The most common questions some workers have relate to why W-2 Wages differ from your final pay stub for the year, and why Federal and State Wages on your W-2 differ from Social Security and Medicare Wages on 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 on your W-2.
| Gross Pay YTD (year to date) |
minus | pretax deductions (Sec 125 insurance, HSA, FSA, etc) |
minus | retirement deductions (401k, 403b, Simple IRA, etc) |
CALCULATING SOCIAL SECURITY TAXABLE WAGES (BOX 3)
Use your last pay stub for the year to calculate the taxable wages in box 3 on your W-2.
*Social security wages will cap at $168,600 in 2024*
| Gross Pay YTD (year to date) |
minus | pretax deductions (Sec 125 insurance, HSA, FSA, etc) |
minus | tips (tips will show in box 7 of W2) |
CALCULATING MEDICARE TAXABLE WAGES (BOX 5)
Use your last pay stub for the year to calculate the taxable wages in box 5 on your W-2.
| Gross Pay YTD (year to date) |
minus | pretax deductions (Sec 125 insurance, HSA, FSA, etc) |
If you feel there has been an error in calculating the taxable wages on your W2, please reach out to your payroll administrator for assistance.