17 Apr Why are my federal and state W-2s different?
Q. Why are there different amounts on my W-2 for federal and state taxes?
A. There are a couple of reasons why you may have a different amount for taxable federal wages and taxable New Jersey wages on your W-2.
First, 401(k) elective deferrals are excluded from wages for both federal and New Jersey income tax purposes, said Altair Gobo, a certified financial planner with U.S. Financial Services in Fairfield.
But, he said, 403(b) retirement plan contributions, while excluded from federal taxable wages, are not deductible and are therefore included in wages for New Jersey state income tax purposes.
Then there’s IRS Section 125, also known as cafeteria plans.
These allow employees to contribute a certain amount of their gross income for health care and other qualified expenses, and are excluded from taxable wages for federal income tax purposes. But they’re not excluded for New Jersey state income tax purposes, Gobo said.
“If you have made any of these contributions, the difference in reporting should be the amount you contributed to the above referenced plans,” Gobo said.
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