The short answer: how to read a W-2 comes down to three zones. The lettered boxes (a to f) identify the employee and employer. Boxes 1 to 6 hold the core numbers: wages for federal income tax and the income tax withheld, then Social Security and Medicare wages and the tax withheld for each. Boxes 7 to 14 add tips, benefits, coded items and checkboxes, and boxes 15 to 20 carry state and local figures. The three wage boxes often differ, and that is normal, because each tax excludes different pre-tax deductions.
This walkthrough follows the Internal Revenue Service's own definitions, box by box, and ends with a check of the W-2 against the year's final pay stub, which is where most W-2 questions are answered.
Box definitions were checked on September 27, 2026, against the IRS General Instructions for Forms W-2 and W-3 (2026). The form and its codes change; the 2026 edition added new items noted below. Dollar thresholds are set by law and adjusted over time.
When the W-2 arrives and what it is for
Form W-2 reports a year of wages from one employer and the taxes withheld from them. Each employer sends its own. For 2026 wages, the General Instructions state that "generally, you must furnish Copies B, C, and 2 of Form W-2 to your employees by February 1, 2027."
On the federal return, the W-2 supplies two things: wages as income, and federal income tax withheld as a payment toward the tax. That second role is why the W-2 sits at the center of any refund or balance due.
The lettered boxes: who and where
These carry no dollar amounts. They let the IRS and the Social Security Administration match the form to the right people.
| Box | What it holds |
|---|---|
| a | Employee's Social Security number |
| b | Employer identification number (EIN) |
| c | Employer's name, address and ZIP code |
| d | Control number, an optional internal reference |
| e and f | Employee's name and address |
A wrong Social Security number or name matters more than it looks, because it can stop the wages from being matched to the right person's records.
Boxes 1 and 2: federal income tax
Box 1, Wages, tips, other compensation. The General Instructions open with: "Wages, tips, other compensation, and nontaxable combat pay must be reported in box 1, less any excludable items." In plain terms, it is the pay that is subject to federal income tax. It is often lower than gross pay because some pre-tax payroll deductions are excluded. A traditional 401(k) deferral is the standard example, and the reason it lowers Box 1 is explained in where the tax hits on traditional and Roth contributions.
Box 2, Federal income tax withheld. The income tax the employer took out during the year and sent to the Treasury. On the return, it is credited against the tax. Comparing this figure with the total tax on the return is the quickest way to see why a refund or a balance due happened.
Boxes 3 to 6: Social Security and Medicare
These four boxes are about payroll taxes, not income tax.
- Box 3, Social Security wages. Wages subject to Social Security tax. Social Security wages stop at an annual maximum that is set each year, so Box 3 can be lower than Box 5 for high earners.
- Box 4, Social Security tax withheld. The instructions tie this to a 6.2% rate on Box 3 wages.
- Box 5, Medicare wages and tips. Wages subject to Medicare tax.
- Box 6, Medicare tax withheld. This includes Additional Medicare Tax, which the instructions tie to a $200,000 wage threshold for the employer's withholding.
Why Boxes 1, 3 and 5 differ
The General Instructions explain the most common gap: 401(k) elective deferrals are excluded from Box 1 but included in Boxes 3 and 5. So an employee who defers part of each paycheck into a traditional 401(k) will usually see Box 3 and Box 5 higher than Box 1. Other pre-tax items can reduce some wage boxes and not others. None of this is an error by itself.
Boxes 7 to 11: tips, benefits and deferred pay
| Box | Name | What it reports |
|---|---|---|
| 7 | Social Security tips | Tips reported to the employer that are subject to Social Security tax |
| 8 | Allocated tips | Tips the employer allocated to the employee |
| 9 | (reduced in size) | The 2026 instructions note this box was reduced in size on the form |
| 10 | Dependent care benefits | Benefits paid or incurred by the employer under a dependent care assistance arrangement |
| 11 | Nonqualified plans | Distributions or deferrals under nonqualified deferred compensation plans |
Box 12: the coded box
Box 12 has four slots, labeled 12a to 12d. Each holds a letter code and a dollar amount. The codes below are taken from the 2026 General Instructions, with quotation marks where the wording is the IRS's own:
| Code | IRS description |
|---|---|
| C | "Taxable cost of group-term life insurance over $50,000" |
| D | "Elective deferrals under a section 401(k) cash or deferred arrangement (plan)" |
| E | Elective deferrals under a section 403(b) plan |
| G | Deferrals to a section 457(b) deferred compensation plan |
| W | "Employer contributions to a health savings account (HSA)" |
| AA | "Designated Roth contributions under a section 401(k) plan" |
| BB | Designated Roth contributions under a section 403(b) plan |
| DD | "Cost of employer-sponsored health coverage" |
| TA | Employer contributions under a section 128 program to a Trump account, new for 2026 |
| TP | "Total amount of cash tips reported to the employer," new for 2026 |
| TT | "Total amount of qualified overtime compensation," new for 2026 |
A few notes on reading them:
- Codes D and AA show the employee's own 401(k) deferrals, pre-tax and Roth respectively. They connect to the plan mechanics in how 401(k) employer match formulas work.
