Reconciling Your W2

Reconciling Your W2

Why is My W-2 Different from My Last Pay Stub?
  1. Employees often ask, “Why is my W-2 different from my last pay stub?” The reason is simple: your pay stub earnings include gross income, while your W-2 reflects taxable income. Additionally, pre-tax deductions lower the taxable amount reported on the W-2, which is why an employee’s final pay stub and W-2 differ.
Common Reasons for W-2 and Pay Stub Differences
  1. Pre-Tax Deductions: Contributions to retirement plans, health insurance, flexible spending accounts, and other benefits. These deductions are reflected in your W-2 but may not show on your year-end pay stub.
  2. Non-Taxable Income: Items like mileage reimbursements or allowances aren’t included in your W-2, making your last pay stub appear higher than your W-2.
  3. Retirement Plan Contributions: Contributions to retirement plans like 401(k)s reduce the income reported in Box 1 of your W-2. For example, if your gross wages are $50,000 and you contribute $5,000 to a 401(k), your taxable wages in Box 1 of your W-2 will be $45,000.
Unless you opt out of pre-tax deductions, your salary amount will almost always be higher than the wages reported on your W-2. To clarify which pre-tax deductions you are opted into, check Box 1 of your W-2. 

Attached to this article is a calculator you can use to check your pay statements to your W2.

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