Eric, your friend, received his Form W-2 from his employer (below) and has asked for your help. Erics 2020 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 Erics Form W-2, explain to Eric the reconciling of his salary of $145,000 to the amounts in Boxes 1, 3, and 5.

Employee socially number 791-51-4335 b Employer identification number EN 12-3456789 Employer's name, address, and ZIP code Ivy Technologies Inc. 436 E 35 Ave. Gary, IN 46409 Sato, accurate, Visit the IRS website at are file www.is.goverle OMB No. 1545-0006 FASTI Use 1 Wages,ps, Ciner compercailon 2 Ferncome the wind 130,377.00 15,184.00 3 sumy Wigd Max Wind 128,400.00 7,960.80 6 Medicaro wages and tips 6 Medicare tar withhold 137,627.00 1,995.59 7 Social security tips 8 Allocated tips d Control number 0 Vernication code Burt.11 Nonqualified plans . Employee's first name and Intial Last namne Eric Hayes 555 E. 81st Street Merrillville, IN 46410 13 malay 10 Dependent care berets 5,000.00 12 See restructions for box 12 IC 127.00 12b iD 7,250.00 120 DD 12,345.00 12d TO lieky plen 14 Other f Employo's address and ZIP code 15 Biale Employer's state ID number IN 00122231001 17 State Income tax 16 Statawagan, tips, so 130,377.00 4,956.00 18 Local Wages, 1ps, etc. 130,377.00 19 Local income tax 987.00 20 Looky na LAKE Department of the Treasury-Internal Revenue Service Form W-2 Wage and Tax 2018 Statement Copy B-To Be Filed With Employee's FEDERAL Tax Retur. This information is being fumished to the Intemal Revenue Service