Odd W-2

[Gary]

I have a client whose box 1 wages are greater than box 3 and box 5. The state wages are the same as box 3 and box 5. She spoke to her human resource person and they claim that is pre-taxed medical. That doesn't make sense. Can anyone make sense out of this.

[erchess]

Pretax not pretaxed

I'm taking down my post because I am persuaded by later posts that everything I originally said was in error.

[Snaggletooth]

Disagree

Gary, I think this is a mistake. Pre-tax medical is quite common, as Erchess has said, but it can produce the exact opposite effect, if any.

In most cases, this is a sec.125 payroll deduction. The employee contributions to the medical plan is exempt from Income Tax, exempt from withholding, exempt from social security, and exempt from medicare.

[ChEAr$]

Box 1 more than box 3 or 5

yep, I had same case last year. I knew it was wrong, but client wanted to go ahead and
file anyway, so he did. Later of course McClatchy newspapers had to correct ALL the W2's.
they went so far as to tell employees that they would reimburse them for any 1040x
costs and they did.
I should have quadrupled my charge! (grin

[Gary]

Don't Understand

"This is quite a common situation and I don't know why you have not encountered it before. The same condition could exist if she were making payments to some sort of employer provided pension plan."

If you make a contribution to a pension plan such as a 401K, the box 1 amount is less than the box 3 & 5 amount. This W-2 the opposite.

When is the box 1 amount not the same as the state income?

[S T]

Does seem odd

Does the t/p happen to have her paycheck stubs that you can review?

If not, and probably not likely, can t/p ask for a payroll print out from the employer?

could be the employer is not reporting correctly the pre-tax deductions. If you can find out what the deductions are.

Typically as you know box 1 is usually less than box 3 and 5 and the state wages usually, not always, but usually match box 1.

I can't remember for sure, but I have had the State wages be different than box 1 on W-2 form, something to do with benefits that Fed recognizes and reporting State does not recognize.

However, I don't think I have ever seen Box 1 be greater than box 3 or 5 except for going over the FICA limits.

Sandy

[JG EA]

Maybe she's a Shareholder in an S-Corp and its insurance.

[S T]

Possible

But then there should be a notation in box 14

and unless the state treats the income differently, which I think Gary is in Az, State box should be the same as Box 1

Sandy