What is my "true" wage income?

[CletusCaddy]

I am trying to figure out what my "true" wage income is.

My understanding is that Medicare wages as shown on W-2 Box 5 is the most expansive definition of wage income, but even that has things excluded, like:

1. FSA contributions
2. HSA contributions
3. Employer 401k match
4. Medical insurance premiums

Anything else? Thanks

[Hyperchicken]

Depends on what you need this for, I suppose. If you need this for some concrete use, then that use would dictate the requirements. Otherwise you can define it any way you like.

The most inclusive definition would probably be gross wages + employer match + imputed income.

[FiveK]

Maybe your Gross pay as discussed in that article (and in Gross Pay - Definition, Examples, How to Calculate)?

[CletusCaddy]

Depends on what you need this for, I suppose. If you need this for some concrete use, then that use would dictate the requirements. Otherwise you can define it any way you like.

The most inclusive definition would probably be gross wages + employer match + imputed income.

What I trying to figure out is the maximum annual wealth available to me from my job, if I optimized every single lever.

After I get that number then I can budget taxes, spending and savings more effectively.

[toddthebod]

Depends on what you need this for, I suppose. If you need this for some concrete use, then that use would dictate the requirements. Otherwise you can define it any way you like.

The most inclusive definition would probably be gross wages + employer match + imputed income.

What I trying to figure out is the maximum annual wealth available to me from my job, if I optimized every single lever.

After I get that number then I can budget taxes, spending and savings more effectively.

I don't see how employer paid insurance premiums contribute to your available wealth.

[CletusCaddy]

Depends on what you need this for, I suppose. If you need this for some concrete use, then that use would dictate the requirements. Otherwise you can define it any way you like.

The most inclusive definition would probably be gross wages + employer match + imputed income.

What I trying to figure out is the maximum annual wealth available to me from my job, if I optimized every single lever.

After I get that number then I can budget taxes, spending and savings more effectively.

I don't see how employer paid insurance premiums contribute to your available wealth.

They don’t so I don’t need it.

I do need employee paid insurance premiums.

[sc9182]

Kind of hard to get it with any level of certainty:

How to account for Holiday-pay/Vacation/Sick & Training & Travel costs incurred/spent by Employer?
Dental+Vision and other coverage discounts-made-available/costs spent
HSA bonus/match on HDHP
Group life usually free for first $50K and/or 1x your annual salary
Corporate Charity funding made to your choice Orgs/Schools/Univs !?
Corporate Gym/facilities, discounted cafeteria, Coffee/snacks etc, possibly free EV-charging made available ?
Benefits/HR administration costs incurred per employee ..
Unemployment benefits accrued to you due to this job (and Corp has $spent on your behalf)

Can think of many other items --

In-essence you need to look at what is your Cost-to-the-Company (and value you are bringing)., and what is net monies you are seeing in your paycheck/401k/hsa accounts that matter to your pocket-book.

Sorry - can't define what the underlying point/intent of your Q .. hopefully, you got some data-points ..

[Ron Ronnerson]

Depends on what you need this for, I suppose. If you need this for some concrete use, then that use would dictate the requirements. Otherwise you can define it any way you like.

The most inclusive definition would probably be gross wages + employer match + imputed income.

What I trying to figure out is the maximum annual wealth available to me from my job, if I optimized every single lever.

After I get that number then I can budget taxes, spending and savings more effectively.

I don't see how employer paid insurance premiums contribute to your available wealth.

My employer doesn’t contribute anything toward health benefits. Insurance purchased through my employer for a family would cost the employee around $30k/year. I have a friend who pays this amount, leaving him with less available money to invest. I have another friend who rolls the dice and goes without health insurance, leaving him at risk of financial ruin.

Health benefits have the word “benefit” right in their name. Imagine two jobs that paid the same (and were otherwise identical in all ways) but one came with no health benefits while the other one offered excellent coverage. The compensation would not be the same.

[ray.james]

In some countries, they use total cost of employee during salary negotiations which includes all the above components. In USA, it is complicated. I found Medicare wages to the best proxy for income that you can control to make wealth from. (the rest are discretionary from employers.

[pizzy]

maximum annual wealth available to me from my job

Does available = able to be spent?

What current deductions do you have on your paycheck? Which ones can you "cancel"?

Take your net and add back the deductions that you could cancel if you chose to.

[toddthebod]

Depends on what you need this for, I suppose. If you need this for some concrete use, then that use would dictate the requirements. Otherwise you can define it any way you like.

The most inclusive definition would probably be gross wages + employer match + imputed income.

What I trying to figure out is the maximum annual wealth available to me from my job, if I optimized every single lever.

After I get that number then I can budget taxes, spending and savings more effectively.

I don't see how employer paid insurance premiums contribute to your available wealth.

