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why does my w2 have higher wages than the ss and medicare amunt

by Silas Roberts Published 2 years ago Updated 1 year ago

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 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

Should Medicare W-2 wages be the same as salary?

May 31, 2019 · 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.

Should your W-2 be higher or lower than your salary?

May 30, 2019 · 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 or have other items taken out of your check "pre-tax". You are paying social security tax on these items but not income tax.

How do I calculate social security and Medicare on my 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 …

Are my Social Security wages more than my wages?

A small difference between Federal Income Tax, Social Security or Medicare withheld on the W2 versus the employee’s last pay stub of the year would be normal if you selected the “Automatically corrected” option (explained above) while importing employee information. However, if the amount were large the reason for the difference is that you have either over or under withheld …

Why are my wages on my W2 higher than my salary?

Why is My W-2 Different from My Salary? The compensation may be different on a W-2 vs a final pay stub, but here's why. Your salary is a gross dollar amount earned before taxes and deductions. Meanwhile, your Form W-2 shows your taxable wages reported after pre-tax deductions.Nov 16, 2021

Should Social Security wages be higher than wages on W2?

Your social security wages can be higher than your wages if you are making contributions to a 401k plan or have other items taken out of your check "pre-tax". You are paying social security tax on these items but not income tax.May 31, 2019

Why is the wages amount in box 1 different than the Social Security wages?

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.

What is the difference between wages and Social Security wages on W2?

Earnings represent taxable wages, tips and other compensation, while Social Security wages refers only to the wages that are subject to the Social Security tax. Certain pretax deductions and wages are not subject to taxation and are excluded from these sections of a W-2.

Why are my Medicare wages higher than my regular wages?

Medicare wages include any deferred compensation, retirement contributions, or other fringe benefits that are normally excluded from the regular income tax. In other words, the amount in Box 5 typically represents your entire compensation from your job.

Why are my Social Security wages less than my salary?

If you earned more than $118,500 last year, you ran up against the Social Security tax cap, which is the max income you pay Social Security taxes on. In that case, your Box 3 wages will likely be less than your Box 1 wages.Feb 12, 2016

Why is Box 1 different from box 16 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.Dec 13, 2021

Why is Box 1 higher than box 5 W-2?

Box 5 reports the amount of wages subject to the Medicare Tax. There is no maximum wage base for Medicare, so the amount showing in Box 5 may be larger than the amount showing in Box 1. It is quite common for Boxes 3 and 5 to be higher than Box 1.Jun 6, 2019

What is the difference between Social Security wages and Medicare wages?

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.Mar 15, 2022

How are Medicare wages calculated on W-2?

It should also be 6.2% of the amount in Box 3 on your W-2. Total wages in Box 5 are the wages subject to Medicare (Medic) tax. These wages are taxed at 1.45% and there is no limit on the taxable amount of wages.

Why is my taxable income higher than my gross income?

Gross income includes all income you receive that isn't explicitly exempt from taxation under the Internal Revenue Code (IRC). Taxable income is the portion of your gross income that's actually subject to taxation. Deductions are subtracted from gross income to arrive at your amount of taxable income.

Are Medicare wages the same as gross wages?

It is calculated the same way as Social Security taxable wages, except there is no wage limit. Medicare taxable wage refers to the employee wages on which Medicare tax is paid. It is calculated as the employee's gross earnings less the non-taxable items, without any maximum on gross wages.

Why are W-2s different from Social Security?

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.

Where to find taxable wages on W-2?

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:

What to call if your W-2 does not match Social Security?

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.

What to call if your W-2 does not match Box 1?

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.

What is the Social Security base for 2019?

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:

Your employee earns tips

An employee who earns tips may also have different amounts in Boxes 1, 3, and 5. This is because tips are included in the amounts in boxes 1 and 5. They are separated out in box 3 and box 7 for Social Security.

Your employee is exempt from one or more Federal taxes

There are several types of employees who are not subject to some Federal taxes per IRS rules. Clergy, employees on a work Visa, and some family members of business owners are a few examples.

What does lower than expected taxable wages mean?

Lower-than-expected taxable wages mean you were successful at sheltering your income from taxes over the past year. This difference between your actual and taxable earnings typically arises from four different situations:

What is the box 1 wage for 2015?

If you earned less than $118,500 in 2015, expect your Box 1 wages to be less than Box 3 and 5 wages, says Wang, since you can shelter more of your earnings from federal taxes than you can Social Security and Medicare taxes.

Is it a good idea to have W-2s less than your salary?

Not to worry. “It’s actually a good thing to have your W-2 wages be less than your salary as this means you’ll owe less taxes,” says CPA Amy Wang, senior technical manager for the American Institute of Certified Public Accountants. What you see on your W-2 is your taxable income, not your total salary. What’s more, the amount shown in Box 1 ...

Is mileage taxable in paycheck?

Your company pays you back for mileage: You may have non-taxable reimbursements show up in your paycheck that are not strictly salary, such as being reimbursed for mileage you incur. Those are not part of your taxable wages.

Why is there a difference between federal and state W2?

The reason why your federal and state W2s has a difference is when you set up a retirement plan for your employees. Retirement plans are not reflected in box 16 in W2 forms.

Is retirement plan reflected in box 16 on W2?

It is neither "the" reason nor is it even always "a" reason. "Retirement plans are not reflected in box 16 in W2 forms" is only the case for some states, and only if the payroll items are set up correctly, and yet it is always true for Box1. 2. Cheer.

Do state wages box report taxes?

State wages boxes report the taxed wages. If normally they are the same for you and they are not this year, look for payroll items that should impact taxes wages but do not. For example, if you have a 401k deduction that should reduce both federal and state income tax, but it does not reduce state taxable wages (set up wrong) ...

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