Box 1 May Include Several Adjustments To Gross Wages
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).
Box 2, Federal Income Tax Withheld Is the Next Topic