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. 

Transcribed Image Text:

a Employee's social security number 791-51-4335 Safe, accurate, FAST! Use Visit the IRS website at IRSe file www.irs.govlefile OMB No. 1545-0008 b Employer identification number (EIN) 2 Federal income tax withheld 1 Wages, tips, other compensation 130,377.00 3 Social security wages 128,400.00 5 Medicare wages and tips 137,627.00 7 Social security tips 15,184.00 4 Social security tax withheld 12-3456789 c Employer's name, address, and ZIP code 7,960.80 6 Medicare tax withheld 1,995.59 Ivy Technologies Inc. 436 E. 35 Ave. Gary, IN 46409 8 Allocated tips d Control number 9 Verification code 10 Dependent care benefits 5,000.00 e Employee's first name and initial Suff. 11 Nonqualified plans 12a See instructions for box 12 Last name | | 127.00 Eric Hayes 555 E. 81st Street 13 stautory employee Ratiremant plan Thrd-party sick pay 12b |D| 7,250.00 Merrillville, IN 46410 12c 14 Other | DD 12,345.00 12d 1 Employee's address and ZIP code 15 State Employer's state ID number 16 State wages, tips, etc. 17 State income tax 18 Local wages, tips, etc. 19 Local income tax 20 Locality name IN | 00122231001 LAKE 130,377.00 4,956.00 130,377.00 987.00 2018 W-2 Wage and Tax Department of the Treasury-Intemal Revenue Service Statement Form Copy B-To Be Filed With Employee's FEDERAL Tax Return. This information is being fumished to the Internal Revenue Service.