Form W-2 Explained: Every Box EA Candidates Must Know

2026-07-10

Last reviewed: July 9, 2026. This article reflects current IRS rules and EA exam requirements as of this date.

Every taxpayer with a job gets a W-2. Every EA candidate must know what's in every box. The EA exam tests W-2 details constantly. Especially the difference between boxes that look similar.

The Boxes That Matter for the EA Exam

Box 1. Wages, tips, other compensation: The amount that goes on Form 1040 Line 1. This is your taxable wages. It excludes pre-tax deductions like 401(k) contributions, health insurance premiums, and FSA contributions. If an employee contributes $5,000 to a 401(k), Box 1 shows $5,000 less than actual salary.

Box 2. Federal income tax withheld: Goes on Form 1040 Line 25. This is the amount the employer sent to the IRS on your behalf.

Box 3. Social Security wages: Usually matches Box 5 (Medicare wages) but is capped at the Social Security wage base ($176,100 for 2026). If your salary is $200,000, Box 3 shows $176,100.

Box 4. Social Security tax withheld: Box 3 × 6.2%, capped at the wage base × 6.2%. For 2026: max $176,100 × 6.2% = $10,918.20.

Box 5. Medicare wages and tips: Not capped. All wages subject to Medicare tax. Usually higher than Box 3 for high earners.

Box 6. Medicare tax withheld: Box 5 × 1.45%. No cap. Plus Additional Medicare Tax (0.9%) on wages over $200,000.

Box 12 Codes. The EA Exam's Favorite Trap

Box 12 uses letter codes to indicate different types of compensation and benefits. The exam expects you to know what each code means:

Code	Meaning	Tax Treatment
D	401(k) contributions	Pre-tax, excluded from Box 1
E	403(b) contributions	Pre-tax, excluded from Box 1
F	408(k)(6) SEP contributions	Pre-tax
G	457(b) contributions	Pre-tax
H	501(c)(18)(D) contributions	Pre-tax
W	Employer HSA contributions	Not taxable
DD	Cost of employer-sponsored health coverage	Informational only. not taxable
C	Taxable cost of group-term life insurance over $50,000	Included in Box 1

Code DD shows the cost of health insurance but is NOT taxable. Students see a number in Box 12 and assume it's income. Code DD is informational only. The employer is reporting the value of coverage, not adding to your taxable income.

Common EA Exam Questions

Employee contributes $8,000 to 401(k). Salary is $75,000. What's in Box 1? ($67,000)
Employee earns $195,000. What's in Box 3? ($176,100. capped at the wage base)
Employee earns $250,000. What Additional Medicare Tax applies? (0.9% on $50,000 above $200,000 = $450)
Box 12 Code DD shows $15,000. Is this taxable? (No. informational only)

When W-2s Must Be Issued

Employers must furnish W-2s to employees by January 31. This is a hard deadline with no automatic extension for employee copies. The employer files Copy A with the Social Security Administration by January 31 as well.

Need to look up the W-2 or other IRS forms? The IRS Form Lookup has 19 common forms with purpose, filing rules, key sections, and EA exam relevance.

Practice income & wage topics →