Head off employees’ W-2 questions before they hit

December 13, 2018|Amy Bradley

Do you get bombarded with the comment “My W-2 does not match my last paystub!” right after you send out your employees’ W-2s each year? If so, consider sending along instructions explaining how your employees can reconcile their last paystub to Form W-2. Below is an example. Feel free to customize it to match your company’s pay types and benefits. View Form W-2.

If after comparing your last paycheck stub to your Form W-2 this year, things don’t look right, here are a few items you’ll want to double check. After confirming that your name, address, and Social Security number are correct on your Form W-2, take a look at the following:

  • Box 1 is the federal taxable wage amount, whereas your paycheck stub includes all the wages you’ve earned. Subtract pretax insurance premiums, dependent care and retirement contributions—such as 401(k), 403(b) or Simple—from the total gross wages to come up with the taxable wage amount.
  • Box 2 contains the federal taxes withheld and should match your last paycheck stub.
  • Boxes 3, 5, and 7, if applicable, are FICA taxable wages, which is the amount in box 1 plus pretax retirement contributions. Box 3, and box 7, if applicable, has a 2018 limit of $128,400.
  • Boxes 4 and 6 are FICA taxes withheld, which will match your last paycheck stub. Box 4 is 6.2% of box 3, and box 7, if applicable. Box 6 is 1.45% of box 5 plus 0.9% additional tax over $200,000 in box 5.
  • Box 10 shows dependent care amounts withheld under a Section 125 plan up to $5,000. Amounts more than the $5,000 limit are also in boxes 1, 3, 5 and 16.
  • Box 11 is deferred compensation payouts. These are also listed in boxes 1 and 16. When the compensation is initially deferred, it is recorded in boxes 3 and 5.
  • Box 12 contains itemized payments and deductions that the IRS requires be listed separately. All of the box 12 codes are listed on the back of Form W-2.
  • Box 16 is state taxable wages, which is the same amount as box 1.
  • Box 17 is the state taxes withheld and will match your last paycheck stub.
Please contact us with any questions.

Amy Bradley, CPP, operations lead - payroll, is responsible for firm-wide research on payroll-related issues. Amy has 30 years of payroll experience, including work with multi-state and multi-employer payrolls.