Payroll Discussion about the Understanding a W2? Am I being underpaid? and various important topics, studies, strategies, and general notes are discussed here.
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Understanding a W2? Am I being underpaid?
Hi everyone, I just received my w2 form and noticed that my gross salary does not match my original offer letter. Is it correct? Do taxes influence this gap? I have noticed that “Social Security Salaries” is much closer to my annual salary.
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This thread was originally published on 2021-02-22 13:24:10.
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Are you looking at box 1 for your “gross pay”? This is just a guess, but that box is for your pay that is subject to federal income taxes. So if you have a 401(k) or other deferred compensation retirement plan that you contribute towards, the amount in box 1 will be reduced by that.
Similarly, if you have a pre-tax cafeteria plan (i.e. 125 plan) for certain deductions (typically health insurance, but you could have others) that will reduce your taxable wages in boxes 1, 3 and 5.
You are getting paid that money, but because it is not subject to tax, it doesn’t get reported in those boxes.
If you have these types of deductions and your final pay stub/voucher for 2020 has year to date totals, you ought to be able to reconcile the numbers (take your final gross pay and subtract the totals deducted for the year for those deductions).
There might be other reasons your pay differs from your annual salary including your pay cycle and whether there are any other types of payments you get (commissions, bonuses, vacation, etc.) in addition to your base salary.
Box 1 is your gross minus healthcare and retirement deductions. So go by box 3 and 5, not 1.