Withheld
- Box 3: Your wages subject to Social Security tax. The 2026 cap is $176,100.
- Box 4: Social Security tax withheld (should be exactly 6.2% of Box 3, capped at $10,918.20)
Box 3 is often higher than Box 1 because health insurance premiums reduce Box 1 but not Box 3.
Box 5 & 6: Medicare Wages and Tax Withheld
- Box 5: Your wages subject to Medicare tax. No cap — this equals your gross pay minus 401(k) contributions (but not health insurance).
- Box 6: Medicare tax withheld (1.45% of Box 5; high earners pay an extra 0.9% Additional Medicare Tax on income over $200,000)
Box 12: Coded Deductions
Box 12 uses letter codes to report specific amounts. The most common:
| Code | Meaning |
|---|---|
| D | 401(k) contributions |
| E | 403(b) contributions |
| W | Employer HSA contributions |
| DD | Cost of employer-sponsored health coverage (informational only — not taxable) |
| AA | Roth 401(k) contributions |
Box 17: State Income Tax Withheld
Total state income tax withheld. Use this when filing your state return. Some states have their own withholding forms.
Common W-2 Confusion: Why Box 1 ≠ Your Salary
Example: $80,000 salary, $4,000 401(k), $2,400 health insurance premiums
| Amount | |
|---|---|
| Gross Salary | $80,000 |
| − 401(k) | − $4,000 |
| − Health Insurance | − $2,400 |
| Box 1 (Federal Wages) | $73,600 |
| Box 3 (Social Security Wages) | $75,600 (401k reduces SS wages too, but not health insurance) |
| Box 5 (Medicare Wages) | $76,000 (only 401k reduces, health insurance does not) |
Multiple W-2s: Excess Social Security
If you worked two jobs with combined Box 3 wages over $176,100, each employer withheld 6.2% independently. You overpaid Social Security.
The excess is refundable — claim it on Schedule 3, Line 11 of Form 1040.
Use our Tax Refund Estimator to estimate your refund or balance due using your W-2 numbers.