W-2 Form
A W-2 (Wage and Tax Statement) is a form employers send to employees each January. It reports total wages paid and all taxes withheld during the prior year. You need it to file your federal and state income tax returns.
Every employer who paid you $600 or more during the year must send a W-2 by January 31. The form reports: gross wages, federal income tax withheld, Social Security wages and withheld, Medicare wages and withheld, state wages, and state tax withheld.
Key boxes to understand: Box 1 (wages used for federal income tax), Box 3 (Social Security wages — capped at the SS wage base), Box 5 (Medicare wages — no cap), Box 12 (various codes for pre-tax deductions like 401(k), HSA, or company-paid benefits).
Box 12 code "D" is your traditional 401(k) contributions — these are excluded from Box 1 (pre-tax), which is why your W-2 taxable wages are lower than your gross pay if you contribute to a 401(k).
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Open calculator →Related terms
- Tax Withholding
- Tax withholding is the amount your employer deducts from each paycheck and remits directly to the IRS on your behalf. It is an advance payment toward your annual tax liability — not an extra tax. If too much is withheld, you get a refund; too little, and you owe at filing.
- Gross Income
- Gross income is your total income before any taxes, deductions, or withholdings. It is the starting figure used by lenders for DTI calculations and by tax authorities to determine your tax bracket.
- 401(k)
- A 401(k) is a US employer-sponsored retirement savings account. Contributions are pre-tax (traditional) or post-tax (Roth), grow tax-deferred or tax-free, and benefit from compound growth over decades.
- FICA Taxes
- FICA (Federal Insurance Contributions Act) taxes fund Social Security and Medicare. Employees pay 7.65% of gross wages — 6.2% for Social Security (up to the wage base) and 1.45% for Medicare — and employers match these contributions.