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.
Full Answer
How are Social Security and Medicare taxable wages calculated on W-2?
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.
Why are my W-2 wages different from my actual wages?
· My W-2 Medicare wages (Box 5) are significantly higher than my Wages, other compensation (Box 1). How is that possible? Certain amounts that are taken out of your pay are not subject to federal income tax, so they are not included in box 1, but they are subject to Social Security and Medicare taxes, so they are included in boxes 3 and 5.
Are my Social Security wages more than my wages?
· If you have group term life insurance through your employer that exceeds $50,000, a portion of that premium is taxable as wages, but not as social security and medicare earnings. Also if your salary exceeds $102,000 for 2008, any earnings over that amount are not subject to social security tax, so the maximum amount your social security earnings should …
What does box 1 on my W-2 mean?
· On one of my W2's it shows that my social security wages is more than my wages, tips, other compensation is this correct? Your social security wages can be higher than your wages if you are making contributions to a 401k plan …
Why does my W-2 have Medicare wages and tips?
Box 5 "Medicare wages and tips": This is total wages and tips subject to the Medicare component of social security taxes. Box 6 "Medicare tax withheld": This is Medicare tax withheld from your pay for the Medicare component of social security taxes. The rate is 1.45% of the Medicare wage base.
Are Social Security wages and Medicare wages the same?
The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total.
What is the difference between wages and Medicare wages on W-2?
Box 1 (Wages, Tips and Other Compensation) represents the amount of compensation taxable for federal income tax purposes while box 3 (Social Security Wages) represents the portion taxable for social security purposes and box 5 (Medicare Wages) represents the portion taxable for Medicare tax purposes.
Why are wages and social security wages different on 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.
Should Box 1 and Box 3 be the same on W-2?
The amounts in box 1 and box 3 of your W-2 will be different if you had a pre-tax deduction. Some pre-tax deductions reduce your taxable income (box 1) and your social security income (box 3). Other pre-tax deductions only reduce your taxable income (box 1).
Why is Box 1 and Box 5 different on W-2?
The amount in Box 1 is also going to be subject to Social Security and Medicare taxes, which means it will be included in Boxes 3 and 5. Box 5 includes income subject to federal income tax (Box 1) as well as income that is not subject to federal income tax. This is the amount subject to Medicare tax.
Why does my W-2 not have Social Security wages?
Social Security wages should be in box 3 and the Social Security Taxes withheld should be in box 4 of the W-2. Contact your employer for either an explanation of why there are no SS wages or taxes withheld or to get a corrected W-2.
Should Social Security wages be the same as wages?
Social Security wages are not the same as gross income. While the amount of Social Security wages and gross income are often identical, they just as easily may not be. Gross income is the total of all compensation from which the amount of taxes and other withholdings are calculated.
Why are my state and local wages different?
Usually, the difference relates to what wage amounts are taxable in each case. In certain States, items that can be excluded from federal wages (for instance contributions to some types of retirement accounts) are not deducted from state salaries.
Why is Box 1 and Box 16 different on my W-2?
If retirement contributions are exempt from state income tax, Boxes 1 and 16 may be the same. If contributions are subject to state income tax, Box 16 may be higher than Box 1. For example, Pennsylvania requires employees to pay state income tax on retirement contributions.
What box shows gross income on W-2?
Your gross income stated in Box 1 of your W-2 is essential in filing your taxes, as it shows your wages subject to federal income tax. Boxes 3 and 5 of the W-2 show your gross income that is subject to Social Security and Medicare taxes.
How do I know if my W-2 is correct?
There are three easy steps to make sure your W-2 is correct:Check the spelling of your name. No nicknames here — you'll want to ensure your full name is spelled out.Verify that your social security number is listed correctly.Double-check that your taxable wages are correct.
Who is responsible for Medicare taxes?
They must also deposit these wages into an authorized bank or financial institution. An employer is also required to match 1.45% of an employee’s withholding for Medicare wages and tips.
What is Medicare tax?
Medicare taxes go toward the Medicare program—a federal health insurance program for Americans who are older than 65 or have certain disabilities and diseases. The funds taken from Medicare taxes cover three areas.
What is the Medicare tax rate for 2020?
If you are self-employed, the 2020 Medicare tax rate is 2.9% on the first $137,700 of your yearly earnings.