W2 Box 1 reports your total wages, which includes your salary, bonuses, commissions, and other forms of taxable compensation received from your employer. It does not include contributions made to your 401(k) plan because these contributions are made pre-tax and are therefore not subject to income tax. Your 401(k) contributions are reported in Box 12 of your W2.
Wage Earnings
Box 1 of your W-2 form, also known as “Wages, tips, other compensation,” includes your total taxable wages for the year. This amount is used to calculate your federal income tax, Social Security tax, and Medicare tax. However, your 401(k) contributions are not included in Box 1. This is because 401(k) contributions are made on a pre-tax basis, meaning they are deducted from your paycheck before taxes are calculated.
Understanding the Difference
- Box 1: Includes all taxable wages, such as regular pay, overtime pay, bonuses, commissions, and tips.
- 401(k) contributions: Are deducted from your paycheck before taxes are calculated. They are not included in Box 1 and are not subject to federal income tax, Social Security tax, or Medicare tax.
| Box 1 | 401(k) Contributions |
|---|---|
| Includes taxable wages | Not included, deducted pre-tax |
| Used to calculate federal income tax, Social Security tax, and Medicare tax | Not subject to federal income tax, Social Security tax, or Medicare tax |
Salary Income
Salary income is the amount of money you earn from your job before taxes or other deductions are taken out. This includes your base salary, bonuses, commissions, and any other payments you receive for your work.
Salary income is typically reported in Box 1 of your W-2 form. This box shows your total salary income for the year, including any amounts that were withheld for taxes or other deductions.
401k Contributions
401k contributions are a type of retirement savings plan that allows you to save money for your future. These contributions are made on a pre-tax basis, which means that they are deducted from your salary before taxes are calculated.
401k contributions are not included in your salary income. This is because they are not considered to be taxable income. As a result, they are not reported in Box 1 of your W-2 form.
Tax Implications
The tax implications of 401k contributions are as follows:
- Pre-tax contributions reduce your current taxable income.
- Earnings on your contributions grow tax-deferred until you withdraw them in retirement.
- Withdrawals from your 401k in retirement are taxed as ordinary income.
Table of W-2 Box 1 and 401k Contributions
| Box | Description |
|---|---|
| 1 | Total salary income |
| 401k contributions are not included in Box 1 |
Covered Compensation
Covered compensation is the amount of an employee’s wages or other compensation that is subject to Social Security taxes. This includes wages, salaries, bonuses, commissions, and tips. It also includes certain other types of income, such as:
- Severance pay
- Sick pay
- Vacation pay
- Holiday pay
401(k) contributions are not considered covered compensation. This means that they are not subject to Social Security taxes.
The table below shows the different types of income that are included in and excluded from covered compensation:
| Included in Covered Compensation | Excluded from Covered Compensation |
|---|---|
| Wages | 401(k) contributions |
| Salaries | Health insurance premiums |
| Bonuses | Dental insurance premiums |
| Commissions | Vision insurance premiums |
| Tips | Life insurance premiums |
| Severance pay | Tuition reimbursement |
| Sick pay | Moving expenses |
| Vacation pay | Meal allowances |
| Holiday pay | Mileage reimbursement |
Gross Income
Gross income is the total amount of money you earn before any deductions or taxes are taken out. This includes wages, salaries, tips, bonuses, and other forms of compensation. Gross income is reported on line 1 of your W-2 form.
What is Included in Box 1 of Form W-2?
Box 1 of Form W-2 reports your total wages, tips, other compensation, and taxable fringe benefits. It does not include any deductions or taxes that were withheld from your paycheck.
What is Not Included in Box 1 of Form W-2?
- 401(k) contributions
- Health insurance premiums
- Social Security taxes
- Medicare taxes
- Federal income taxes
Table: What is Included and Not Included in Box 1 of Form W-2
| Included in Box 1 | Not Included in Box 1 |
|---|---|
| Wages | 401(k) contributions |
| Tips | Health insurance premiums |
| Other compensation | Social Security taxes |
| Taxable fringe benefits | Medicare taxes |
Thanks for reading, folks! I hope this article was helpful in clearing up any confusion about whether 401k contributions are included in Box 1 of your W2 form. Remember, it’s always a good idea to double-check with your employer or tax professional if you’re ever unsure about anything related to your taxes. And be sure to check back soon for more money-saving tips and tax-related advice.