Please address the following:

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

IRS website at 791-51-4335 B No. 1545-0008 FAST Ues efile b Employar Identfication nunbar Ps, 130,37700 15, 184.00 7,960.80 1.995.59 12-3456789 nama, addross, and AP code Ivy Technologies Inc. 436 E. 35 Ave Gary, IN 46409 128,400.00 wagon and tips 137,627.00 Medkcaro a tax witthhaid 8 Allocatod tips Vericabon coda 5,000.00 'CI 127.00 D7,250.00 DDI 12,345.00 eEmployee's nnt name and In Last name Eric Hayes 555 E. 81st Street Merrillville, IN 46410 14 Othar Employo's addross and ZP cod 15 Employars state ID number IN I 00122231001 18 Etata wagos, tipe, ata. State Income tax 130,377.00 4,956.00 130,377.00 18 Local wges, 1ps, b10 Local income tax 20 Localty nama 987.00 LAKE Wage and Tax Statement 2018 Department of the Troapry-Internal Reverue Savico Copy B-To Be Flled With Employee's FEDERAL Tax Return. This nfomation is beling fumished to the htemal Revenua Servica