Understand Your W2 Wages

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 2017 was $127,200. 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