Tax on Social security wages

[wolf570]

My W2 shows SS wages in Box 3 as less than Wages/tips in Box 1.    Don't know why.   Amount in W2 Box 4 is 6.2% of Box 1.   Turbo Tax reported that Box 4 calculation should be based on Box 3 rather than Box 1 wages. Difference is $100.   Which one is correct?     Tom

[wolf570]

My W2 Box 1 includes tips and wages.  How are Soc Security wages calculated? 

Tom   

[BillM223 · Accepted solution]

As you see, "Total tips reported by the employee to the employer (not allocated tips)" are included in Box 1 but not in Box 3. 

The definitions of both are rather detailed and lengthy, so I encourage you to read the IRS W-2 Instructions on pages 16 and 17 where the entries are described.

Note that these are instructions to your employer on how to complete your W-2, so it tells you exactly what you want to know.

As for Box 4, there is an interaction between Boxes 1, 3,  and 7, wherein Box 7 has Social Security tips ("the tips that the employee reported to you even if you did not have enough employee funds to collect the social security tax for the tips.")

Read the instructions for Box 4 and Box 7 and see how this applies to your W-2 (I assume that you have an entry in Box 7).