Eric, your friend, received his Form W-2 from his employer (below) and has asked for your help. Eric’s 2018 salary was $145,000 and he does not understand why the amounts in Boxes 1, 3 and 5 are not $145,000? His final paycheck for the year included the following information: – Eric contributed 5 percent of his salary to the company 401(k) plan on a pre-tax basis. – Eric is married with two children. He had $5,000 deducted from his wages for a Dependent Care Flexible Spending Account. – Eric is enrolled in the company-sponsored life insurance program. He has a policy that provides a benefit of $145,000. – Eric contributed $2,500 to the Health Care Flexible Spending Account (he keeps forgetting that the maximum deferral has increased over the years). Using the information and Eric’s Form W-2, prepare an email to Eric reconciling his salary of $145,000 to the amounts in Boxes 1, 3, and 5 Below is the transcription of a sample W-2 Wage and Tax Statement for the year 2018, typically utilized for filing an individual's federal tax return with the IRS.---### W-2 Wage and Tax Statement 2018#### Employee Information:- **Employee’s Social Security Number**: 791-51-4335- **Employee Name**: Eric Hayes- **Address**: 555 E. 81st Street, Merrillville, IN 46410#### Employer Information:- **Employer Identification Number (EIN)**: 12-3456789- **Employer Name**: Ivy Technologies Inc.- **Employer Address**: 436 E. 35 Ave., Gary, IN 46409#### Wages and Compensation:- **Wages, Tips, Other Compensation**: $130,377.00- **Social Security Wages**: $128,400.00- **Medicare Wages and Tips**: $137,627.00- **Social Security Tips**: (Not specified)- **Allocated Tips**: (Not specified)#### Taxes Withheld:- **Federal Income Tax Withheld**: $15,184.00- **Social Security Tax Withheld**: $7,960.80- **Medicare Tax Withheld**: (Amount not specified, calculation would be needed on Medicare wages)#### Additional Details:- **Dependent Care Benefits**: $5,000.00- **Nonqualified Plans**: (Checked)- **Other** (Box 14): - C: $127.00 - 13b (Not clearly specified) - DD: $12,345.00 (Typically represents the cost of employer-sponsored health coverage; however, it's advised to check specific IRS guidelines)#### State and Local Taxes:- **State**: IN (Indiana)- **Employer’s State ID Number**: 00122231001- **State Wages, Tips, etc.**: $130,377.00- **State Income Tax**: $4,956.00- **Local Wages, Tips, etc.**: $130,377.00- **Local Income Tax**: $987.00- **Locality Name**: LAKE---This document is an important official tax form used in reporting earnings and taxes withheld for a given calendar year.

At the conclusion of the year, employers must deliver Form W-2, frequently referred to as the Wage and Tax Report, to every employee as well as the IRS. A W-2 form reflects a worker's annual earnings as well as the tax amount deducted from their payments. W-2 employees are those whose employers withhold taxes on their salaries and report this data to the government.Hi E, Greetings! Your gross pay for the year 2018 is $145,000, while you may find different amounts in Form W-2. To help you understand, I am herewith providing reconciliation of amounts reported in Box 1, 3 and 5 with your gross salary and deductions. The following are the calculations for the amounts reported in the boxes 1, 3 & 5 of Form W-2: I hope you are clear now on the gross amount of your salary and the amounts reported on the Form W-2. I am happy to help you if you still have any questions. Thanks & Regards,Student

Answered: Eric, your friend, received his Form…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Eric, your friend, received his Form W-2 from his employer (below) and has asked for your help. Eric’s 2018 salary was $145,000 and he does not understand why the amounts in Boxes 1, 3 and 5 are not $145,000? His final paycheck for the year included the following information: – Eric contributed 5 percent of his salary to the company 401(k) plan on a pre-tax basis. – Eric is married with two children. He had $5,000 deducted from his wages for a Dependent Care Flexible Spending Account. – Eric is enrolled in the company-sponsored life insurance program. He has a policy that provides a benefit of $145,000. – Eric contributed $2,500 to the Health Care Flexible Spending Account (he keeps forgetting that the maximum deferral has increased over the years). Using the information and Eric’s Form W-2, prepare an email to Eric reconciling his salary of $145,000 to the amounts in Boxes 1, 3, and 5

Below is the transcription of a sample W-2 Wage and Tax Statement for the year 2018, typically utilized for filing an individual's federal tax return with the IRS.

---

### W-2 Wage and Tax Statement 2018

#### Employee Information:
- **Employee’s Social Security Number**: 791-51-4335
- **Employee Name**: Eric Hayes
- **Address**: 555 E. 81st Street, Merrillville, IN 46410

#### Employer Information:
- **Employer Identification Number (EIN)**: 12-3456789
- **Employer Name**: Ivy Technologies Inc.
- **Employer Address**: 436 E. 35 Ave., Gary, IN 46409

#### Wages and Compensation:
- **Wages, Tips, Other Compensation**: $130,377.00
- **Social Security Wages**: $128,400.00
- **Medicare Wages and Tips**: $137,627.00
- **Social Security Tips**: (Not specified)
- **Allocated Tips**: (Not specified)

#### Taxes Withheld:
- **Federal Income Tax Withheld**: $15,184.00
- **Social Security Tax Withheld**: $7,960.80
- **Medicare Tax Withheld**: (Amount not specified, calculation would be needed on Medicare wages)

#### Additional Details:
- **Dependent Care Benefits**: $5,000.00
- **Nonqualified Plans**: (Checked)
- **Other** (Box 14):
- C: $127.00
- 13b (Not clearly specified)
- DD: $12,345.00 (Typically represents the cost of employer-sponsored health coverage; however, it's advised to check specific IRS guidelines)

#### State and Local Taxes:
- **State**: IN (Indiana)
- **Employer’s State ID Number**: 00122231001
- **State Wages, Tips, etc.**: $130,377.00
- **State Income Tax**: $4,956.00
- **Local Wages, Tips, etc.**: $130,377.00
- **Local Income Tax**: $987.00
- **Locality Name**: LAKE

---

This document is an important official tax form used in reporting earnings and taxes withheld for a given calendar year.

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