Vision Payroll

December 28, 2010

2010 Form W-2 Tips, Part 2, Box 1 Wages, Tips, Other Compensation

2010 Form W-2 Tips, Part 2, Box 1 Wages, Tips, Other Compensation
2010 Form W-2 Tips, Part 2, Box 1 Wages, Tips, Other Compensation
This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. 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 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

The next topic in this continuing series will be Box 2, federal income tax withheld. Contact Vision Payroll with any questions on the 2010 Form W-2.

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