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Experienced Member

Payroll deduction affected Medicare Wages


I created a payroll deduction for an employee to repay a loan.  Unfortunately, the amount of the deduction (120 dollars) created a difference on my W2s for one employee.

SS wages (box 3) shows 70,265 and Medicare wages (box 5) are 70,385.
Can these boxes have different wages or do I need to do something to correct this?



Re: Payroll deduction affected Medicare Wages

Great to see you here, chansenb,


I want to ensure your Form W-2 information is accurate. Let's get this sorted out.


The way your payroll items affect your tax reporting depends on the Tracking Type you selected during the setup. In your case, you'll need to review the payroll deduction set up. Let me guide you how:

  1. Go to the Lists menu.
  2. Choose Payroll Item List.
  3. Double-click the deduction.
  4. Click Next twice.
  5. On the Tax tracking type page, verify what tax type you're using. You can verify how the item affects your forms below the type drop-down.

Once verified, you can update the type selected if needed. However, if you're unsure what type to choose, I'd recommend consulting an accounting professional to make sure you're using the correct type.


Please let me know how it goes, chansenb. I'll keep an eye on this post for your response. Have a good day!

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Re: Payroll deduction affected Medicare Wages

For Step 5, the Tax Tracking should be set to None.