How to Find Gross Income on a W-2 Form

The Form W-2, Wage and Tax Statement, is an annual document employers send to employees and the Internal Revenue Service (IRS) that details total earnings and tax withholdings for the year. Many people look for a single “gross income” figure on this form but find no box is explicitly labeled as such. Instead, the form presents several different wage amounts, each serving a distinct purpose for tax reporting.

Identifying Federal Taxable Income

The primary figure for reporting your income on a federal tax return, like Form 1040, is in Box 1, labeled “Wages, tips, other compensation.” This amount represents your wages subject to federal income tax, including your salary, bonuses, and any reported tips.

The amount in Box 1 is not your total earnings before any deductions. This figure has already been reduced by certain pre-tax deductions your employer offers, which lowers your taxable income and the amount of federal income tax you owe.

Understanding Social Security and Medicare Wages

Your W-2 form also reports wages subject to Social Security and Medicare taxes in separate boxes. Box 3 shows “Social Security wages,” which are the earnings used to calculate the Social Security tax withheld. Similarly, Box 5, “Medicare wages and tips,” reports the earnings subject to Medicare tax. These two figures are often identical and may be higher than the amount in Box 1.

For higher-income earners, the amount in Box 3 may differ from Box 5. This is because the Social Security Administration sets an annual wage base limit for Social Security tax, and you only pay this tax on earnings up to that limit. There is no similar wage limit for Medicare tax, so all your covered wages are subject to it, causing Box 5 to be higher than Box 3.

Why the Wage Amounts Differ

The difference between the federal taxable wages in Box 1 and the wages in Boxes 3 and 5 arises from pre-tax deductions. These are amounts for certain benefits taken from your paycheck before federal income taxes are calculated, such as contributions to retirement plans like a 401(k), health insurance premiums, or a Health Savings Account (HSA).

However, not all of these deductions reduce the wages subject to Social Security and Medicare taxes. For instance, your 401(k) contributions lower your federal taxable income in Box 1 but do not lower the wages reported in Boxes 3 and 5. This is why the figures in Boxes 3 and 5 are often a closer representation of your total compensation.

You can find details about these deductions in Box 12 of your W-2. This box uses single or double-letter codes to identify the type and amount of each deduction. For example, code “D” indicates 401(k) contributions, while code “W” signifies employer contributions to an HSA.