Problem 2-5 Salaries and Wages (LO 2.2)

Kristen, a single taxpayer, receives two 2018 Forms W-2 from the two employers she worked for during the year. One Form W-2 lists her wages in Boxes 1, 3, and 5 as $18,700. Her other employers Form W-2 has $43,000 in Box 1 but $46,500 in both Box 3 and Box 5. Kristen participated in the second employers 401(k) plan. She also received health care from her second employer. Lastly, her second employer provided $30,000 of group term life insurance to Kristen.

a. What amount should Kristen report as taxable wages in 2018? $

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b. What could explain the difference between Box 1 wages and Boxes 3 and 5 on her second employers W-2?

It would appear that Kristen made $ of contributions toward her employers 401(k) plan. The health care and group term life does not create a difference between Box 1 and wages taxable for Social Security and Medicare in Boxes 3 and 5.