IRS Form — Wage and Tax Statement
Form W-2 — Wage and Tax Statement
Form W-2 is issued by employers to employees to report wages, tips, and other compensation, and the taxes withheld. It is the primary document for preparing an employee's individual tax return. For tax professionals, Form W-2 is a foundational document — but the coded boxes (particularly Box 12) contain critical information about pre-tax benefits, retirement contributions, and employer-provided benefits that affect the tax return.
Key Rules and Authority
| Rule | Detail |
|---|---|
| W-2 Deadline | January 31 (furnish + file) |
| 401(k) Limit (Box 12 Code D) | $23,500 (2026) |
| HSA Employer Contribution (Box 12 Code W) | Included in Form 8889 limit |
| Dependent Care FSA (Box 10) | $5,000 exclusion |
| Group Term Life (Box 12 Code C) | Imputed income over $50K coverage |
| SIMPLE IRA (Box 12 Code S) | $16,500 (2026) |
Box 12 Codes — Quick Reference for Tax Professionals
| Code | Description | Tax Treatment |
|---|---|---|
| D | 401(k) elective deferrals | Pre-tax; reduces Box 1 wages |
| E | 403(b) elective deferrals | Pre-tax; reduces Box 1 wages |
| W | Employer HSA contributions | Excluded from income; included in Form 8889 limit |
| C | Imputed cost of group term life over $50K | Taxable — included in Box 1 |
| S | SIMPLE IRA contributions | Pre-tax; reduces Box 1 wages |
| AA | Roth 401(k) contributions | After-tax; included in Box 1 |
| DD | Cost of employer-sponsored health coverage | Informational only — not taxable |
| FF | Permitted benefits under QSEHRA | Excluded from income |
Frequently Asked Questions
My client's W-2 shows wages in Box 1 that are lower than their salary. Why?
Box 1 of Form W-2 reports taxable wages — not gross salary. Pre-tax deductions reduce Box 1. Common pre-tax deductions include: 401(k) and 403(b) elective deferrals (Code D or E in Box 12), health insurance premiums paid through a §125 cafeteria plan, HSA contributions through payroll (Code W in Box 12), dependent care FSA contributions (Box 10), and SIMPLE IRA contributions (Code S in Box 12). Box 3 (Social Security wages) and Box 5 (Medicare wages) are typically higher than Box 1 because some pre-tax deductions reduce federal income tax but not FICA taxes (e.g., 401(k) contributions reduce Box 1 but not Boxes 3 and 5).
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