They don’t so I don’t need it.

I do need employee paid insurance premiums.

That's on your paystub, isn't it? Mine are also reported in Box 14 of my W2, although I don't know if that's standard.

[snowday2022]

gross wages + employer 401k contributions

[sailaway]

gross wages + employer 401k contributions

What is listed as gross wages doesn't include employee t401k deferrals.

Gross wages =/= gross pay. I am not a particularly detailed planner, but I just use gross pay. This includes RSUs, but not the benefit of the ESPP discount nor employer match on 401k or HSA seed/incentive money. Those are easily seen on the paycheck if I wanted that level, but with so much pay dependent on bonus and RSU values, those amounts don't affect planning for us. We get the free money before we even start planning.

Thanks for the reminder to get DH to do an activity for some of that 2024 HSA incentive money!

[snowday2022]

gross wages + employer 401k contributions

What is listed as gross wages doesn't include employee t401k deferrals.

Gross wages =/= gross pay. I am not a particularly detailed planner, but I just use gross pay. This includes RSUs, but not the benefit of the ESPP discount nor employer match on 401k or HSA seed/incentive money. Those are easily seen on the paycheck if I wanted that level, but with so much pay dependent on bonus and RSU values, those amounts don't affect planning for us. We get the free money before we even start planning.

Thanks for the reminder to get DH to do an activity for some of that 2024 HSA incentive money!

Does not Medicare Gross wages include employee t401k deferrals?

[sailaway]

gross wages + employer 401k contributions

What is listed as gross wages doesn't include employee t401k deferrals.

Gross wages =/= gross pay. I am not a particularly detailed planner, but I just use gross pay. This includes RSUs, but not the benefit of the ESPP discount nor employer match on 401k or HSA seed/incentive money. Those are easily seen on the paycheck if I wanted that level, but with so much pay dependent on bonus and RSU values, those amounts don't affect planning for us. We get the free money before we even start planning.

Thanks for the reminder to get DH to do an activity for some of that 2024 HSA incentive money!

Does not Medicare Gross wages include employee t401k deferrals?

Yes, on the W2. Megacorp has a different gross wages on the paycheck. Gross pay on the final paycheck for 2022 is still about $2k higher than Medicare Gross wage on the W2. That might be a patent bonus or something similar.

[CletusCaddy]

Finally did the math and it turns out my "true" wages are 15% above my Medicare wages. That is material. Exactly why I started this thread.

[robbierob03]

Finally did the math and it turns out my "true" wages are 15% above my Medicare wages. That is material. Exactly why I started this thread.

Out of curiosity what was the math behind your definition of "true" wages? I can't immediately think of any part of my wages that wouldn't be in the Medicare wage bucket.

[pizzy]

Finally did the math and it turns out my "true" wages are 15% above my Medicare wages. That is material. Exactly why I started this thread.

Can you share the calculation you used?

[Onlineid3089]

Finally did the math and it turns out my "true" wages are 15% above my Medicare wages. That is material. Exactly why I started this thread.

Out of curiosity what was the math behind your definition of "true" wages? I can't immediately think of any part of my wages that wouldn't be in the Medicare wage bucket.

Any employee contributions to section 125 cafeteria plans are withheld before Medicare/SS taxes. I have almost 19,000 in payroll deductions for those in CY23 between health insurance premiums, HSA, Dependent Care Flex account.

If they're counting employer matches/contributions to 401k or the like as wage income that wouldn't show up as Medicare earnings either.

[CletusCaddy]

Finally did the math and it turns out my "true" wages are 15% above my Medicare wages. That is material. Exactly why I started this thread.

Out of curiosity what was the math behind your definition of "true" wages? I can't immediately think of any part of my wages that wouldn't be in the Medicare wage bucket.

Medicare wages
+ Pre-tax 401k contribution
+ 401k match
+ HSA & FSA contributions, including DCFSA
+ Medical insurance premiums paid by me

[Onlineid3089]

Finally did the math and it turns out my "true" wages are 15% above my Medicare wages. That is material. Exactly why I started this thread.

Out of curiosity what was the math behind your definition of "true" wages? I can't immediately think of any part of my wages that wouldn't be in the Medicare wage bucket.

Medicare wages
+ Pre-tax 401k contribution
+ 401k match
+ HSA & FSA contributions, including DCFSA
+ Medical insurance premiums paid by me

Your pre-tax 401k contributions should not be withheld before FICA taxes. You shouldn't have to add that back in.

[CletusCaddy]

Finally did the math and it turns out my "true" wages are 15% above my Medicare wages. That is material. Exactly why I started this thread.

Out of curiosity what was the math behind your definition of "true" wages? I can't immediately think of any part of my wages that wouldn't be in the Medicare wage bucket.

