Your W-2 - Employees – Help Center Home

While Form W-2 can be overwhelming at first glance, once you break down what each box is for and how they relate to each other (and your tax refund), it gets a lot easier.

So what is Form W-2? It’s what the IRS requires your employer to use to report your wages. It also reports the amount of federal, state and other taxes withheld from your pay by your employer for the year. You’ll need this information when preparing your tax return, so the IRS requires your employer to postmark your W-2 no later than January 31.

But what do all these boxes mean? And how do you know it’s right? We’ll show you what each box is for, and how the totals are calculated, so you can be sure your pay and tax information is correct.

Boxes 1-8

Box 1: Wages, tips, other compensation

This is a total of all your wages, tips, and any other compensation you’ve received this year, before any taxes or deductions have been taken out. Most compensation is taxed, including compensation that isn’t money, like personal use of a company car, or 2% shareholders health insurance premiums. But there are also exceptions, including pre-tax retirement plan contributions, Section 125 health insurance premiums, and commuter benefits that are deducted from your gross pay, before any taxes are taken out. If you see that this figure is higher or lower than other wages on your W-2, that’s okay.

If your Box 1 wages are lower than your Box 3 wages, it may be because you have pre-tax benefits that are exempt from federal income tax, but not Social Security tax. If you received paid sick leave, or paid family leave under the Families First Coronavirus Response Act (FFCRA), wages for this paid leave will appear here.

Box 2: Federal income tax withheld

This is the amount of federal income tax that has been withheld from your wages and sent to the IRS this year. It’s based on your total taxable wages for the year, and the filing status on your W-4, which you filled out when you were hired.

The IRS compares this withheld amount with the total amount of taxes you owe, to see if you’ve paid too much or too little. If you’ve paid too much, you’ll get a nice refund, but if you’ve paid too little, you will owe taxes for the year.

Box 3: Social Security wages

This is how much of your total wages are subject to Social Security tax. This figure will also include compensation like pre-tax contributions to 401(k), 403(b) annuity, SIMPLE-IRA and 457 government retirement plans. It helps pay for the retirement, disability, and survivorship benefits that millions of Americans receive each year. Learn more about Social Security and Medicare taxes.

The number in Box 3 should not be higher than $137,700. This is called the Social Security Wage Base, and is the limit to the amount of Social Security taxes that can be withheld in 2020.

If you have any Social Security tips (Box 7), you should be able to add Boxes 3 and 7 together and still get less than $137,700. If you received paid sick leave, or paid family leave under the Families First Coronavirus Response Act (FFCRA), wages for this paid leave will appear here, too.

Box 4: Social Security tax withheld

Box 4 reports how much you withheld from an employee’s Social Security wages and tips. Unlike federal income taxes, Social Security taxes are calculated based on a flat rate of 6.2%. This means that the amount in Box 4 should be equal to the amount in Box 3 times 6.2% (0.062).

Since the most that Box 3 can be is $137,700, the amount in box 4 should not exceed $8,537.40, because $137,700 X 0.062 = $8,537.40.

Box 5: Medicare wages and tips

This may be the largest figure on your W-2, but don’t worry, it’s not how much you’re paying. It’s just how much of your total pay and compensation is used to calculate the Medicare taxes that you owe. Like Social Security wages, this figure will also include compensation like pre-tax contributions to 401(k), 403(b) annuity, SIMPLE-IRA and 457 government retirement plans. But if you have any pre-tax deductions, they will not be included when determining this figure.

And unlike Social Security wages, there is no limit to the amount of Medicare taxes that can be withheld. This is why the figure in Box 5 may be larger than the amounts shown in Box 1 or Box 3. Note: If this figure is above $200,000, a lower tax rate is applied to each dollar over $200,000. We’ll go into this further in the next box.

Medicare is the federal health insurance program intended for people who are 65 or older, but is also available to some younger people with certain diseases and disabilities.

Box 6: Medicare tax withheld

This is how much was withheld from your wages for Medicare tax this year, and should equal 1.45% of your taxable wages (Box 5), if these wages are below $200,000. A lower rate of .9% is applied to each dollar above $200,000. So generally, multiplying the figure in Box 5 by 1.45% (0.0145) should equal the total in Box 6, but just in case you made over $200,000, we'll go over that math.

Here's an example. If Box 5 = $205,000, then you’d calculate it as follows:

($200,000 X 1.45%) + ($5,000 X .9%) = $2,900 + $45 = $2,945.

So if Box 5 is $205.000, then Box 6 would be $2,945.

Box 7: Social Security tips

Tips are taxable and count as income, including cash tips as well as tips added to debit or credit card charges. If this box is blank, it means that you either made no tips this year, or did not report any tips to your employer. This amount is also included in the total for Boxes 1 and 5. The total of Boxes 7 and 3 should not be more than $137,700 for 2020.

If you received tips, but didn’t report them, they are still taxable. Report all of your tips to your employer each month using IRS Form 4070 by the 10th of the next month.

Box 8: Allocated tips

These are tips that your employer has attributed to you, and are considered taxable income. Not all employers have to allocate tips to their employees.

