W2 Box 1 Empty

[livin4grace]

Several of our W2s printed with no value in box 1, it may be related to employees who claim exempt on Federal withholding. Whether they are expecting to be exempt or not, this does not correctly represent their earnings. How can we fix this?

[Paul Mayer]

See this FAQ, if you marked the employee as exempt from FIT then the employee did not receive any wages subject to FIT.

https://zpay.com/vbulletin/showthrea...Line-5a-and-5c

It printed what was expected for the settings for that employee.

[livin4grace]

I disagree that it's up to our company to decide what portion of these wages to report, just because the employee "expects" to be exempt from federal tax, and has asked us not to withhold FIT. According to the IRS, only wages that are non-taxable, such as certain benefits, should be excluded from Box 1. Here are the IRS instructions for form W2: (emphasis mine, to show what I'm specifically referring to) What I want to know is, how can I fix this so that ALL wages are reported in box 1? (we do not offer any benefits that would reduce taxable wages)

https://www.irs.gov/instructions/iw2w3

"Box 1—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)(1 contributions. Include the following.
Total wages, bonuses (including signing bonuses), prizes, and awards paid to employees during the year. See Calendar year basis.
Total noncash payments, including certain fringe benefits. See Fringe benefits.
Total tips reported by the employee to the employer (not allocated tips).
Certain employee business expense reimbursements. See Employee business expense reimbursements.
The cost of accident and health insurance premiums for 2%-or-more shareholder-employees paid by an S corporation.
Taxable benefits from a section 125 (cafeteria) plan if the employee chooses cash.
Employee contributions to an Archer MSA.
Employer contributions to an Archer MSA if includible in the income of the employee. See Archer MSA.
Employer contributions for qualified long-term care services to the extent that such coverage is provided through a flexible spending or similar arrangement.
Taxable cost of group-term life insurance in excess of $50,000. See Group-term life insurance.
Unless excludable under Educational assistance programs, payments for non-job-related education expenses or for payments under a nonaccountable plan. See Pub. 970.
The amount includible as wages because you paid your employee's share of social security and Medicare taxes (or railroad retirement taxes, if applicable). See Employee's social security and Medicare taxes (or railroad retirement taxes, if applicable) paid by employer. If you also paid your employee's income tax withholding, treat the grossed-up amount of that withholding as supplemental wages and report those wages in boxes 1, 3, 5, and 7. (Use box 14 if railroad retirement taxes apply.) No exceptions to this treatment apply to household or agricultural wages.
Designated Roth contributions made under a section 401(k) plan, a section 403(b) salary reduction agreement, or a governmental section 457(b) plan. See Designated Roth contributions.
Distributions to an employee or former employee from an NQDC plan (including a rabbi trust) or a nongovernmental section 457(b) plan.
Amounts includible in income under section 457(f) because the amounts are no longer subject to a substantial risk of forfeiture.
Payments to statutory employees who are subject to social security and Medicare taxes but not subject to federal income tax withholding must be shown in box 1 as other compensation. See Statutory employee.
Cost of current insurance protection under a compensatory split-dollar life insurance arrangement.
Employee contributions to a health savings account (HSA).
Employer contributions to an HSA if includible in the income of the employee. See Health savings account (HSA).
Amounts includible in income under section 409A from an NQDC because the amounts are no longer subject to a substantial risk of forfeiture and were not previously included in income. See Nonqualified deferred compensation plans under Special Reporting Situations for Form W-2.
Nonqualified moving expenses and expense reimbursements. See Moving expenses.
Payments made to former employees while they are on active duty in the U.S. Armed Forces or other uniformed services.
All other compensation, including certain scholarship and fellowship grants. See Scholarship and fellowship grants. Other compensation includes taxable amounts that you paid to your employee from which federal income tax was not withheld. You may show other compensation on a separate Form W-2. See Multiple forms."

[Paul Mayer]

The first part of that shows "Box 1—Wages, tips, other compensation. Show the total taxable wages". And if you read our instructions in the help file it tells you that you are marking the wages as Tax Exempt. So many employers get in trouble by an employee telling them they are exempt from taxes.

I can remove all of the Tax Exempt flags on your transactions if you desire by editing the raw data and then getting your database back to you. But do not use that again going forward as t=it was actually setup for non-employee compensation. The old 1099-MISC payees and now the 1099-NEC payees.

Make a backup and send the backup file to support@zpay.com. In the email, tell me the Employee Name and ID. See the instructions here:

https://zpay.com/PayWindowTutorials/...PAY/index.html

In the future if you want to reduce FIT, after calculating the taxes select the FIT and type in what you want to use, press the Tab key to recalculate the Net and Close and Save.

[Paul Mayer]

I just noticed that you posted your question in the W2-1099FormWindow Forum. You can edit the W2's and put anything you want on them in that program.