Payroll receives many questions about the W-2. Most of these questions focus on understanding the amounts in the numbered boxes on the W-2.
The most common questions relate to why W-2 Wages differ from your final pay stub for the year, and why Federal and State Wages per your W-2 differ from Social Security and Medicare Wages per the W-2. The short answer is that the differences relate to what wage amounts are taxable in each case. The following steps will walk you through the calculations of the W-2 wage amounts and enable you to reconcile these to your final pay stub for the year.
CALCULATING FEDERAL AND STATE TAXABLE WAGES (BOXES 1 & 16)
Use your last pay stub for the year to calculate the taxable wages in boxes 1 and 16 in your W-2. Begin with the Gross Pay YTD (year-to-date) and make the following adjustments, if applicable:
Federal Taxable Wage – Adjustments to Gross Pay YTD:
Subtract YTD Before-Tax Deductions, which include
• Medical
• Dental
• Vision
• FSA Health
• FSA Dependent Care
• HSA
• Parking
• T Pass
• 403B
• 457 Plan
Add Employer Paid Benefits Taxable* for QDP Medical and Dental YTD
Add GTL imputed income from Box 12C on your W-2
State Taxable Wage – Adjustments to Gross Pay YTD:
Subtract YTD Before-Tax Deductions, which include
• Medical
• Dental
• Vision
• FSA Health
• FSA Dependent Care
• HSA
• Parking
• T Pass
• 403B
• 457 Plan
Add Employer Paid Benefits Taxable* for QDP Medical and Dental YTD
Add GTL imputed income from Box 12C on your W-2
The resulting amounts should equal Box 1 Federal Wages and Box 16 State Wages on your W-2. Some employees may see a difference between Box 1 Federal Wages and Box 16 State Wages due to the value of certain pre-tax transportation benefits.
If you find that after making these adjustments to your Gross Pay YTD per your final pay stub, the result does not match Box 1 Federal Wages and Box 16 State Wages on your W-2, call Central Payroll, 617-495-8500, option 4, for assistance.
CALCULATING SOCIAL SECURITY AND MEDICARE TAXABLE WAGES (BOXES 3 & 5)
The Social Security Wage Base for 2019 was $132,900. To determine Social Security and Medicare taxable wages on your W-2, again begin with the Gross Pay YTD from your final pay stub and make the following adjustments if applicable:
Social Security and Medicare Taxable Wage – Adjustments to Gross Pay YTD:
Subtract the following:
• Before-Tax Medical deductions YTD
• Before-Tax Dental deductions YTD
• Before-Tax Vision deductions YTD
• Before-Tax FSA Health deductions YTD
• Before-Tax FSA Dependent Care deductions YTD
• Before-Tax HSA deductions YTD
• Before-Tax Parking deductions YTD
• Before-Tax T Pass deductions YTD
Add Employer Paid Benefits Taxable* for QDP Medical and Dental YTD
Add GTL imputed income from Box 12C on your W2
The resulting amount should equal Box 3 Social Security Wages and Box 5 Medicare Wages on your W-2.
If you find that after making these adjustments to your Gross Pay YTD per your final pay stub, the result does not match Box 3 Social Security Wages and Box 5 Medicare Wages on your W-2, call Central Payroll, 617-495-8500, option 4 for assistance.
EXPLANATION OF OTHER BOXES ON YOUR W-2
Box 12C: Group term life (GTL)
Box 12E: 403B TDA deductions
Box 12G: 457 Plan deductions
Box 12M: Uncollected Social Security Tax on taxable GTL
Box 12N: Uncollected Medicare tax on taxable GTL
Box 12P: Excludable moving expenses
Box 12T: Adoption benefits
Box 12BB: 403B Roth deductions
Box 12DD: Cost of employer sponsored Health Insurance
Box 12W: Employer contributions and employee elected contributions to HSA