Allocated tips are not included in taxable income on Form W-2, and are not included in the totals for Boxes 1, 3, 5, or 7. You must use Form 4137 to calculate taxes on allocated tips.

Boxes 9-14

Box 9: (Blank)

This box is not currently used by the IRS, and so will be blank.

Box 10: Dependent care benefits

If your employer has a plan which permits you to pre-tax payroll withholdings for daycare, the amount withheld from your payroll is reported here.

If it’s below $5,000, then it’s nontaxable. But any benefits after the first $5,000 is taxable, and will be included in Boxes 1, 3, and 5.

Box 11: Nonqualified plans

This is your employer's distribution to you from a nonqualified deferred compensation plan. Having a non-qualified deferred compensation (NQDC) plan means you can earn wages, bonuses, or other compensation in one year, but receive those earnings in a later year, allowing you to defer the income tax on them until the next year, too.

Box 12: Codes

Here, you may see one or more codes listed, along with associated dollar amounts. These codes and values may affect your taxable wages. For instance, if you elected to contribute earnings toward a 401(k) retirement plan, you may see code D applied, with the amount you contributed. You can see what all the codes mean below, in “Box 12 codes”.

Box 12 codes

A	Uncollected social security or RRTA tax on tips	L	Substantiated employee business expense reimbursements	Y	Deferrals under a section 409A nonqualified deferred compensation plan
B	Uncollected Medicare tax on tips (but not Additional Medicare Tax)	M	Uncollected social security or RRTA tax on taxable cost of group-term life insurance over $50,000 (former employees only)	Z	Income under a nonqualified deferred compensation plan that fails to satisfy section 409A
C	Taxable cost of group-term life insurance over $50,000	N	Uncollected Medicare tax on taxable cost of group-term life insurance over $50,000	AA	Designated Roth contributions under a section 401(k) plan
D	Elective deferrals under a section 401(k) cash or deferred arrangement plan	P	Excludable moving expense reimbursements paid directly to members of the Armed Forces	BB	Designated Roth contributions under a section 403(b) plan
E	Elective deferrals under a section 403(b) salary reduction agreement	Q	Nontaxable combat pay	DD	Cost of employer-sponsored health coverage
F	Elective deferrals under a section 408(k)(6) salary reduction SEP	R	Employer contributions to an Archer MSA	EE	Designated Roth contributions under a governmental section 457(b) plan
G	Elective deferrals and employer contributions (including nonelective deferrals) to a section 457(b) deferred compensation plan	S	Employee salary reduction contributions under a section 408(p) SIMPLE plan	FF	Permitted benefits under a qualified small employer health reimbursement arrangement
H	Elective deferrals to a section 501(c)(18)(D) tax-exempt organization plan	T	Adoption benefits	GG	Income from qualified equity grants under section 83(i)
J	Nontaxable sick pay	V	Income from exercise of nonstatutory stock option(s)	HH	Aggregate deferrals under section 83(i) elections as of the close of the calendar year
K	20% excise tax on excess golden parachute payments	W	Employer contributions (including employee contributions through a cafeteria plan) to an employee's health savings account (HSA)

Box 13: Checkboxes

These checkboxes indicate in the following circumstances:

If you are a statutory employee (meaning your earnings are subject to Social Security and Medicare taxes but not federal income tax withholding)
If you participated in your employer's retirement plan during the year
If you received sick pay under your employer's third-party insurance policy

To go back to our previous example, if you saw code D in Box 12, then the “Retirement plan” box would also be checked.

Box 14: Other

This box is for any remaining information that doesn’t fit in any of the other boxes. Examples include union dues, state disability insurance taxes withheld, vehicle lease payments, health insurance premiums deducted, 2% shareholders health insurance premiums, clergy house allowance, and any other nontaxable income.

Boxes 15-20

Box 15: State | Employer’s state ID number

This is your employer's state tax identification number. If you work in a state that doesn't have a reporting requirement, this box will be blank (so will boxes 16 and 17).

Box 16: State wages, tips, etc.

This shows how much of your total wages is subject to state income tax. If you work in a state with no state income tax, Box 16 should be blank.

If your Box 16 amount is different from Box 1, don’t worry. This isn’t a mistake. You may have wages that are exempt from federal income tax, but that are not exempt from state income tax.

Box 17: State income tax

If you have state-taxable wages in Box 16, then Box 17 will show how much was withheld by your employer to pay these taxes.

Box 18: Local wages, tips, etc.

If your wages are subject to local income tax, like county or city taxes, you’ll see these wages in Box 18. This amount might be different than Boxes 1 and 16.

Box 19: Local income tax

If you have locally-taxed wages in Box 18, then Box 19 will show how much was withheld by your employer to pay these taxes.

Box 20: Locality name

This is the abbreviation for the county or city where these local taxes apply.

So that’s what all the boxes represent, and how they're calculated. But did you know you can see your W-2 in the OnPay app? If your employer has already sent it out, there’s no need to wait for it to arrive in the mail. Just log into OnPay and check your earnings!

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