Solved: Why is Box 18 higher than Box 5?
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New Member

Why is Box 18 higher than Box 5?

My Box 18 (local wages) is higher than Box 5 which I always thought reflected my gross wages. It's also higher than box 16, my state wages. What could be included in Box 18 that isn't in the others?

1 Best answer

Accepted Solutions
Level 15

Why is Box 18 higher than Box 5?

There's some tax free employer benefits that are not subject to federal and state tax, that the locals do tax.  Your year end pay stub may  be a quick place to identify it.  Otherwise you'll have to ask your employer.  You are correct, most local jurisdictions stop at the amount in box 5. 

 

The city tax dept web site would be another place to check.

For example, here's a list from my city's web site:

Wages, salaries and other compensation
Bonuses, stipends, and tip income
Commissions, fees and other earned income
Sick pay (including third party sick pay)
Employer supplemental unemployment benefits (SUB pay)
Strike pay
Vacation pay
Employee contributions to retirement plans & tax deferred annuity plans (including Sec. 401k, 403b, 457b, etc.)
Pre-retirement distributions from retirement plans
Profit sharing
Uniform, automobile, moving & travel allowances
Reimbursements in excess of deductible expenses
Employee contributions to costs of fringe benefits
Employer provided educational assistance, and/or reimbursement (taxable to the same extent as for federal taxation)
Royalties, if not derived from intangible property
Stock options (taxed when exercised, valued at market price less option price on the date the option is exercised)
Employer paid premiums for group term life insurance (taxed to the same extent as for federal taxation)
Compensation paid in goods or services orproperty usage (taxed at fair market value)
Excess employee discounts
Income from wage continuation plans (including retirement incentive plans, severance pay and golden parachute payments)
Income from guaranteed annual wage contracts
Prizes and gifts if connected with employment
Director fees
Income from jury duty
Union steward fees
Disability pay if received as a benefit of employment (includes third party plans)
Income received as a result of a covenant not to compete

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7 Replies
Level 15

Why is Box 18 higher than Box 5?

You would have to ask your employer that.   Do you even have a local tax where you live?  Is there local tax withheld on box 19?   If no box 19 tax then all boxes  18-20 should be blank.    Sometimes employers use unused boxes for other information when they should not.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Employee Tax Expert

Why is Box 18 higher than Box 5?

It is common for state wages in NJ and CA to be higher than federal wages, because these state do not recognize some common federal deductions.

 

I don't know of cities or counties that doe this (they normally key off of the state income), but we don't know which state and which locality you are talking about.

 

Have you called your employer to find out the source of the different? That would get you the right answer for you, as opposed to us just guessing.

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Level 15

Why is Box 18 higher than Box 5?


@BillM223 wrote:

It is common for state wages in NJ and CA to be higher than federal wages, because these state do not recognize some common federal deductions.

The poster said box 18 *local* wages.   It is not common to have any local tax at all - only a very few states even have a local tax.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Level 15

Why is Box 18 higher than Box 5?

There's some tax free employer benefits that are not subject to federal and state tax, that the locals do tax.  Your year end pay stub may  be a quick place to identify it.  Otherwise you'll have to ask your employer.  You are correct, most local jurisdictions stop at the amount in box 5. 

 

The city tax dept web site would be another place to check.

For example, here's a list from my city's web site:

Wages, salaries and other compensation
Bonuses, stipends, and tip income
Commissions, fees and other earned income
Sick pay (including third party sick pay)
Employer supplemental unemployment benefits (SUB pay)
Strike pay
Vacation pay
Employee contributions to retirement plans & tax deferred annuity plans (including Sec. 401k, 403b, 457b, etc.)
Pre-retirement distributions from retirement plans
Profit sharing
Uniform, automobile, moving & travel allowances
Reimbursements in excess of deductible expenses
Employee contributions to costs of fringe benefits
Employer provided educational assistance, and/or reimbursement (taxable to the same extent as for federal taxation)
Royalties, if not derived from intangible property
Stock options (taxed when exercised, valued at market price less option price on the date the option is exercised)
Employer paid premiums for group term life insurance (taxed to the same extent as for federal taxation)
Compensation paid in goods or services orproperty usage (taxed at fair market value)
Excess employee discounts
Income from wage continuation plans (including retirement incentive plans, severance pay and golden parachute payments)
Income from guaranteed annual wage contracts
Prizes and gifts if connected with employment
Director fees
Income from jury duty
Union steward fees
Disability pay if received as a benefit of employment (includes third party plans)
Income received as a result of a covenant not to compete

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New Member

Why is Box 18 higher than Box 5?

I live in Ohio but work in Kentucky and so I have local tax withheld on my W2 for both the city of Covington and Kenton County. I've been trying to confirm if I can get that refunded, since I do not live in Kentucky, but haven't had much luck.

New Member

Why is Box 18 higher than Box 5?

I'll definitely reach out to my employer and check the city tax website - that's something I hadn't thought about. Your list was incredibly helpful, thank you!

Level 15

Why is Box 18 higher than Box 5?

You cannot get that refunded. 

The reciprocity agreement, between KY and OH on state taxes, does not apply to local city and county  taxes.  You can not get those refunded.

But if you live in an Ohio city with a tax, they may give you a credit or partial credit. Many do.  You need to check with your city.

If you are subject to Ohio School District Income Tax (SDIT), you can not get a credit, for KY local taxes withheld, on an SDIT return.

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