Discussion:Federal Wages Higher than Social Security Wages

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Discussion Forum Index --> Basic Tax Questions --> Federal Wages Higher than Social Security Wages


Discussion Forum Index --> Tax Questions --> Federal Wages Higher than Social Security Wages

Dllcpa (talk|edits) said:

7 February 2008
I have a W-2 from a client whose federal wages are higher than his social security wages. What circumstances would generate this? He is in the National Guard. I've only ever seen where social security wages are higher.

TaxManager (talk|edits) said:

7 February 2008
I do not know specifically about the National guard but I have seen this in 2 other instances.

1. Super of a building. The cost of his living quarters are not subject to SS but are subject to Income tax

2. Social Security and Medicaid tax paid by the employer of houseohld employee. The federal wages are increased by the amount of the employees portion that the employer paid.

KatieJ (talk|edits) said:

7 February 2008
If his earnings are above the SS limit, of course the federal wages (Box 1) would be more than SS wages (Box 2). Medicare wages should be the same.

I'm not familiar with National Guard wages, but there may be allowances etc. that are subject to income tax but not to SS tax.

Kendrick (talk|edits) said:

7 February 2008
Another situation is where Health Insurance premiums of a more than 2% shareholder in an S corp are included in Federal wages but NOT SS wages. Though in this case, the difference should be shown in Box 15.

Dllcpa (talk|edits) said:

7 February 2008
Thanks, but none of these scenarios apply. I called the military pay office (because I am a retired member of the Air National Guard) and asked a friend up there. She said the W-2 was right-there weren't any errors coded to it, but she didn't know what kind of pay the taxpayer had that wouldn't be subject to FITW, but subject to SS & Medicare. I guess I'll just input the W-2 and not worry about it anymore.

KatieJ (talk|edits) said:

7 February 2008
Huh? I thought the Box 1 wages were MORE, not LESS, than the Box 3 and 5 wages .... "...federal wages are higher than his social security wages" ....

But I agree, just input it as it is and don't worry about it.

Natalie (talk|edits) said:

February 7, 2008
Just ignore it? If there is a significant difference, I would check into it a little deeper. I bet the client would appreciate it if you found there was an error on the W2s and you saved him some $.

Dllcpa (talk|edits) said:

7 February 2008
Oooh, I typed it backwards--sorry. I even reviewed it before I posted! But, I am just going to use the W-2 as is. I have been searching the IRS website and I can't find anything there, either. His employer will have to answer to the IRS, not me. So, thanks.

Taxtips (talk|edits) said:

8 February 2008
Income from a disqualifying disposition of an ISO is included in box 1, but omitted from boxes 3 and 5.

Death&Taxes (talk|edits) said:

8 February 2008
A National Guard ISO????? Image:smile.jpg

PostingFromWork (talk|edits) said:

8 February 2008
Hey, it worked for Milo Minderbinder.

Mscash (talk|edits) said:

8 February 2008
Has the client been a federal employee since before 1983? If so, he may be under the old Civil Service Retirement System and have FICA wages of zero but be covered by Medicare.

Dllcpa (talk|edits) said:

8 February 2008
No, he is a traditional Guardsman-never a full-time employee of the Air National Guard, so he wouldn't have been under the old Civil Service Retirement System. He retired in December. I asked him what he did different in 2007 and he said nothing.

Newtaxguy (talk|edits) said:

8 February 2008
i kinda like pfw's milo minderbinder theory.

The New Tax Guy

Dllcpa (talk|edits) said:

8 February 2008
Well, I never heard of milo minderbinder. ??? I just told the taxpayer to contact mil pay and tell them to investigate.

Death&Taxes (talk|edits) said:

8 February 2008
Catch 22 Image:smile.jpg

Could he have been called up for an emergency? This year's Publication 15 states that such wages are FICA exempt if serving on a temporary basis for a storm etc.

Bushmaster (talk|edits) said:

8 February 2008
Some military pay is subject to income tax yet exempt from SS and Medicare. One that come to mind is Drill Sergeant pay. The extra $375 a month is subject to income tax but not SS and Medicare.

Since the National Guard doesn't have Drill Sergeants, I would dig a little deeper. DFAS is usually right on the money with this stuff though.

Death&Taxes (talk|edits) said:

8 February 2008
I suspect my explanation of a call up to fight a flood, storm etc may be correct.

Dllcpa (talk|edits) said:

11 February 2008
He gave me detail of his pay throughout the year. He did deploy in 2007 and he sold back leave. So, sold-back leave is not subject to FICA. I'm surprised.

Redbeard911 (talk|edits) said:

8 March 2008
I have the same issue. I'm doing my son's taxes. He is FT Navy, and his federal wages are $10,000 higher than his FICA wages. I haven't reviewed his pay stubs yet, which is my next task. I'm assuming that the Navy W-2 automatically deducts his BAH, since it's excluded from tax. I could just enter it and go on, but I want to understand why it is the way it is.

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