W-2 Boxes: What Each One Means and How to Fill Them Out

W-2 boxes are the different categories that represent an employee’s financial details, such as wages, Social Security taxes, and retirement plan deductions. Using a W-2 generator can help you accurately fill out these boxes with minimal effort. W-2 forms play a crucial role in tax reporting; thus, it’s crucial to know how to fill out W-2 boxes accurately to avoid any misunderstandings or delays.

In this article, we’ll discuss the different W-2 boxes you’ll find on the form, explain what each one represents, and discuss how to complete them accurately. We’ll also highlight some common mistakes to watch for when filling out W-2 forms.

Let’s start!

Key Takeaways

• A W-2 form is a document that states an employee’s total earnings, withheld taxes, and deductions.
• There are 19 numbered and six lettered W-2 boxes corresponding to an employee’s personal, financial, and tax information.
• To complete a W-2 form correctly, you must accomplish Boxes A to F first, then carefully proceed to Boxes 1 to 20. Afterward, make sure to double-check all the information stated to prevent any errors.
• Some common mistakes to avoid when filling out a W-2 form are missing or incorrect information, wrong formatting, and forgetting decimal points and centavos.

What is a W-2 Form and Who Is It For?

A W-2 form is an essential tax document that reports an employee’s total earnings, the amount of federal and state taxes withheld, and other deductions from their salary. Employers must complete and distribute these forms to eligible employees before January 31st of the following year to meet tax filing deadlines.

You can expect to receive a W-2 form from your employer if you:

• Earn $600 or more in wages
• Had Social Security, Medicare, or income taxes withheld from your paycheck

If either of these applies to you, understanding how W-2 forms impact tax filing is crucial. Since this form states how much you earned and paid in taxes throughout the year, it can help you calculate income taxes and ensure accurate tax filings.

Any discrepancies in the amount or data stated on W-2 forms can lead to delays and penalties, so it’s always a good idea to double-check all the information and ask your employer for a W-2 form correction if necessary.

19 W-2 Boxes and Their Functions Explained

The W-2 tax form has over 19 boxes representing different income categories, tax liabilities, and benefits that apply to your wages.

These boxes can be overwhelming and confusing, but a W-2 generator can simplify the process by ensuring accuracy and efficiency.

Here’s a breakdown of W-2 form codes you will encounter:

Box 1: Wages, Tips, and Other Compensation

Box 1 is arguably the most important for W-2 reporting, showing the employee’s total taxable wages, tips, and bonuses. Taxable wages refer to an employee’s gross earnings minus pre-tax deductions such as retirement or health insurance.

This box also accounts for other fringe benefits received during the year, including:

• Wellness benefits
• Health reimbursements
• Parking fringe benefits
• Education benefits that exceed $5,250

While tips are currently taxable, President-elect Donald Trump has recently reiterated his pledge to implement a “no tax on tips” policy, so the amount in this W-2 box may change in the future.

Box 2: Federal Income Tax

Box 2 states the amount of federal income tax withheld from an employee’s wages throughout the year.

Box 3: Social Security Wages

Social Security wages refer to the employee’s wages that are subject to Social Security tax. These wages differ from what’s reported on Box 1, as this amount is reduced if the employee has pre-tax deductions from parking or health insurance.

However, once an employee earns the maximum Social Security wage base of $176,100 for 2025, they will no longer be subject to Social Security tax deductions.

Box 4: Social Security Tax

Box 4 indicates the amount of Social Security tax withheld from the employee’s pay during the year. The current tax rate for Social Security is 12.4%, divided equally between employer and employee at 6.2% each. That said, if you’re self-employed, you will have to pay the full tax rate by yourself.

Box 5: Medicare Wages and Tips

Unlike Social Security wages, Medicare wages have no wage base limit and apply to all of an employee’s taxable earnings, including tips. These wages are also reduced for pre-tax deductions like HCFSA contributions.

Box 6: Medicare Tax

Box 6 states the amount of Medicare tax withheld from the employee’s paycheck. For self-employed individuals, this reflects the full rate of 2.9%, while regular employees are subject to a 1.45% tax rate.

An additional Medicare tax of 0.9% is also applied to higher earners that exceed the following income thresholds:

• $250,000 for married filing jointly
• $125,000 for married filing separately
• $200,000 for other taxpayers

Box 7: Social Security Tips

Box 7 reports any tips an employee receives that are subject to Social Security taxes. This amount can also be included under Box 3.

Box 8: Allocated Tips

Box 8 refers to the tips an employer assigns to an employee on top of the tips they already reported. Employers can allocate tips when the employee:

• Works in a large food or beverage establishment
• Received direct tips from customers
• Initially reported tips that were less than 8% of food and drink sales

Box 10: Dependent Care Benefits

Dependent care benefits refer to contributions to a Dependent Care Assistance Program (DeCAP) through payroll deductions. These contributions are not subject to federal, Social Security, or Medicare taxes.

Box 11: Nonqualified Plans

Box 11 shows the total amount an employee receives from their employer’s non-qualified deferred compensation plan. This amount can be taxable and affects Social Security and Medicare wages.

