Box 1 on the W-2 form generally includes all taxable wages, salaries, tips, and other compensation subject to federal income tax. This includes wages earned from employment, commissions, bonuses, and taxable fringe benefits. However, Box 1 does not include certain types of income, such as amounts contributed to 401(k) plans. 401(k) contributions are made on a pre-tax basis, meaning that they are deducted from an employee’s paycheck before taxes are calculated. As a result, 401(k) contributions are not taxed until they are withdrawn in retirement. Therefore, Box 1 of the W-2 form will not include any 401(k) contributions made during the year.
401(k) Contributions
401(k) contributions are not included in Box 1 of the W-2 form. Box 1 only includes the employee’s wages, tips, and other compensation. 401(k) contributions are deducted from the employee’s paycheck before taxes, so they are not included in the employee’s taxable income.
However, 401(k) contributions are reported in Box 12 of the W-2 form, with code D. This code indicates that the employee made 401(k) contributions during the year.
- Employee’s taxable wages: This is the total amount of wages, tips, and other compensation that the employee earned during the year. This amount is reported in Box 1 of the W-2 form.
- 401(k) contributions: This is the total amount of money that the employee contributed to their 401(k) plan during the year. This amount is reported in Box 12 of the W-2 form, with code D.
- Traditional IRA contributions: This is the total amount of money that the employee contributed to their traditional IRA during the year. This amount is reported in Box 12 of the W-2 form, with code E.
- Roth IRA contributions: This is the total amount of money that the employee contributed to their Roth IRA during the year. This amount is reported in Box 12 of the W-2 form, with code F.
Box 1 of Form W-2
Box 1 of Form W-2 reports the total wages, tips, other compensation, and taxable fringe benefits paid to an employee during the tax year. It is used to calculate the employee’s federal income tax liability.
401(k) contributions are not included in Box 1 of Form W-2. They are reported in Box 12 with code D.
Compensation Included in Box 1
- Wages
- Tips
- Commissions
- Bonuses
- Severance pay
- Jury duty pay
- Sick pay
- Vacation pay
- Taxable fringe benefits
Compensation Excluded from Box 1
- 401(k) contributions
- Health insurance premiums
- Life insurance premiums
- Social Security taxes
- Medicare taxes
- Federal income taxes
| Item | Box on Form W-2 |
|---|---|
| Wages | 1 |
| Tips | 1 |
| Commissions | 1 |
| Bonuses | 1 |
| Severance pay | 1 |
| Jury duty pay | 1 |
| Sick pay | 1 |
| Vacation pay | 1 |
| Taxable fringe benefits | 1 |
| 401(k) contributions | 12, code D |
| Health insurance premiums | N/A |
| Life insurance premiums | N/A |
| Social Security taxes | N/A |
| Medicare taxes | N/A |
| Federal income taxes | N/A |
What is Included in Box 1 Income?
When you receive your W-2 form, you’ll see a section labeled “Box 1 Income.” This is also known as your “wages, tips, other compensation.” Box 1 typically includes all income you received from your employer before any deductions, such as:
- Wages
- Salaries
- Tips
- Commissions
- Bonuses
- Overtime pay
- Severance pay
401k Contributions
Contributions to a traditional 401(k) plan are not included in Box 1 income. This is because these contributions are made on a pre-tax basis, meaning that they are deducted from your paycheck before taxes are calculated. This is the case for both traditional 401(k)s and SIMPLE 401(k)s. For Roth 401(k)s, contributions are made post-tax, meaning they come out of your paycheck after taxes have been taken out; these contributions are included in Box 1 income.
The following table provides a quick summary of how different types of 401(k) contributions are handled in Box 1 income:
| Type of 401(k) | Box 1 Inclusion |
|---|---|
| Traditional 401(k) | Not included |
| SIMPLE 401(k) | Not included |
| Roth 401(k) | Included |
Retirement Savings
Retirement savings plans, such as 401(k)s, are a crucial part of financial planning for many individuals. These plans allow you to save money for retirement on a tax-deferred basis, meaning you won’t pay taxes on your contributions or earnings until you withdraw them.
There are two types of 401(k) accounts: traditional and Roth. Traditional 401(k)s offer immediate tax savings on your contributions, while Roth 401(k)s offer tax-free growth on your earnings. The type of account you choose will depend on your individual circumstances and financial goals.
Box 1 on your W-2 form includes your total wages, salaries, tips, and other taxable income for the year. This amount does not include contributions to your 401(k) account.
Your 401(k) contributions are reported in Box 12 of your W-2 form. This amount is not included in your taxable income, so it does not affect your tax liability.
Here is a table that summarizes the tax treatment of 401(k) contributions and earnings:
| Type of Account | Contributions | Earnings | Withdrawals |
|---|---|---|---|
| Traditional 401(k) | Tax-deductible | Tax-deferred | Taxed as ordinary income |
| Roth 401(k) | After-tax | Tax-free | Tax-free (if certain requirements are met) |
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