Your W-2 is the form your employer sends each January summarizing what you earned and what was withheld for taxes. It's dense, but only a handful of boxes really matter. Here's what they mean.
Boxes 1–2: wages and federal tax
Box 1 is your taxable wages — and it's usually less than your salary, because pre-tax deductions (401(k), health insurance, HSA) are subtracted out. Box 2 is the federal income tax your employer already withheld and sent to the IRS on your behalf.
Boxes 3–6: Social Security and Medicare
Box 3 and Box 5 show wages subject to Social Security and Medicare — these can differ from Box 1 because 401(k) contributions are still taxed for Social Security/Medicare. Box 4 and Box 6 are the amounts withheld for each.
Box 12: the coded amounts
This is the box that confuses everyone. Each entry has a letter code and a dollar amount, such as:
- D — your 401(k) contributions
- DD — the cost of your employer-sponsored health coverage (informational only; not taxable)
- W — HSA contributions
- C — taxable cost of group-term life insurance over $50,000
Boxes 15–20: state and local
These repeat the wage/withholding story for your state and, if applicable, your city or locality.
Why Box 1 ≠ your salary
If your salary is $60,000 but Box 1 says $54,000, that's normal — your pre-tax 401(k) and benefits came out first. That's the number your income tax is calculated on, which is a good thing.
The bottom line
Focus on Box 1 (taxable wages) and Box 2 (federal tax withheld) — those drive your tax return. The rest is detail your tax software fills in automatically.
Staring at a W-2, 1099, or tax notice you can't parse? Plainly is a free Chrome extension that explains tax forms and other confusing documents in plain English — right on the page. Your documents are never stored.