How to Read Your W-2: A Simple Guide for Tax Season

By Tax&Facts | Published on Feb 4, 2025 | Read: 3 Mins

Tax season is upon us, and that mysterious-looking W-2 form has landed in your mailbox or inbox. If you’ve ever looked at a W-2 and felt like you were reading another language, you’re not alone. But don’t worry — this post will break it down, box by box, so you know exactly what it means and how it affects your taxes.

What is a W-2?

Form W-2, also known as the Wage and Tax Statement, is a document your employer sends to both you and the IRS. It reports your earnings and the taxes withheld from your paycheck for the year. If you had more than one job, you’ll receive a W-2 from each employer.

W-2 Breakdown: Box by Box

Boxes A–F: Who You Are and Who You Work For

• Box A: Employee’s Social Security Number – This is your SSN — make sure it’s correct!
• Box B: Employer Identification Number (EIN) – Like a Social Security number, but for your employer.
• Box C: Employer’s Name, Address, and ZIP Code – Your company’s legal contact information.
• Box D: Control Number – Internal to your employer or payroll system. You can ignore it for your taxes.
• Box E & F: Employee’s Name and Address – Your name and address. Double-check for typos.

Boxes 1–6: Your Wages and Federal Taxes

• Box 1: Wages, Tips, Other Compensation – This is your taxable income — what the IRS looks at. It may be less than your total salary if you had pre-tax deductions (like for a 401(k)).
• Box 2: Federal Income Tax Withheld – How much your employer already sent to the IRS on your behalf.
• Box 3: Social Security Wages – Income subject to Social Security tax. Might differ from Box 1 due to pre-tax deductions.
• Box 4: Social Security Tax Withheld – 6.2% of Box 3 (up to IRS-set limit).
• Box 5: Medicare Wages and Tips – Income subject to Medicare tax (no limit).
• Box 6: Medicare Tax Withheld – Typically 1.45% of Box 5, plus 0.9% on income over $200,000.

Boxes 7–14: Other Income Details

• Box 7: Social Security Tips – Social Security tips are tips an employee receives from customers (such as in restaurants or salons) that are reported to the employer and are subject to Social Security tax. These tips are reported separately in Box 7 of IRS Form W-2.
  Employees are required to report cash tips of $20 or more in a month to their employer, who then includes these tips in wage reporting and withholds Social Security and Medicare taxes accordingly. These tips are counted toward an employee’s Social Security earnings and can impact future Social Security benefits
• Box 8: Allocated Tips – Tips your employer reports you received but didn’t claim — may be taxable.
• Box 10: Dependent Care Benefits – Employer contributions to a dependent care FSA.
• Box 12: Codes & Contributions – Mixed info like:
  - Code D: 401(k) contributions
  - Code DD: Employer-provided health insurance
  - Code W: HSA contributions
• Box 13: Checkboxes – May include:
  - Statutory employee
  - Retirement plan
  - Third-party sick pay
• Box 14: Other – Miscellaneous info (union dues, tuition assistance, etc.).

Boxes 15–20: State and Local Info

These boxes show your state and local income details:

• State wages and state income tax withheld
• Employer’s state ID number
• Local wages and local tax withheld (if applicable)

Final Tips

• Always compare your W-2 with your final pay stub.
• Double-check your name and Social Security number.
• Use the W-2 when filing your federal and state income tax returns.
• If something looks off, contact your employer’s HR or payroll department right away.