topic My medicare wages are greater than my PA state wages, is that a problem and should i make a statement? in Get your taxes done using TurboTax

My medicare wages are greater than my PA state wages, is that a problem and should i make a statement?

basedswag3005 — Fri, 31 Jan 2020 17:55:58 GMT

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

HelenC12 — Fri, 31 Jan 2020 18:15:55 GMT

No, that is not a problem. The most common reason is due to 401(k) contributions (W2, Box 12, Code D) or other pre-tax retirement plan contributions. They are subject to medicare tax but not to federal or state income tax.

Additional information: IRS Topic No. 751 Social Security and Medicare Withholding Rates

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

egoralczyk — Wed, 18 Mar 2020 03:25:19 GMT

Looks like that is not a problem. Not sure why turbotax expects me to send in printed W2 with statement to Pa.

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

LeonardS — Wed, 18 Mar 2020 14:56:45 GMT

The fact that your medicare wages are higher than your wages is should not be a reason why you have to send a printed copy of your W-2 to PA. Did you receive a reason why you need to send a copy of your W-2 to PA?. The most common reason why medicare wages are higher is due to 401(k) contributions (W2, Box 12, Code D) or other pre-tax retirement plan contributions. They are subject to medicare tax but not to federal or state income tax.

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

buddykat — Wed, 17 Feb 2021 01:47:58 GMT

Except in Pennsylvania (the state the question was asking about), 401k contributions and other retirement contributions are *not* deductible. On the flip side, they are also not taxed when they are withdrawn if they were earned while you lived in PA.

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

goodaact — Sat, 27 Feb 2021 20:18:53 GMT

Do you know why an employer would calculate the PA withholding amount from the wages(box1 on w2) which excludes the 401k contributions and not the state wages (box 16)?

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

DianeW777 — Sun, 28 Feb 2021 17:11:09 GMT

It sounds like it is an error on the part of your employer's payroll department. The state withholding should definitely be determined based on your state wages as opposed to the federal wages.

Contact your payroll department and ask them to make the change so that you don't owe tax each year on this difference due to the 401(k) contributions. I'm sure it's just a click of the mouse to make the change in their systems.

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

dwilson16 — Tue, 09 Mar 2021 20:42:10 GMT

I had the same question - TurboTax does not have the W2 reconciliation form needed to resolve the issue. Customer can efile the federal return but must mail in the state return with the W2

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

Cynthiad66 — Wed, 10 Mar 2021 00:02:50 GMT

Since PA does not have a deduction for the 401K, seems your employer may need to issue corrected W-2 to show the PA income including any of those type contributions that may have reduced the PA income.

Pennsylvania is one of the few states that does not follow the federal rules on 401(k) contributions. PA does NOT exclude 401(k) contributions from a taxpayers income - thus, making contributions taxable.

PA Rules Regarding Retirement Accounts

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a statement?

Jim R PA — Sun, 28 Mar 2021 22:31:15 GMT

Most people replying assume the difference between Medicare wages and PA State wages is due to erroneously deducting 401(k) contributions. In my case, at least, it is due to (correctly, I believe) adding "Imputed Income" ("Taxable cost of group-term life insurance over $50,000") to Medicare wages but not State wages.

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

DaveF1006 — Mon, 29 Mar 2021 02:13:10 GMT

Yes. According to this PA link taxable Group term life insurance is never taxable for Pennsylvania personal income tax purposes, regardless of the amount.

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

RBJ54 — Sun, 18 Apr 2021 17:57:45 GMT

I think Jim R PA specks of what I am seeing on my wife's W-2. Her PA wages are the same as her Total Gross pay for 2020 from her last pay stub but Social Security & Medicare wages are $310.00 higher. Is there an Instruction from the State or Feds that explains these variations in taxable wages

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

ErnieS0 — Mon, 19 Apr 2021 16:30:28 GMT

@RBJ54 Your wife's payroll or HR department would be the best person to explain the difference. Without seeing all the boxes on the W-2, everything is just a just.

Pennsylvania does give a list of examples of items that are not subject to the personal income tax?

Social Security benefits and/or Railroad Retirement benefits
Commonly recognized pension, old age, or retirement benefits paid after becoming eligible to retire, and retiring
United Mine Workers Pension
Military pension benefits
Civil Service Annuity
Unemployment compensation and public assistance
Payments received under workers' compensation acts, occupational disease acts, or similar legislation; including Heart and Lung Pension
Payments for injuries received while working, and damages received, whether by suit or otherwise, for personal injuries
Sick pay and disability benefits, including payments by third party insurers for sickness or disability (does not include amounts paid as sick leave)
NOTE: If your employer includes your payments for sickness, disability, and/or on-the-job injuries in box 16 of your Form W-2, provide a statement from your employer verifying the amount of these payments.
Employer-paid group term life insurance premiums
Damage awards and settlements from physical injury or sickness such as pain and suffering or emotional distress
Child support
Alimony
Inheritances, death benefits, and income in respect of a decedent (IRD) as defined for federal income tax purposes
Active-duty pay received as a member of the U.S. Armed Forces from the U.S. government for service outside Pennsylvania (see page specific instructions in the PA-40 IN, Instruction Booklet)
Awards and gifts made from detached or disinterested generosity
Personal use of an employer’s owned or leased property and/or services, at no cost or at a reduced cost
Federally taxable punitive damages received for personal physical injury or physical sickness, whether received by suit or by settlement
Income from contracts of insurance for long-term care that do not have accumulated refundable

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

Jean01 — Thu, 22 Apr 2021 01:09:50 GMT

Your medicare wages could be higher that your PA wages if Box 12 shows imputed income for Life insurance over 50K or shown as code C. PA does not tax this imputed income. However, PA does tax 401K contributions. They are not taxed in PA when they are pulled out, unlike the Federal. I'm not sure why everyone thinks that 401K contributions reduce taxable PA wages on your W-2. It is simply not true. PA is rather unique in this aspect.

In other words.....

PA does not tax Box 12 code C wages

401K contributions are not pre-tax in PA, unlike most other states. When 401K contributions are pulled out at a later date, they are not taxed because the tax has already been withheld.

Medicare and PA wages should be the same other than a deduction for imputed income (code C) from PA.

PA state and PA local wages should agree on the W-2.

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a statement?

Sarah531 — Tue, 18 May 2021 00:05:58 GMT

Is this new? I have been doing our taxes with Turbo Tax for several years and don’t recall being asked if the Medicare income was higher.

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

Daddleship — Mon, 14 Feb 2022 15:50:22 GMT

The difference is GTL in my situation. Does that mean I need to print and send in my W-2 with that as my attestation or can I just submit my taxes as is and expect to not have a problem?

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

DMarkM1 — Mon, 14 Feb 2022 17:15:04 GMT

It is not unusual or out of the ordinary to have medicare wages in W2 box 5 be higher than PA state wages in box 16. You can e-file normally; this should not cause any tax issues.

I assume GTL is Group Term Life insurance this is pre-tax so not in box 1 or box 16 but would show up in boxes 3 and 5 on your W2.

Re: My medicare wages are greater than my PA state wages, is that a problem and should i make a s...

Coyote3 — Sun, 02 Mar 2025 16:15:21 GMT

Jean01, thanks for this excellent explanation. My Medicare and PA wages only differ by the amount listed under code C, so I'm going to ignore the new Turbotax question and file normally without explanation or sending in my W2.