To Calculate My Gross Income, Should I Use My Pay Stub Amount or My W-2?

Ordinarily, your gross pay is all of your income before any deductions are taken out. Your pay stub and IRS Form W-2 include gross income data, but for different reasons. While your pay stub shows total wages paid to you, your W-2 shows gross taxable wages. To figure your true gross earnings, use your pay stub amount.

Your gross income stated in Box 1 of your W-2 is essential in filing your taxes, as it shows your wages subject to federal income tax. Boxes 3 and 5 of the W-2 show your gross income that is subject to Social Security and Medicare taxes. If you only want to figure the total amount your employer paid you for the year, your last pay stub of the year should show all of the earnings you received.

If your employer includes year-to-date earnings on your pay stub, you can find this data under the year-to-date and total gross columns. If your employer doesn't do this, you can calculate it yourself. To arrive at the total gross, add all of your wages earned throughout the year, including any additional compensation you received such as overtime, commissions, bonuses, or retroactive pay for wage or salary increases. Even if year-to-date gross is stated on your pay stub, verify its accuracy by adding the amounts you received each pay period throughout the year. Keep in mind that the total gross wages on your pay stub do not include any mandatory or voluntary deductions.

Your gross income on your W-2 shows your earnings for the year, minus premiums or contributions paid toward pretax or salary reduction plans. Such plans include section 125 medical, dental, vision, life and accident insurance; flexible spending accounts for dependent care assistance; qualified retirement contributions; and parking and transit fees. For example, Box 1 shows only your wages that the Internal Revenue Service deems as taxable for federal income tax purposes. Because traditional 401(k) contributions are not subject to federal income tax, the amounts you paid toward your 401(k) are not included in Box 1.

If you tally all of your pay stubs for the year and the amount doesn't match the total year-to-date gross on your last pay stub, there's an error somewhere. Double-check your calculation; if the result is still the same, consult your payroll department. Likewise, if you add your pretax deductions to your gross income reported in Box 1 of your W-2 and the total doesn't equal the total gross on your last pay stub, contact your payroll department to resolve the issue. If your W-2 is wrong, your employer needs to give you a Form W-2c showing the correction.