
You probably know the W2 form from tax season. But how do you read a W2? What do all of those boxes mean, and why is it important to know how to read this tax form?
W2 Overview
First, a bit of background. The W2 form, issued at the start of every year in January, consolidates an employee’s earnings, wages, and other essential information for the previous year. This form reconciles an employee’s earnings on an annual basis.
The W2 is best known as the form submitted to the IRS and state governments to submit for your tax return. This form determines whether you still owe tax dollars to the government or if there is a refund due from the government.
(Pro Tip: For the W2 form and other payroll and compliance resources, check out our Government Forms and Info page!)
Who Gets a W2?
If an employee has earned over $600 in wages from an employer, that employee will receive a W2. There is no distinction between part-time and full-time status—the only criteria for issuing or not is how much an employer paid an employee the previous year.
Why Are There So Many W2 Form Copies?
Each W2 form includes multiple copies, each intended for a specific purpose.
Employer Copies
Employers will handle and submit W2s separately from the versions that employees submit. The following are the employer’s copies of the W2:
- Copy A: Employers submit this copy to the Social Security Administration along with their W3 filing. Unlike all other copies that are blue, this version is red to avoid confusion.
- Copy D: This copy is for the employer’s business records.
- Copy 1: Employers submit this copy to state, city, or local tax departments (if relevant).
Employee Copies
Employees will receive the following copies of the W2:
- Copy B: This copy is used for employee federal income tax filing.
- Copy C: Employees will keep this copy for their personal records.
- Copy 2: Employees submit this copy to state, city, or local tax departments if they file a return with one of those entities.
How Do You Read a W2: Box Breakdown
So how do you actually read a W2 form? Use this step-by-step breakdown to understand what each box on your W2 represents.
Box 1: Wages, Tips, and Other Compensation
This is your total taxable income for the year. The total includes wages, salaries, bonuses, and any other taxable benefits.
NOTE: This total excludes pre-tax benefits contributions (like 401k or health insurance).
Box 2: Federal Income Tax Withheld
This box shows the total amount of federal income tax that was withheld from your pay during the year.
Box 3: Social Security Wages
This box indicates the portion of your wages that are subject to Social Security Tax. If you made pre-tax contributions, this total may differ from the total in Box1.
NOTE: The Social Security wage base limit can cap this figure. For 2024, this limit was $168,600.
Box 4: Social Security Tax Withheld
This total is the amount of Social Security tax withheld from your pay over the previous year.
Box 5: Medicare Wages and Tips
This total reflects the amount of your wages that are subject to Medicare tax. Unlike Social Security wages (Box 3), there is no upper limit for Medicare taxes.
Box 6: Medicare Tax Withheld
This total is the amount of Medicare tax that was withheld from your pay over the previous year. This is generally 1.45% of the total in Box 5.
NOTE: “High earners” making over a certain threshold will see an extra .9% in this total. The thresholds for 2024 are:
- Single = $200,000
- Married, Filing Jointly = $250,000
- Married, Filing Separately = $125,000
Box 7: Social Security Tips
If you work in a tipped profession, this box totals all tips you reported to your employer that are subject to Social Security tax.
Box 8: Allocated Tips
This box shows tips your employer allocated to you if you work in a tipped profession. These are tips that you didn’t officially report but your employer has attributed to you (for example, based on your share of sales in a restaurant).
NOTE: This amount is not included in Box 1.
Box 9: BLANK
This box was formerly used for advanced earned income credit payments. It is now blank.
Box 10: Dependent Care Benefits
This amount totals any dependent care assistance benefits you received in the past year. Examples include employer-sponsored daycare, employer-subsidized after-school programs, and paid leave for caring for a disabled family member.
Box 11: Nonqualified Plans
This box reports any distributions from a nonqualified deferred compensation plan. These are payments from income that you deferred in previous years. This will help the IRS track deferred payments to ensure you aren’t taxed twice on the same income.
NOTE: This is not very common. It mostly applies to high-level executives, highly-compensated employees, and non-profit employees. The majority of W2 recipients will not see an amount in Box 11.
Box 12: Additional Information Codes
This box contains a series of codes that indicate different forms of compensation or deductions. Common codes include:
- D: 401k contributions
- E: 403b contributions
- DD: Cost of employer-sponsored health coverage
- W: Employer contributions to an HSA
See the full list of codes here.
Box 13: Special Situations
This box includes checkboxes for specific scenarios:
- Statutory Employee: Independent contractors who receive a W2 instead of a 1099.
- Retirement Plan: Checked if you participated in a workplace retirement plan like a 401k.
- Third-Party Sick Pay: Wages paid through a third-party insurance provider.
Box 14: Other Information
Employers use this box to report additional information such as union dues, garnishments, reimbursements (for uniforms, etc.), or tuition assistance.
Boxes 15-20: State and Local Tax Information
This bottom set of boxes reports state and local income tax details, with percentages varying by locality.
How Do You Review Your W2 for Accuracy?
Once you’ve read your W2, you’ll want to make sure you’re checking for accuracy of information in each box. In general, you’re going to double check three main areas: personal information, earnings and withholdings, and tax withholdings.
Personal Information
Verify that your full name is spelled correctly, that your social security number is accurate, and that your home address is correct.
Earnings and Withholdings
Compare the total earnings listed in Box 1 with your final pay stub of the year to confirm that the amounts match. If you made any changes throughout the year (like increasing 401k contributions), make sure the total reflects those changes.
Tax Withholdings
Review the amounts in Boxes 2, 4, and 6 to make sure the correct tax amounts were withheld. Verify that any pre-tax benefits (like health insurance premiums or dependent care) are accurately applied.
Some Final Tips
While W2s are usually quite accurate, mistakes can happen! To help ensure a smooth review process:
- Employers legally must send W2s by January 31. If you have not received your W2 by then, reach out to your employer as soon as possible. If you still do not receive your form, you can reach out to the IRS directly for support.
- Keep all of your pay stubs throughout the year to make end-of-year comparisons easier.
- If you identify discrepancies, reach out to your employer immediately for clarification/correction.
- Save all of your W2s for at least five years in case of an audit.
By thoroughly reviewing your W2, you can confidently file your taxes, avoid unnecessary complications, and ensure your tax return (if applicable) is timely.
We hope this was a helpful guide on how to read a W2 form! If you need further assistance, consider consulting a tax professional like Green Payroll! In addition to helping employers manage business tax filing, we can also help with employee filing!
For more helpful overviews of government forms, check out these articles below: