How to Read and Understand Your W-2 Form: Complete 2026 Guide

If you’re an employee in the United States, the Form W-2 (Wage and Tax Statement) is one of the most important tax documents you’ll receive each year. Your employer is required to provide this form by January 31, 2027 for the 2026 tax year, and you’ll need it to file your federal and state income tax returns.

The 2026 version of Form W-2 includes significant changes under the One Big Beautiful Bill Act (OBBBA), including new deductions for tips and overtime, new Box 12 codes, and a restructured Box 14. This comprehensive guide will help you understand every aspect of your W-2 form.

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What’s New in the 2026 W-2 Form

The IRS released substantial updates to Form W-2 for 2026 based on P.L. 119-21 (One Big Beautiful Bill Act), enacted July 4, 2025. Here are the key changes:

1. Box 14 Split into 14a and 14b

Box 14 has been restructured:

• Box 14a—Other: Contains the information previously reported in the old Box 14 (union dues, state disability, health insurance premiums, etc.)
• Box 14b—Treasury Tipped Occupation Code(s): New box for reporting occupation codes for employees receiving tips

2. New Box 12 Codes: TA, TP, and TT

Three new codes have been added for 2026:

Code	Description	What It Means
TA	Employer contributions to Trump account	Up to $2,500/year contributed to a Trump account (a new type of traditional IRA for children under 18)
TP	Total cash tips reported to employer	All cash tips reported during the year for the new qualified tips deduction
TT	Total qualified overtime compensation	The premium portion of overtime pay (e.g., the “half” of time-and-a-half)

3. New Deduction for Qualified Tips

For tax years 2025-2028, eligible employees can deduct up to $25,000 in qualified tips on their income tax return. To qualify:

• Tips must be cash tips (including charged tips) from customers
• Must be in occupations that “customarily and regularly” received tips as of December 31, 2024
• Mandatory service charges are NOT qualified tips

Your employer must report cash tips in Box 12 with code TP and include the Treasury Tipped Occupation Code(s) in Box 14b.

4. New Deduction for Qualified Overtime

For tax years 2025-2028, employees can deduct up to $12,500 ($25,000 if married filing jointly) in qualified overtime compensation. This applies to:

• Overtime pay required under Section 7 of the Fair Labor Standards Act (FLSA)
• Only the premium portion (the “half” of time-and-a-half) qualifies
• Your employer reports this in Box 12 with code TT

5. Wage Reporting Threshold Increased

The threshold for filing Form W-2 increased from $600 to $2,000 if no federal income, Social Security, or Medicare tax was withheld. This threshold will be adjusted for inflation starting in 2027.

6. State Paid Family and Medical Leave (PFML)

Employee contributions and employer voluntary payments under state PFML programs must now be included as wages on Form W-2 per Rev. Rul. 2025-4 and Notice 2026-6.

7. Increased Penalties

Penalties for late or incorrect Forms W-2 have increased for returns due after December 31, 2026:

Filing Status	Penalty Per Form	Maximum Penalty
Within 30 days of due date	$60	$698,500
31 days to August 1	$130	$2,095,500
After August 1 or not filed	$340	$4,191,500
Intentional disregard	$690+	No maximum

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Understanding Every Box on Your W-2

Employee & Employer Information

Box	Label	What It Contains
a	Employee’s SSN	Your 9-digit Social Security Number (may be partially masked on your copy)
b	Employer’s EIN	Your employer’s 9-digit Employer Identification Number
c	Employer’s Name & Address	Your employer’s legal name and address
d	Control Number	Internal tracking number (optional)
e	Employee’s Name	Your legal name as shown on your Social Security card
f	Employee’s Address	Your mailing address

Income Boxes (What You Earned)

Box	Label	What It Contains
1	Wages, Tips, Other Compensation	Your total taxable income (used for your tax return)
3	Social Security Wages	Wages subject to Social Security tax (max $184,500 for 2026)
5	Medicare Wages and Tips	Wages subject to Medicare tax (no maximum)
7	Social Security Tips	Tips subject to Social Security tax
8	Allocated Tips	Tips allocated by employer (large food/beverage establishments)

Why Box 1 May Differ from Your Total Pay: Box 1 excludes pre-tax deductions like:

• 401(k) contributions
• Health insurance premiums
• HSA contributions
• FSA contributions

Withholding Boxes (Taxes Taken from Your Pay)

Box	Label	What It Contains
2	Federal Income Tax Withheld	Federal taxes taken from your paychecks
4	Social Security Tax Withheld	6.2% of Social Security wages (max $11,439 for 2026)
6	Medicare Tax Withheld	1.45% of Medicare wages (includes 0.9% Additional Medicare Tax on wages over $200,000)

Special Boxes

Box	Label	What It Contains
10	Dependent Care Benefits	Amounts from employer dependent care programs (up to $5,000 excludable)
11	Nonqualified Plans	Distributions from nonqualified deferred compensation plans
12	Coded Items	Various benefits, contributions, and special items (see code guide below)
13	Checkboxes	Statutory employee, Retirement plan participant, Third-party sick pay
14a	Other	Additional information (state taxes, union dues, etc.)
14b	Treasury Tipped Occupation Code(s)	Occupation codes for tip recipients (NEW for 2026)

State and Local Tax Boxes

Box	Label	What It Contains
15	State/Employer’s State ID	Two-letter state abbreviation and employer’s state ID number
16	State Wages, Tips, etc.	Wages subject to state income tax
17	State Income Tax	State income taxes withheld
18	Local Wages, Tips, etc.	Wages subject to local/city tax
19	Local Income Tax	Local/city taxes withheld
20	Locality Name	Name of the city or locality

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Complete Box 12 Code Reference

Box 12 uses letter codes to report various types of compensation and benefits. Here’s the complete reference:

Retirement Plan Contributions

Code	Description
D	401(k) elective deferrals
E	403(b) elective deferrals
F	408(k)(6) SEP salary reduction contributions
G	457(b) elective deferrals
H	501(c)(18)(D) tax-exempt organization plan
S	SIMPLE plan salary reduction contributions
AA	Designated Roth contributions (401(k))
BB	Designated Roth contributions (403(b))
EE	Designated Roth contributions (governmental 457(b))

Health & Benefits

Code	Description
DD	Cost of employer-sponsored health coverage (informational only, not taxable)
FF	Permitted benefits under QSEHRA (Qualified Small Employer HRA)
R	Employer contributions to Archer MSA
W	Employer contributions to Health Savings Account (HSA)
T	Adoption benefits

New 2026 Codes (OBBBA)

Code	Description
TA	Employer contributions to Trump account (up to $2,500/year)
TP	Total cash tips reported to employer (for tip deduction)
TT	Total qualified overtime compensation (for overtime deduction)

Other Important Codes

Code	Description
A	Uncollected Social Security tax on tips
B	Uncollected Medicare tax on tips
C	Taxable cost of group-term life insurance over $50,000
J	Nontaxable sick pay
K	20% excise tax on excess golden parachute payments
L	Substantiated employee business expense reimbursements
M	Uncollected Social Security tax on group-term life insurance (former employees)
N	Uncollected Medicare tax on group-term life insurance (former employees)
P	Excludable moving expense reimbursements (military only)
Q	Nontaxable combat pay
V	Income from nonstatutory stock options
Y	Deferrals under section 409A NQDC plan
Z	Income under section 409A NQDC plan (taxable)
GG	Income from qualified equity grants under section 83(i)
HH	Aggregate deferrals under section 83(i) elections
II	Medicaid waiver payments excluded under Notice 2014-7

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Box 14b: Treasury Tipped Occupation Codes

New for 2026, if your employer reports tips in Box 12 with code TP, they must also include your Treasury Tipped Occupation Code(s) in Box 14b.

Important rules:

• Up to two codes can be reported
• Code “000” means tips are from a nonqualifying occupation (not eligible for the $25,000 deduction)
• If you received tips in 3+ occupations, employer reports any two codes
• If ANY tips are from nonqualifying occupations, “000” must be one of the codes

Visit IRS.gov/TippedOccupations for the complete list of qualifying occupation codes.

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Key W-2 Deadlines for 2027 (Tax Year 2026)

Deadline	What Happens
January 31, 2027	Employers must furnish W-2 to employees
January 31, 2027	Employers must file W-2 with SSA (paper or electronic)
April 15, 2027	Employees file individual tax returns using W-2
October 15, 2027	Extended individual tax return deadline

Note: If January 31 falls on a weekend or holiday, the deadline moves to the next business day.

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Common W-2 Errors to Avoid

The IRS and SSA identify these common mistakes that cause processing delays:

Errors Employers Should Avoid

1. Printing Copy A from IRS.gov — The SSA only accepts red-ink originals or electronic filing
2. Omitting decimal points and cents — Always include cents (e.g., 50000.00)
3. Using light ink — Only use black ink for all entries
4. Adding dollar signs — Dollar signs are not needed in amount boxes
5. Wrong EIN — Using employee’s SSN or incorrect EIN
6. Misformatting employee name — First name and middle initial in first box, surname in second
7. Checking “Retirement plan” incorrectly — Only check for qualified plans, not 457(b) or nonqualified plans
8. Cutting, folding, or stapling Copy A — Forms are machine-read

For Employees: Check Your W-2 For

1. Correct SSN — Verify all 9 digits match your Social Security card
2. Correct name spelling — Must match your Social Security card exactly
3. Correct address — Important for receiving tax correspondence
4. Box 1 accuracy — Compare to your final pay stub’s YTD taxable wages
5. Box 2 matches withholding — Compare to pay stub YTD federal withholding

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What To Do If Your W-2 Is Wrong

Step 1: Contact Your Employer

If you find errors, immediately contact your employer’s payroll or HR department. They should issue a corrected Form W-2c if needed.

Step 2: Request a Corrected W-2c

Your employer files Form W-2c with the SSA and provides you corrected copies. Common corrections include:

• Wrong SSN or name
• Incorrect wage or tax amounts
• Missing or wrong Box 12 codes

Step 3: If Employer Won’t Correct

If your employer refuses to issue a correction:

1. Call the IRS at 1-800-829-1040 after February 14th
2. Have your employer’s name, address, and EIN ready
3. Provide your best estimate of correct wages and taxes
4. The IRS will contact your employer

Step 4: File Using Form 4852

If you can’t get a corrected W-2 by the filing deadline:

1. Use Form 4852 (Substitute for Form W-2)
2. Estimate wages using your final pay stub
3. File an amended return if you later receive the correct W-2

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Understanding Box 13 Checkboxes

Statutory Employee

Checked if you’re a statutory employee — your earnings are subject to Social Security and Medicare taxes but NOT federal income tax withholding. Common statutory employees include:

• Full-time life insurance sales agents
• Certain delivery drivers
• Home workers with supplied materials
• Full-time traveling salespeople

Retirement Plan

Checked if you’re an “active participant” in a qualified retirement plan, including:

• 401(k) plans
• 403(b) annuity plans
• SEP plans
• SIMPLE IRA plans
• Pension plans

Why it matters: This affects your eligibility to deduct traditional IRA contributions.

Third-Party Sick Pay

Checked only by third-party sick pay payers or employers reporting such payments.

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How to Use Your W-2 for Tax Filing

For Your Federal Tax Return (Form 1040)

W-2 Box	Where It Goes on Form 1040
Box 1	Line 1a (Wages, salaries, tips)
Box 2	Line 25a (Federal income tax withheld)
Box 12 Code DD	For information only (not entered)
Box 12 Codes TP/TT	Used to calculate new deductions on Schedule 1

Multiple W-2s?

If you had multiple employers:

1. Add all Box 1 amounts together for Line 1a
2. Add all Box 2 amounts together for Line 25a
3. Check if you need to claim excess Social Security tax refund (if combined Box 4 exceeds $11,439)

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Special Situations

Military Members

• Box 12 Code Q shows nontaxable combat pay
• Box 12 Code P shows excludable moving expense reimbursements
• Combat pay is excluded from Box 1 but may be included for earned income credit purposes

Railroad Employees

• Social Security and Medicare (boxes 3-6) are left blank
• RRTA taxes are reported in Box 14a as:
  • “RRTA compensation”
  • “Tier 1 tax”
  • “Tier 2 tax”
  • “Medicare tax”
  • “Additional Medicare Tax”

Government Employees (Medicare Only)

If you’re a government employee paying only Medicare (not Social Security):

• Box 3 (Social Security wages) is blank
• Box 5 (Medicare wages) shows your wages
• Box 4 (SS tax) is blank
• Box 6 (Medicare tax) shows tax withheld

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Frequently Asked Questions

How long should I keep my W-2?

Keep W-2 forms for at least 4 years after filing your tax return. However, the SSA recommends keeping them until you verify your Social Security benefits are correctly recorded — digital copies are acceptable.

Can I file my taxes without my W-2?

Yes, but you should try to wait. If you don’t receive your W-2 by February 14th:

1. Contact your employer
2. Call IRS at 1-800-829-1040
3. Use Form 4852 with estimates if needed
4. File an amended return when you receive the correct W-2

Why is my Box 1 lower than my salary?

Box 1 shows taxable wages after pre-tax deductions are removed:

• 401(k)/403(b) contributions (codes D, E, AA, BB)
• Health insurance premiums
• HSA contributions (code W)
• FSA contributions
• Transportation benefits

Do I attach my W-2 to my tax return?

• E-filing: No attachment needed — data is transmitted electronically
• Paper filing: Attach Copy B to the front of Form 1040

What if my employer went out of business?

Contact the company’s successor, bankruptcy trustee, or the IRS. You can also request a Wage and Income Transcript from the IRS using Form 4506-T.

Can my employer charge for a replacement W-2?

The IRS does not prohibit employers from charging a reasonable fee for duplicate W-2s.

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Related Forms and Resources

Understanding your W-2 is easier when you know how it connects to other tax forms:

• Form W-4 — Employee’s Withholding Certificate (affects your W-2)
• Form 1040 — U.S. Individual Income Tax Return (where you report W-2 data)
• Form W-3 — Transmittal of Wage and Tax Statements (employer summary)
• Form W-9 — Request for Taxpayer Identification Number (for contractors, not employees)

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Summary: Key Takeaways for 2026

1. New Box 12 codes TA, TP, TT — Report Trump account contributions, cash tips, and qualified overtime
2. Box 14 is now split — 14a for other information, 14b for tipped occupation codes
3. New deductions available — Up to $25,000 for qualified tips, $12,500 for qualified overtime
4. Deadline unchanged — Employers must provide W-2 by January 31, 2027
5. Penalties increased — $60 to $340 per form depending on delay
6. Verify your information — Check SSN, name, and amounts match your records

Your W-2 is the key to filing an accurate tax return. Understanding what each box means helps you verify your employer reported correctly and ensures you claim all deductions you’re entitled to.

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Last updated: February 9, 2026. This guide is based on the official IRS General Instructions for Forms W-2 and W-3 (2026). For the most current information, visit IRS.gov/FormW2.