What box is that in or how is it listed?
Items of "Income" that are exempt from income tax can include amounts that you contribute to a retirement plan or a health savings account (elective deferrals), flexible spending account, or medical insurance premiums and certain other employee benefits that are deducted from your pay pre-tax. For example, if you are paid a gross salary of $40,000 but box 1 only shows $35,000 of wages, I would expect that you had $5000 of pre-tax deductions for these types of items.
Typically these could only be listed in box 14 which is an informal "information" box that does not directly impact your tax return.
You would have to ask your employer to really know what they are including in that box.
Thank you for your response! It was a deduction from "gross pay" (called "less exempt wages") before getting to an amount as the "reported W-2 Wages", so it came before the boxes under the gross pay adjustment.
Those aren't legit boxes on a W-2, so I'm slightly confused. But in any case, if your employer is indicating that some of your wages are tax exempt, and you aren't sure why they say this, you will need to ask them. I listed a few of the items that can be deducted from gross wages that are not taxable.
Are you looking at a pay stub ? If so don't try to use it to complete or file a tax return... wait for the form to come in January.
Hi, Not sure if you are still commenting on exempt earnings in Box 1 of the W2, but can you tell me if I file a W4 as EXEMPT, will my earnings from a regular job be excluded from Box 1 of the W2, solely based on my W4 filing?
Thank you.
Absolutely not. The W-4 is only used to determine your withholding. Nothing you say on the W-4 can change the taxability of your wages. Claiming exempt, when you are not, can result in a large tax bill plus a penalty when you file your return for failing to have sufficient withholding during the year.
You are my hero! Thank you so much for your quick response. I thought this was the case, and just needed someone to tell me it was so. I don't plan to use the EXEMPT tactic, but have been trying to convince someone else that it is a very bad idea. Thank you again!