Do you get bombarded with the comment “My W-2 does not match my last paystub!” right after you have sent out the W-2s? If so, consider sending out a memo with the Form describing how to reconcile the employee’s last paystub to Form W-2. Below is a sample reconciliation. Feel free to customize it to match your company pay types and benefits.
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 checking that your name, address, and Social Security Number are correct on your Form W-2, check the following:
- Box 1 is the Federal taxable wage amount, whereas your paycheck stub includes all the wages you’ve earned. In wages earned could be imputed income for GTL; personal use of a company vehicle; or carrying your adult child on your health insurance if the child turned age 27 in 2011. You will need to subtract pre-tax insurance premiums, dependent care and retirement contributions (i.e. 401(k), 403(b) or Simple), from the total gross wages to come up with the taxable wage amount.
- Box 2 is the Federal taxes withheld and will match your last paycheck stub.
- Boxes 3, 5, and 7, if applicable, are FICA wages which is the amount in box 1 plus pretax retirement contributions and subtract the amount for carrying your adult child on insurance. Box 3 and box 7, if applicable, have a 2011 limit of $106,800.
- Boxes 4 and 6 are FICA taxes withheld which will match your last paycheck stub. Box 4 is 4.2% of box 3 and box 7, if applicable. Box 6 is 1.45% of box 5.
- Box 10 is dependent care amounts withheld under a Section 125 plan up to $5,000. Amounts over the $5,000 limit are also in boxes 1, 3, 5, and 16.
- Box 11 is deferred compensation payouts and is 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 to be listed separately. All of the box 12 codes are listed on the back of the Form W-2.
- Box 16 is state taxable wages which is the same amount as box 1. [note: edited 1/6/12]
- Box 17 is the state taxes withheld and will match your last paycheck stub.
Amy M. Bradley, CPP, Payroll Specialist II, is responsible for firm-wide research on payroll-related issues. Amy has almost 25 years of payroll experience, including work with multi-state and multi-employer payrolls. She also has extensive experience working with Lawson software.