![]() Employee and employer contributions to an HSA, if includible.Insurance protection under a compensatory split-dollar life insurance arrangement.Payments to statutory employees who are subject to Social Security and Medicare taxes but not federal income tax withholding.Distributions to an employee’s nonqualified deferred compensation plan or nongovernmental Section 457(b) plan.Amount you paid for an employee’s share of Social Security and Medicare taxes, if applicable.Non-excludable educational assistance payments.Taxable cost of group-term life insurance in excess of $50,000.Employer contributions for qualified long-term care services, if coverage is provided by an FSA.Employee and employer contributions to an Archer MSA.Taxable cash benefits from a Section 125 cafeteria plan.Accident and health insurance premiums for 2%-or-more shareholder-employees (if you have an S Corp). ![]() Certain employee business expense reimbursements.Total wages, bonuses, prizes, and awards you paid an employee.Per the IRS, list the following taxable wages, tips, and other compensation in Box 1: Do not include pre-tax benefits in Box 1. So, what is Box 1?īox 1-wages, tips, other compensation-contains an employee’s total wages subject to federal income tax. However, understanding W-2 form basics is key to fielding employee questions. If you imported information from your payroll software or used a tax preparer, you may not know the ins and outs of Box 1. But, Form W-2 details stump many employers and employees. You likely know that you must report an employee’s wages and withheld taxes from the previous year on Form W-2. But, you need to understand why Form W-2 Box 1 values are higher or lower than other values on the form. Were you wrong? Do you need to issue a corrected W-2? Most likely, no. You do a quick search of Form W-2 on the web, but you’re too overwhelmed to get a quick, specific answer to your employee’s question. Just when you think you’re done, an employee comes up to you, hands you their form, and asks, Why are my W-2 Box 1 earnings less than my Box 3 and Box 5 earnings?
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