Box 12: Box 12 Codes

Box 12 includes W-2 codes ranging from A to II that represent different types of employee compensation or benefits, such as:

• B - Uncollected Medicare tax on tips
• J - Nontaxable sick pay
• Q - Nontaxable combat pay (for military personnel)
• W - Health savings account contributions

Box 13: Retirement Plans

Box 13 shows whether an employee is currently part of an employer-sponsored retirement plan. This box includes three options:

• Statutory employee
• Retirement plan
• Third-party sick pay

Checking this box is crucial as it will affect the amount of IRA contributions an employee can deduct from their tax return.

Box 14: Others

Employers can use Box 14 to report any additional tax information that does not fit into the other categories, such as:

• Health insurance premium deductions
• Union dues
• State disability insurance (SDI) contributions
• Uniform payments
• Educational assistance payments

Boxes 15 - 20: State and Local Tax Information

Finally, boxes 15-20 are used to report any state or local tax information. Here’s a quick explanation for each W-2 box:

• Box 15 shows your employer’s state and state tax ID number
• Box 16 reflects the employee’s wages subject to state income taxes
• Box 17 reports the amount of state income tax withheld from box 16
• Box 18 states the employee wages subject to local or city taxes
• Box 19 shows the amount of local taxes withheld from box 18
• Box 20 states the name of the city where the wages are subject to local taxes

Boxes A - F

These W-2 boxes are used to state important employee and employer information, including their:

• Complete name
• Complete address and zip code
• Social Security number
• Employer Identification Number (EIN)

How to Correctly Fill Out a W-2 Form

Now that we have explained W-2 boxes and their functions, it’s time to learn how to fill a W-2 form correctly. Some boxes can be tricky, and mistakes can lead to penalties, so paying close attention to each section when filling out a form is important.

Here are the complete W-2 form instructions you need to help you accomplish this form correctly:

• Complete Boxes A to F. Since these W-2 boxes require employee and employer information, it’s best to accomplish these first so you don’t forget to do so later. Make sure to double-check all entries to avoid any errors or incorrect information that can cause tax complications.

• Fill out Boxes 1 to 6. Once you complete the required information, it’s time to move on to the numbers, starting with Boxes 1 to 11. Remember that W-2 Boxes 1, 3, and 5 all reflect the employee’s wages, while Boxes 2, 4, and 6 should state the amount of tax deducted. After this, you can proceed with the rest of the W-2 boxes.

• Review Box 12. W-2 Box 12 can be tricky, especially since it has over 30 different codes, so review each section thoroughly when filling out your form to avoid issues.

• Check Box 13 if applicable. Next, if the employee is in a retirement plan, received third-party sick pay, or is a statutory employee, you must check the appropriate option on W-2 Box 13.

• Add details in Box 14. You can add any additional information that isn’t covered by the other boxes in Box 14.

• Provide necessary information in Boxes 15 to 20. Finally, you can fill out the remaining W-2 boxes 15 to 20 with the required information about local and state taxes.

Given the sheer number of W-2 boxes to keep track of, filing a W-2 form can be difficult, especially if it’s your first time. To help simplify your tax filing preparation, consider using Paystub.org’s W-2 generator to create professional documents in seconds. Our tool automatically calculates wages, taxes, and deductions to help you avoid filing errors.

3 Common Mistakes to Avoid When Filling out Your W-2 Form

While W-2 boxes are arguably the trickiest part of filling out a W-2 form, there are other common mistakes you should be aware of, such as:

#1. Missing or Incorrect Information

Completely missing information or having incorrect data is one of the most common W-2 errors that can lead to costly fines. Minor mistakes in the spelling of the name or the Social Security number can prevent the IRS from matching the form with the right taxpayer, which can cause significant delays in processing their tax filings.

#2. Using the Wrong Format

The IRS has strict guidelines for W-2s, and failing to follow this format can lead to rejected forms. Here are some formatting errors you should avoid:

• Using an ink color other than black
• Adding a dollar sign to money amounts
• Using a font size too small or too big; a size 12 font is ideal.

#3. Forgetting Decimal Points and Cents

Employers must report accurate wages, taxes, and deductions, meaning the stated amounts on W-2 boxes should include the exact decimals and centavos. Rounding numbers off can lead to underreporting income, which is a form of tax evasion and is subject to hefty fines.

Even if there are no centavos, you should still enter the decimal value. This means that if an employee earns $31,567.00, then you should report this exact amount on their W-2 form.

Final Thoughts

Understanding the different W-2 boxes is key to making tax season less stressful and avoiding issues with the IRS. W-2s are just one of the many payroll tax forms employers need to accomplish, so it’s important to use online tools like our W-2 generator that can help simplify this process for you.

Whether you’re preparing for tax season or just managing payroll throughout the year, you can use Paystub.org to generate professional forms for accurate financial reporting. With the right tools, you can easily accomplish W-2 forms and ensure complete tax compliance.

W-2 Boxes FAQ

#1. How do I know if I need to file a W-2 or a 1099 form?

To know if you need to file a W-2 or a 1099 form, you need to understand what type of employment you currently have. W-2 forms are used for regular employees on the payroll, while 1099 forms are for independent contractors and freelancers.

#2. What should I do if my W-2 is incorrect?

If your W-2 is incorrect, you can raise the issue with your employer and ask them to correct it. Correcting W-2 errors should be done before the end of February; if your employer fails to do so, you can file a complaint with the IRS.

#3. Can I make my own W-2 form?

You can make your own W-2 form if you’re an employer using a W-2 form generator like one from Paystub.org. Employees, on the other hand, can’t make their forms and will simply receive a copy of this form from their employer.