Why doesn't my W-2 match my salary? If the salary you think you earned doesn't match what you see on your Form W-2, you should be able to quickly confirm and correct any problem. You might even be able to spot and fix errors before the January 31 deadline employers have to get you your W-2. Understanding how W-2 forms work and what should be on them will help you make sure you have what you need to file your annual income taxes.
Consider Also: W-2 Forms: What It Is, Who Gets One & How It Works
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What is a W-2?
If this is your first job, you might remember that when you came on board with your new company, you were asked to fill out a Form W-4. That contains personal information such as your Social Security number and the number of dependents you want to claim. This information helps your employer determine how much to deduct from your paycheck each pay period.
At the end of the year, you'll receive a W-2, which is similar to your pay stubs, but shows your annual gross income and deductions. This is what you submit with your income tax return when you file your taxes.
Gross vs. Net Pay
If this is your first job and you have never received a W-2 before, you might not understand exactly what's being reported. If you haven't received pay stubs, you might not spot things like gross pay vs. net pay.
Your gross pay is the total amount your company pays you before deductions, while your net pay is the amount you take home. If you total the amount of money you deposited in your bank this year, you will find that it's far less than what your W-2 shows as your earnings. That's because your W-2 shows your gross (total) pay before deductions.
The W-2 form also shows you your deductions for FICA, state and federal taxes, as well as any deductions, such as benefits your company provides you or those you elect to buy and have deducted from your paycheck.
Consider Also: Form 1040: What You Need to Know
Correcting W-2 Errors
The quickest way to find out why there's a difference between your W-2 and your salary is to contact your HR or accounting department (whoever handles payroll). They might have been given an incorrect salary for you by your department head when you started. You might have misread your contract. You might not recognize certain deductions, a bonus or commission.
If you no longer work for the company that issued the W-2 (let's say you quit during the middle of the year, took another job and have two W-2s), re-calculate what you think you earned using pay stubs or bank deposits. If you were paid electronically, contact the company to find out how you can access your pay stubs online.
If all else fails, talk to your tax preparer about submitting Form 4852, which is the substitute for a W-2 if an employer fails to give you a W-2 or correct W-2. You can always amend your tax return later if you find a mistake, but filing on time will help you pay most of what you owe and avoid more penalties and interest on any shortfall you submit. If the error is in your favor, you will get a refund.
If you have a feeling that there's going to be a problem with your W-2 and want to check it out without having to wait until January 31, ask the company if you can get your W-2 early or if they will match the information they have with the salary you think your W-2 should be based on.