Vision Payroll

December 28, 2009

2009 Form W-2 Tips, Part 2, Box 1 Wages, Tips, Other Compensation

This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 1, wages, tips, other compensation.

Box 1 shows the amount employees must enter on line 7 of Form 1040, US Individual Income Tax Return. It may be, but is not necessarily, equal to gross wages. Common adjustments that increase or decrease gross wages include the following:

  • Employee elective deferral to qualified retirement plans such as §401(k) plans, SIMPLE plans, and §403(b) plans (decrease).
  • Amounts withheld for non-taxable benefits elected under §125 plans (decrease).
  • Taxable non-cash fringe benefits, such as personal use of company automobile (increase).
  • Certain clergy housing allowances (decrease).
  • Reported tips (increase).
  • Expense reimbursements paid under a non-accountable plan (increase).
  • Accident and health insurance premiums for so-called 2% S corporation shareholders (increase).
  • Cost of group-term life insurance in excess of $50,000 (increase).

The next topic in this continuing series will be Box 2, federal income tax withheld. Contact Vision Payroll with any questions on the 2009 Form W-2.

2 Comments »

  1. I had a question regarding working two jobs. I worked two part-time jobs for a short period of time during the summer. I claimed only myself and no dependencies on both, but did not claim working two jobs as the pay for both was fairly low. I held one job for about two months before shifting full time to the second.

    Would there be any tax benefit for claiming working two jobs at the same time? Will there be any penalties for not reporting it on the I9?

    Comment by Joe — December 29, 2009 @ 3:15 pm

  2. The general rule is to calculate the number of withholding allowances on one Form W-4 and then allocate those allowances among all jobs. If the jobs are close in pay, it is okay to split them. If one job pays more than the others, it is best to claim all the allowances on that job and zero on the others.

    There is no tax benefit to claiming two jobs, but your withholding may be more accurate.

    When you say “not reporting it on the I9”, we assume you mean not splitting your allowances among your jobs. There could be a penalty if you don’t pay in enough tax through withholding and estimated tax payments. That is less likely if the jobs were part-time, low-paying, and only held for a short period of time.

    Comment by Vision — January 4, 2010 @ 7:16 pm

RSS feed for comments on this post. TrackBack URL

Leave a comment

Contact Us Vision Payroll
Client Remote Access