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Why doesn't the box 1 amount on the W-2 agree with the gross wage amount on my final earnings statement?

The amount reported in box 1 (Wages, Tips and Other Compensation) is an employee's "taxable compensation", not gross wages. Taxable compensation is gross wages (the total amount of earnings on your earnings statement) less those items the IRS considers "non-taxable."

Some common IRS non-taxable items: 

  • Employee contributions to deferred compensation plans such as traditional 401(k) and 457
  • Employee paid portion of some insurance premiums, such as health, dental and vision
  • Employee contributions to health and dependent care flexible spending accounts
  • Employee contributions to a health care savings account (HSA)
  • Employee paid qualified parking deductions
  • Qualified parking reimbursements