W-2 Form Explained
Every January, a W-2 lands in your mailbox and a good chunk of r/tax turns into "what does Box 12 code DD mean?" Fair question — the form is genuinely confusing. Here's a plain-English tour of every box, so you actually understand what you're looking at.
Box 1
Taxable wages
After pre-tax deductions
Box 2
Federal withheld
What was already paid
Box 12 code D
401(k)
Your contributions
Box 12 code W
HSA
Through payroll
What a W-2 Actually Is
Your W-2 is a summary of what you earned and what was withheld in taxes during the year. Your employer sends one copy to you and one to the IRS — which is why the numbers need to match your tax return. If they don't, that's when a CP2000 notice shows up.
Understand what your wages look like after tax
Plug in your income to see your real take-home.
Box 1 and Box 2: Wages and Withholding
Box 1 is your taxable wages — your salary minus pre-tax deductions like 401(k) contributions, health insurance premiums, and HSA contributions. This is why Box 1 is often lower than your gross salary, which confuses a lot of people. It's normal, and it's actually a good thing — those deductions lowered your tax.
Box 2 is the federal income tax already withheld from your paychecks. This is the number that determines whether you get a refund or owe more at filing.
Boxes 3–6: Social Security and Medicare
- Box 3 — wages subject to Social Security tax (capped at the $184,500 wage base for 2026).
- Box 4 — Social Security tax withheld (6.2% of Box 3).
- Box 5 — wages subject to Medicare tax (no cap).
- Box 6 — Medicare tax withheld (1.45% of Box 5).
Note the difference from Box 1: 401(k) contributions reduce your income tax (Box 1), but they do not reduce your Social Security/Medicare wages (Boxes 3 and 5). That's why those numbers can be higher than Box 1.
Box 12: The Codes Everyone Asks About
Box 12 uses letter codes for all sorts of things. The ones you'll actually see:
- D — your 401(k) contributions (pre-tax).
- DD — the cost of your employer-sponsored health coverage (informational only, not taxed).
- W — HSA contributions made through payroll.
- C — taxable cost of group-term life insurance over $50,000.
- AA — designated Roth 401(k) contributions.
Boxes 15–20: State and Local
These boxes mirror the federal ones at the state level: state wages (Box 16), state income tax withheld (Box 17), and local wages/tax (Boxes 18–20) where local taxes apply. If you live in a no-income-tax state, these are usually blank.
Frequently Asked Questions
Why doesn't my W-2 match my salary?
Because Box 1 is your taxable wages, after pre-tax deductions (401(k), health insurance, HSA). Your salary minus those = Box 1. It's normal and not an error.
What if my W-2 has an error?
Ask your employer for a corrected W-2 (Form W-2c). Don't file with wrong numbers — the IRS matches them and a mismatch triggers a notice.
What if I never received my W-2?
Contact your employer first. If that fails, you can use Form 4852 (substitute for W-2) with your best estimate, or request a wage transcript from the IRS. Don't just skip filing.
Do I report Box 12 code DD as income?
No. Code DD is informational only — it tells you what your health coverage cost, but it is not taxable income. Just leave it be.
Sources
- IRS — Form W-2 and W-2c instructions.
- IRS — Social Security wage base ($184,500 for 2026) and FICA rates.
- IRS Publication 15 — withholding and Box 12 codes.
This is informational, not tax advice. Your specific W-2 may include codes not listed here.