W-2 Box 1
Finch’s data can be used to run an individual’s W-2 Box 1 calculation using data returned from Finch Pay endpoints.
Box 1 is defined in the IRS’ “2024 General Instructions for Forms W-2 and W-3” published guidance as:
Wages, tips, other compensation. Show the total taxable wages, tips, and other compensation that you paid to your employee during the year. However, do not include elective deferrals (such as employee contributions to a section 401(k) or 403(b) plan) except section 501(c) (18) contributions. Include the following. 1. Total wages, bonuses (including signing bonuses), prizes, and awards paid to employees during the year. See Calendar year basis. 2. Total noncash payments, including (…) 24. Salary reduction contributions made to a Roth IRA pursuant to a SEP arrangement or SIMPLE IRA plan. See SEP arrangements and SIMPLE IRA plans.
Tabulated IRS criteria:
| # | IRS Text | ||
|---|---|---|---|
| 1 | ”Total wages, bonuses (including signing bonuses), prizes, and (…) | Earning | |
| 2 | ”Total noncash payments, including certain fringe benefits. See Fringe benefits.” | Earning | |
| 3 | ”Total tips reported by the employee to the employer (not allocated tips).” | Earning | |
| 4 | ”Certain employee business expense reimbursements. See Employee business expense reimbursements.” | Earning | |
| 5 | ”The cost of accident and health insurance premiums for 2%-or-more shareholder-employees paid by an S corporation.” | Contribution | |
| 6 | ”Taxable benefits from a section 125 (cafeteria) plan if the employee chooses cash.” | Contribution | |
| 7 | ”Employee contributions to an Archer MSA.” | Deduction | |
| 8 | ”Employer contributions to an Archer MSA if includible in the income of the employee. See Archer MSA.” | Contribution | |
| 9 | ”Employer contributions for qualified long-term care services to the extent (…) | Contribution | |
| 10 | ”Taxable cost of group-term life insurance in excess of $50,000. See Group-term life insurance.” | Contribution | |
| 11 | ”Unless excludable under Educational assistance programs, payments for (…) | Earning | |
| 12 | “The amount includible as wages because you paid your employee’s share of social security and (…) | Tax | |
| 13 | ”Designated Roth contributions made under a section 401(k) plan, a section 403(b) salary (…) | Deduction | |
| 14 | ”Distributions to an employee or former employee from an NQDC plan (including a rabbi trust) or a nongovernmental section 457(b) plan.” | Earning | |
| 15 | ”Amounts includible in income under section 457(f) because the amounts are no longer subject to a substantial risk of forfeiture.” | Earning | |
| 16 | ”Payments to statutory employees who are subject to social security and Medicare taxes but (…) | Earning | |
| 17 | ”Cost of current insurance protection under a compensatory split-dollar life insurance arrangement.” | Contribution | |
| 18 | ”Employee contributions to a health savings account (HSA).” | COMMON | Deduction |
| 19 | ”Employer contributions to an HSA if includible in the income of the employee. See Health savings account (HSA).” | COMMON | Contribution |
| 20 | ”Amounts includible in income under section 409A from an NQDC because the amounts are (…) | Earning | |
| 21 | ”Nonqualified moving expenses and expense reimbursements. See Moving expenses.” | Earning | |
| 22 | ”Payments made to former employees while they are on active duty in the U.S. Armed Forces or other uniformed services.” | Earning | |
| 23 | ”All other compensation, including certain scholarship and fellowship grants (…) | Earning | |
| 24 | ”Salary reduction contributions made to a Roth IRA pursuant to a SEP arrangement or (…) | Deduction |
Finch implementation:
All of the information necessary to run an individual’s W-2 Box 1 calculation can be found in Finch’s Finch’s Pay Statement data.
The table above highlights where to find criteria within Pay Statement object groups (Earning, Tax, Deduction, Contribution). The majority of these criteria require simple suming of line-item-amounts over a given calendar year - Finch’s type classification is invaluable for properly aggregating criteria values.
Nuanced criteria guidance:
- Calculate per pay-period OR on 12/31 check - determine the cost of group-term life insurance provided over the $50,000 income exclusion threshold.
Want to talk through how to do this with a Finch teammate? Reach out to your DSE or AM.
this general guidance must be used at the discretion of Finch’s developers
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