The short version
Box 1 is your taxable federal wages; Box 2 is the federal income tax already withheld from them. Those two do most of the work on your return.
Boxes 3 through 6 cover Social Security and Medicare on a different wage base, which is why they rarely match Box 1. Box 12 holds the details; the rest is identification and state reporting.
Why Box 1 doesn't match Box 3
The most common W-2 question, and usually not an error.
- Traditional 401(k), 403(b), and similar deferrals reduce Box 1 but not Boxes 3 and 5. You defer income tax; you still pay Social Security and Medicare tax.
- Section 125 pre-tax benefits — health premiums, FSA and payroll-run HSA contributions — usually reduce Boxes 1, 3, and 5.
- Roth 401(k) contributions reduce nothing — they are after-tax (Box 12 code AA).
- Box 3 is capped. Box 5 is not.
Box by box
Boxes a–f: identification
Your SSN (a), employer EIN (b), employer name and address (c), optional control number (d), your name and address (e, f).
Boxes 1 and 2 — taxable wages and federal tax withheld
Box 1 is salary, bonuses, commissions, taxable fringe benefits, and reported tips. Box 2 is a prepayment, not your tax bill — your return computes the real liability and subtracts it.
Boxes 3 and 4 — Social Security wages and tax withheld
Social Security tax is 6.2% for the employee, applied only up to an annual wage base that changes every year. Per IRS Topic No. 751 (last reviewed January 20, 2026), the base is $184,500 for 2026 and was $176,100 for 2025. Use the base for the year printed on the form — never this year's number on last year's W-2.
Quick check: Box 4 should be about 6.2% of Box 3. If Box 3 equals the wage base exactly, you hit the cap.
Boxes 5 and 6 — Medicare wages and tax withheld
Medicare is 1.45% for the employee with no wage cap, so Box 5 is often the largest wage figure on the form.
An Additional Medicare Tax of 0.9% applies above thresholds set by statute and not indexed for inflation: $200,000 single or head of household, $250,000 married filing jointly, $125,000 married filing separately. Your employer withholds it once your wages pass $200,000 regardless of filing status, so it is routinely over- or under-withheld for a household. Form 8959 reconciles it.
Boxes 7 and 8 — Social Security tips and allocated tips
Box 7 is tips you reported to your employer, also inside Box 1. Box 8 is tips *allocated* to you by certain food and beverage establishments when reported tips fall short of a set percentage of sales — allocated tips are not in Boxes 1, 3, 5, or 7 and generally must be added to your income.
Boxes 9, 10, and 11
Box 9 is unused. Box 10 is dependent care benefits — anything above the excludable limit is taxable, and P.L. 119-21 changed that limit, so check IRS Publication 503 for your year. Box 11 is nonqualified deferred compensation distributions, reported for the SSA's earnings test.
Box 12 — the codes that actually matter
Four entries fit per form; more than that and you get a second W-2.
- D — traditional 401(k) elective deferrals
- AA — designated Roth 401(k) contributions
- W — employer HSA contributions, including yours through a cafeteria plan
- DD — cost of employer-sponsored health coverage. Informational only: not taxable
- C — taxable cost of group-term life insurance over $50,000 (statutory, not indexed)
- V — income from nonstatutory stock option exercises
About 30 codes exist; the General Instructions list them all.
Box 13 — three checkboxes
Statutory employee, retirement plan, third-party sick pay. The retirement plan box bites people: if checked, your traditional IRA deduction may be limited by income.
Box 14 — Other
A catch-all with no standard format: state disability insurance, union dues, after-tax deductions. On 2026 forms it is Box 14a; 14b holds the Treasury Tipped Occupation Code. Ask payroll if an entry is unclear.
Boxes 15–20 — state and local
State abbreviation and employer state ID, state wages and tax, then local wages, tax, and locality. State wages often differ from Box 1 because states treat some items differently.
Tips and overtime: what changed
Under P.L. 119-21, for tax years 2025 through 2028, individuals may deduct up to $25,000 of qualified tips and up to $12,500 of qualified overtime compensation ($25,000 joint — the overtime cap doubles, the tips cap does not). Both phase out above $150,000 of modified AGI, $300,000 joint.
- Tax year 2025 W-2s were not updated for it. IRS Notice 2025-62 gave employers penalty relief for not reporting the amounts separately; Notice 2025-69 explains how individuals find them — tips from Box 7, Forms 4070, or your own log, and qualified overtime as only the FLSA premium, the "half" of time-and-a-half: divide time-and-a-half overtime pay by 3, or by 4 for double time. Keep the records.
- Tax year 2026 forms report it directly. Box 12 code TP (cash tips reported to the employer), code TT (qualified overtime compensation), and Box 14b for the Treasury Tipped Occupation Code.
Before you file: three checks
1. Name and SSN match your Social Security card. 2. Two or more employers? If combined Social Security wages exceeded that year's base, claim the excess as a credit on Schedule 3 of Form 1040. A *single* employer that over-withheld has to correct it itself. 3. Missing or wrong? Ask your employer first; if unresolved by the end of February, call the IRS at 800-829-1040. Employers correct errors on Form W-2c, Form 4852 substitutes for a W-2 that never arrives, and Form 1040-X amends a return filed with the wrong numbers.
For employers
W-2s are due to employees and to the Social Security Administration on January 31, moving to the next business day when that falls on a weekend — tax year 2026 forms are due February 1, 2027. SSN mismatches trigger most notices; validate them before the run.
If you produce pay statements in-house, UWageCo prepares them from the payroll data you enter. You or your filing agent still transmit anything going to the SSA or a state agency, and every document it generates carries a disclosure that the data came from the customer.
Where to verify anything here
Dollar thresholds change annually, so match the source to the year on your form: the IRS General Instructions for Forms W-2 and W-3, Topic No. 751 (rates and wage base), Topic No. 154 (missing or incorrect W-2), and Notice 2025-69 (2025 tips and overtime).
This is general information, not legal or tax advice. For your own situation, talk to a CPA or an enrolled agent, or contact the IRS directly.