Medicare wages
+ Pre-tax 401k contribution
+ 401k match
+ HSA & FSA contributions, including DCFSA
+ Medical insurance premiums paid by me

Your pre-tax 401k contributions should not be withheld before FICA taxes. You shouldn't have to add that back in.

Ah shoot you are right

[pizzy]

Finally did the math and it turns out my "true" wages are 15% above my Medicare wages. That is material. Exactly why I started this thread.

Out of curiosity what was the math behind your definition of "true" wages? I can't immediately think of any part of my wages that wouldn't be in the Medicare wage bucket.

Medicare wages
+ Pre-tax 401k contribution
+ 401k match
+ HSA & FSA contributions, including DCFSA
+ Medical insurance premiums paid by me

Your pre-tax 401k contributions should not be withheld before FICA taxes. You shouldn't have to add that back in.

Ah shoot you are right

What did the % drop to?

[toddthebod]

Finally did the math and it turns out my "true" wages are 15% above my Medicare wages. That is material. Exactly why I started this thread.

Out of curiosity what was the math behind your definition of "true" wages? I can't immediately think of any part of my wages that wouldn't be in the Medicare wage bucket.

Medicare wages
+ Pre-tax 401k contribution
+ 401k match
+ HSA & FSA contributions, including DCFSA
+ Medical insurance premiums paid by me

You got me curious, and I checked my W2 and final paystub for last year. My final paystub has "Total Gross" and "Fed Taxable Gross". Total Gross is what you are calling "true" wages. It's a number that does not appear anywhere on my W2.

[CletusCaddy]

Out of curiosity what was the math behind your definition of "true" wages? I can't immediately think of any part of my wages that wouldn't be in the Medicare wage bucket.

Medicare wages
+ Pre-tax 401k contribution
+ 401k match
+ HSA & FSA contributions, including DCFSA
+ Medical insurance premiums paid by me

Your pre-tax 401k contributions should not be withheld before FICA taxes. You shouldn't have to add that back in.

Ah shoot you are right

What did the % drop to?

Medicare wages are now 92% of my true wages

[queenofthemadhouse]

I am curious, if you are adding in 401k match, I’m still puzzled by not including health premiums.

It’s part of the monetary value of the job. If you had another job or no job, you’d have to fund that expense. Having that expense covered certainly contributes to wealth building.

My employer provides a ‘total rewards’ number that includes their cost for all my benefits as well.

[OrangeKiwi]

My employer doesn’t contribute anything toward health benefits. Insurance purchased through my employer for a family would cost the employee around $30k/year. I have a friend who pays this amount, leaving him with less available money to invest. I have another friend who rolls the dice and goes without health insurance, leaving him at risk of financial ruin.

Health benefits have the word “benefit” right in their name. Imagine two jobs that paid the same (and were otherwise identical in all ways) but one came with no health benefits while the other one offered excellent coverage. The compensation would not be the same.

Being able to pay for health insurance premiums with pretax W2 income is itself a benefit as opposed to having to paying with post tax W2 income without the employer’s involvement.

Although, it seems bizarre that an employer would be able to incentivize sufficient employees to opt into the health insurance plans so that they pass non discrimination testing without offering at least some subsidy for health insurance premiums.

[CletusCaddy]

I am curious, if you are adding in 401k match, I’m still puzzled by not including health premiums.

It’s part of the monetary value of the job. If you had another job or no job, you’d have to fund that expense. Having that expense covered certainly contributes to wealth building.

My employer provides a ‘total rewards’ number that includes their cost for all my benefits as well.

I include the employee premiums in my “true wage” because I could theoretically decline coverage and put that money in my pocket. I don’t include the employer premiums because that is money I can’t use for other purposes

[MrJones]

If you use a double entry bookkeeping system like gnucash and enter your paychecks into it in full, these types of questions can be answered any time in seconds. And can be computed and analyzed for and period and such, accurately down to the penny.

I know it doesn't help you right now, but mentioning it in case this type of tracking is of ongoing interest.

[mikep]

Gains from an employer stock purchase plan aren't in Medicare wages, but disqualifying dispositions are added to wage income.

[CletusCaddy]

One more item not mentioned yet. My employer issues me stock options that I can choose to exercise (or not). Are these ever included in Medicare wages? If so, when?

[Hyperchicken]

What does your paystub say?

[CletusCaddy]

What does your paystub say?

It doesn’t show up upon grant, nor vest. I haven’t exercised any yet, much less sold any exercised shares.

[snowday2022]

For health insurance premiums, I thought thr employee contributions are taxed for FICA, but employer contributions are not. This thread disabused me of that notion. On my paystub there is a “total gross earnings” but no sum of that over the year. Could add those together for all months to get a number that would be helpful though not include employer insurance premiums, or RSUs.