- Code W covers HSA contributions made through the employer, which are part of the HSA's tax layers.
- Code C appears when employer-provided group-term life coverage exceeds $50,000, and the cost above that level is treated as taxable pay. The coverage itself is a form of term insurance, the contract type compared in term vs whole life insurance.
- Code DD is reported for information about the cost of health coverage. It is not an amount added to taxable wages.
- Codes TP and TT are new reporting items for 2026. How they are used on the return is set by that year's Form 1040 instructions, which a tax professional can confirm for a specific return.
The full list of Box 12 codes is longer than this table. The General Instructions carry every code.
Boxes 13 and 14: checkboxes and "other"
Box 13 has three checkboxes: statutory employee, retirement plan and third-party sick pay. The retirement plan box is checked when the employee was an active participant in an employer retirement plan during the year. That checkbox can matter beyond the W-2, because active participation affects some other retirement account rules.
Box 14 is where employers report other items. For 2026, the General Instructions state that box 14 "has been split into box 14a and box 14b," with items previously reported in the single "Other" box now reported in box 14a. Box 14b is for Treasury tipped occupation codes. Box 14a entries have no standard format, so the employer's label is the best guide to what each one means.
Boxes 15 to 20: state and local
The bottom of the form repeats the wage and withholding idea for state and local income tax: the state and the employer's state ID, state wages, state income tax withheld, then local wages, local tax withheld and the locality name. An employee who worked in more than one state or locality can have more than one line here.
Checking a W-2 against the final pay stub
The last pay stub of the year shows year-to-date totals, and they should line up with the W-2 once pre-tax items are taken into account. A short check covers most questions:
- Start from year-to-date gross pay on the final pay stub.
- Subtract the pre-tax items that Box 1 excludes, such as traditional 401(k) deferrals. The result should be close to Box 1.
- Check Box 2 against year-to-date federal income tax withheld. These should match.
- Check Boxes 4 and 6 against year-to-date Social Security and Medicare tax.
- Match Box 12 codes to the deduction lines on the pay stub, such as 401(k), Roth 401(k) or HSA.
A difference that cannot be explained by pre-tax items is a question for the employer's payroll or HR department, since only the employer can issue a corrected form, known as Form W-2c.
What this article cannot decide
This is general information about what each W-2 box reports under the 2026 IRS instructions. How a particular W-2 should be entered on a return, whether an amount is correct, or how a new 2026 code affects a specific return depends on details an article cannot see. The employer's payroll department can explain its own entries, and a tax professional, such as a CPA or enrolled agent, or an IRS-certified volunteer preparer can advise on the return. They will need every W-2, the final pay stub of the year and any Forms 1099.
Frequently asked questions
Why is Box 1 lower than my salary?
Box 1 reports pay subject to federal income tax, less excludable items. Pre-tax deductions such as traditional 401(k) deferrals are excluded, so Box 1 is often lower than gross pay.
Why are Boxes 1, 3 and 5 different?
Each box measures wages for a different tax. The IRS instructions note that 401(k) elective deferrals are excluded from Box 1 but included in Boxes 3 and 5, and Social Security wages stop at an annual maximum.
What does code DD in Box 12 mean?
It is the cost of employer-sponsored health coverage, reported for information. It does not add to taxable wages.
When should a W-2 arrive?
For 2026 wages, the IRS General Instructions state that employers must generally furnish the employee copies by February 1, 2027.
What if something on the W-2 is wrong?
The employer issues corrections on Form W-2c. The employer's payroll or HR department is the starting point.
