Medicare Blog

why is my social security wages is different from medicare wages on my w2?

by Prof. Layne Prosacco III 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?

Sep 13, 2021 · PUCC is subject to Social Security, and Medicare. You can choose to exclude it from Federal Income Tax. 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.

How do I calculate social security and Medicare on my W-2?

Social Security tops out at $118000 while Medicare has no limit. Just over 14000. My Medicare is at 21800. Edit: My social security was just over 14000. I can't think at anything which would be subject to medicare tax but not subject to social security tax at wages of $14K/$21K.

What's the difference between a W-2 and a total salary?

May 31, 2019 · My wages for box 1 are smaller than the social security/medicare wages (box 3 & 5) Yes, that is normal. Box 1 is the amount of your pay that is subject to income tax. If you make pre-tax contributions to a 401k, 403b, or similar, that amount will not show in the Box 1 amount, but it will be in the Box 3 and 5 amounts.

Are W-2 box 1 wages lower than box 3 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 …

Are Medicare and Social Security 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.Mar 15, 2022

Why are my Medicare wages higher than my actual wages?

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. A common example is contributions to a 401(k) plan.May 31, 2019

Why are my Social Security wages so much lower than my wages?

The other mystery on your W-2 is why your Social Security wages differ from your actual pay. 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.Feb 12, 2016

What is the Social Security wages on w2?

Social Security wages are an employee's earnings that are subject to federal Social Security tax withholding (6.2% for the employer and 6.2% for the employee for the 2020 tax year).

Why are my Medicare wages lower than my regular wages?

Medicare wages are reduced by pre-tax deductions such as health/dental/vision insurances, parking and flex spending but not reduced by your contributions to a retirement plan (403b or 457.)

Why does my W2 not match 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

Why is Box 1 and Box 16 different on my w2?

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 does my w2 have different amounts?

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).May 31, 2019

Why is my Social Security check so low?

If you recently started receiving Social Security benefits, there are three common reasons why you may be getting less than you expected: an offset due to outstanding debts, taking benefits early, and a high income.

How do you figure out your Social Security wages?

There are four ways to figure out your Social Security benefits: Visit a Social Security office to get an estimate, create an account at the official Social Security website and use its calculators, let the SSA calculate your benefits for you, or calculate your benefits yourself.

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.

What counts as Social Security wages?

Wages are the same for SSI purposes as for the social security retirement program's earnings test. (See § 404.429(c) of this chapter.) Wages include salaries, commissions, bonuses, severance pay, and any other special payments received because of your employment.

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.

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.

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 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:

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 are Box 1 wages lower than Box 3 wages?

The employee elected to contribute to a retirement plan. If an employee elected to contribute to a pre-tax retirement plan, their W-2 Box 1 wages are likely lower than their Box 3 wages.

What is Box 2 in Social Security?

Box 2 shows how much federal income tax you withheld from Box 1 wages throughout the year. The numbers in Box 1 and Box 2 help determine an employee’s tax refund or liability. Most benefits that are exempt from federal income tax are not exempt from Social Security tax.

What is box 1 in the IRS?

Box 1—wages, tips, other compensation—contains an employee’s total wages subject to federal income tax. Do not include pre-tax benefits in Box 1. Per the IRS, list the following taxable wages, tips, and other compensation in Box 1: Total wages, bonuses, prizes, and awards you paid an employee. Noncash payments.

What is the difference between Box 1 and Box 3?

3. The employee earned above the SS wage base. In some instances, Box 1 can be higher than Box 3. After an employee earns above the Social Security wage base, they no longer need to pay Social Security tax. Because earnings above the Social Security wage base aren’t subject to SS tax, don’t report them in Box 3.

Why are boxes 1 and 3 different?

Because some benefits are not subject to federal income tax, Boxes 1 and 3 (as well as Box 5) can have different values. Likewise, you may see W-2 Box 1 and Box 16 differ. And, the values in Box 1 and Box 18 may also vary.

What is the Social Security wage base for 2021?

The 2020 wage base is $137,700. For 2021, the Social Security wage base is $142,800.

Do you pay state taxes on retirement contributions?

Retirement plan contributions might be subject to state income tax, depending on the state. Some states follow federal rules when it comes to tax-exempt retirement contributions. Other states tax contributions at the state level.

Is Medicare based on 100% of your earnings?

The medicare wages and tips box of your W-2 is supposed to be the same your wages, tips, other compensation box. All this means is that your medicare tax is based on 100% of your earnings. Now, if there is a difference, it could be that you have a 401K, or 403K.

Does my employer have to withhold Medicare?

Your employer is required to withhold Medicare and Social Security taxes based upon your wages.

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