What is code DD in Box 12?

The cost of employer-sponsored health insurance. Informational only. Not taxable. Not included in Box 1 wages.

I worked in two states. How is that on the W-2?

You may receive separate W-2s, or one W-2 with multiple state lines. Boxes 15-20 separate state-by-state wages and withholding.

When does my employer have to send my W-2?

By January 31 of the following year. If you have not received it by mid-February, contact payroll. If still unreceived by February 14, contact the IRS.

How to Read a W-2 (Box-by-Box)

The W-2 is the form your employer sends you and the IRS each January reporting your annual wages and tax withholdings. The boxes confuse people because Box 1 wages do not match your gross. Here is each one decoded.

PayslipIQ provides educational information and estimated calculations only. It does not provide tax, legal, financial, accounting, employment, benefits, or payroll advice. PayslipIQ is not a CPA firm, law firm, financial advisor, payroll provider, or tax authority. Always verify your paycheck, deductions, withholdings, and tax position with your employer's payroll department, a qualified CPA, the IRS, your state tax authority, or another appropriately qualified professional. Calculations are estimates; your actual paycheck may differ based on factors specific to your employer, location, benefits elections, and personal tax situation.

The most-asked-about boxes

Box 1: Wages, tips, other compensation

Federal income tax wages. This is gross minus pre-tax 401(k), pre-tax health insurance via Section 125, FSA, traditional HSA via cafeteria plan. So Box 1 is usually less than your total earnings.

Box 2: Federal income tax withheld

Total federal income tax your employer withheld during the year.

Box 3: Social Security wages

Wages subject to Social Security tax. Capped at the annual wage base. Includes pre-tax 401(k) (because 401(k) does NOT reduce FICA wages). Excludes Section 125 deductions.

Box 4: Social Security tax withheld

6.2 percent of Box 3.

Box 5: Medicare wages

Wages subject to Medicare tax. Uncapped. Includes pre-tax 401(k). Excludes Section 125.

Box 6: Medicare tax withheld

1.45 percent of Box 5, plus the 0.9 percent Additional Medicare on wages above $200k.

Box 7: Social Security tips

Tips subject to Social Security. Reported tips count.

Box 8: Allocated tips

Tip income allocated by your employer beyond what you reported, when their tip allocation rules apply.

Box 10: Dependent care benefits

Dependent Care FSA contributions and other dependent care employer benefits.

Box 11: Nonqualified plans

Distributions from non-qualified deferred compensation plans.

Box 12: Coded items

The most common codes:

D: 401(k) elective deferral (pre-tax)
DD: Cost of employer-sponsored health insurance (informational only, not taxable)
W: HSA contributions through payroll
AA: Roth 401(k) elective deferral
BB: Roth 403(b) elective deferral
EE: Roth 457(b)
S: SIMPLE IRA contribution
L: Substantiated employee business expense reimbursement

Boxes 15-20: State and local tax info

15: State and employer state ID
16: State wages
17: State income tax withheld
18: Local wages
19: Local income tax withheld
20: Locality name

Why Box 1 differs from your year-end gross

Pre-tax 401(k), traditional HSA, FSA, Section 125 health insurance all reduce Box 1. Your gross is on your last pay stub of the year. Box 1 is gross minus those deductions.

Frequently asked questions

Why is Box 1 less than my actual annual gross?: Pre-tax 401(k), traditional HSA, FSA, Section 125 health insurance all reduce Box 1. Your gross is on your last pay stub of the year. Box 1 is reduced by these pre-tax items.
What is code DD in Box 12?: The cost of employer-sponsored health insurance. Informational only. Not taxable. Not included in Box 1 wages.
I worked in two states. How is that on the W-2?: You may receive separate W-2s, or one W-2 with multiple state lines. Boxes 15-20 separate state-by-state wages and withholding.
When does my employer have to send my W-2?: By January 31 of the following year. If you have not received it by mid-February, contact payroll. If still unreceived by February 14, contact the IRS.