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How are W-2 taxable wages calculated for social security (box 3) and Medicare (box 5)?
Obtain your year-to-date total gross pay from your last earnings statement for the applicable year. This can be found in the "Earnings" section.
II. Reduce Gross Pay by Non-Taxable Wages Received During the Year:
These amounts are also found in the "Earnings" section of your earnings statement. However, non-taxable wages will only be found on the earnings statements for periods in which you received these types of wages. Therefore, you may need to review all earnings statements for the applicable calendar year to find these amounts:
1. Premium mileage - non tax portion
2. Non-taxable travel or other expense reimbursements
3. Beneficiary payments at employee's death-subsequent year
4. Reimbursed qualified parking
5. Basic allowance - housing and subsistence
6. S/L payoff - disability retirement
7. Military leave payments or adjustments marked "Med/SS Non-Tax"
8. Non-taxable grievance/settlement payments*
9. Retirement contribution earned through county - Judges only
*Backpay is reported as taxable compensation, included in social security and Medicare (FICA) wages and subject to income tax and FICA withholding. Liquidated damages, interest and legal fees are reported as taxable compensation but not included in FICA wages and not subject to FICA withholding. Compensatory damages are not reported as taxable income, included in FICA wages or subject to income tax or FICA withholding.
III. Reduce Gross Pay by Pre-Tax Deductions:
These amounts are found in the "Employee Pre-Tax Deductions" section of the statement.
1. Health, dental and vision insurance premiums
2. House and Senate insurance premiums
3. Dependent care and medical care spending accounts
4. Health Savings Account (HSA)
5. Pre-tax parking / qualified parking
IV. The net amount of this calculation should equal the taxable wages reported on your W-2 for social security (box 3) and Medicare (box 5).
NOTE: If your box 3 amount differs from box 5 please refer to the following FAQ: "If social security and Medicare taxable wages are calculated the same, why are the amounts in boxes 3 and 5 on my W-2 different?"
V. HR Offices Only - HR personnel that have appropriate security can access this information on PR52.1-Payroll History - Year to Date using the procedures outlined below:
Open the PR52.1 form in HRMN for the applicable employee and year. Find the "Gross Wages" on the "Wages" tab. Subtract the non-taxable earnings found on the "Wages" tab as indicated below.
Pay Summary Group Codes
32A, 42S, 52C, A34, 34C, A44, A57, 94D, A94
Transfer to the PR52.1 "Deductions" tab. Subtract the pretax deductions found on the "Deductions" tab as indicated below.
WALG-WDB0, WDM0-WDRC, WH01-WHZ0, WUID-WVEC Corresponding adjustment codes that begin with "V"
Codes that begin with "H" or "N" where description is "EE PR TX" or something similar
WGK1, WGM1, NGAE, NGBE and corresponding adjustment codes V116, V117
PM05, PM06, PP01-PP52