When you compare a W-2 vs the final pay stub year to date, expect them to differ. The stub's year-to-date gross is pay before deductions. W-2 Box 1 removes pre-tax deferrals and benefits and adds taxable fringe benefits. Boxes 3 and 5 follow their own rules, so a gap usually has a reason you can trace line by line.
W-2 Box 1 versus final pay stub year to date gross
W-2 Box 1 reports wages, tips and other compensation subject to federal income tax, while the final pay stub's year-to-date gross shows everything earned before any deduction. Box 1 is usually the lower figure, because pre-tax deductions such as 401(k) deferrals and cafeteria plan health premiums come out of it.
The IRS 2026 General Instructions for Forms W-2 and W-3 tell employers to report total taxable wages in Box 1 and to leave out elective deferrals, such as employee contributions to a section 401(k) or 403(b) plan. The same instructions say those deferrals are reported in Box 12 with code D for a 401(k) plan.
Health premiums paid through a cafeteria plan are the second common reduction. IRS Publication 15-B (2026) lists accident and health benefits among the benefits a cafeteria plan can include, and says excluded benefits in most cases are not subject to federal income tax withholding, social security tax or Medicare tax. A stub may label this line "Medical pre-tax", "Sec 125" or just "Health", so read the deduction labels rather than assuming.
So the first move is simple. Start from the stub's year-to-date gross, subtract each year-to-date pre-tax deduction shown on the stub, and see how close you land to Box 1. Whatever is left over usually comes from the fringe benefits covered below.
Why do W-2 Boxes 3 and 5 differ from the final pay stub?
W-2 Box 3 shows social security wages and Box 5 shows Medicare wages. Both differ from the final pay stub because they include 401(k) deferrals that Box 1 leaves out, still exclude cafeteria plan health premiums, and follow their own limits: Box 3 stops at the social security wage base, while Box 5 has no cap.
The IRS 2026 General Instructions for Forms W-2 and W-3 say elective deferrals to certain qualified cash or deferred arrangements are reported in Box 3 even though they are not in Box 1. The same instructions say Boxes 3 and 7 together cannot exceed $184,500, the 2026 maximum social security wage base, and that there is no wage base limit for Medicare.
That is why Box 3 and Box 5 are often higher than Box 1 for the same employee. It also explains why, for a higher earner, Box 5 can be well above Box 3. An employee whose pay passes the wage base partway through the year will see Box 3 stop at the limit while Box 5 keeps counting every dollar.
The stub rarely shows any of this directly. Most stubs list a year-to-date amount for social security tax and Medicare tax withheld, but not the wage base behind each one. Dividing the year-to-date tax by its rate gives a rough check on Boxes 3 and 5, if the stub's figures are complete.
Worked reconciliation: year-to-date gross to Box 1, Box 3 and Box 5
This example uses a fictional employee, Jordan Ellery, at a fictional employer, Copperline Studio, for tax year 2026. Every figure below is an example.
| Item | Final stub YTD | Box 1 | Box 3 | Box 5 |
|---|---|---|---|---|
| Gross pay | $96,400 | $96,400 | $96,400 | $96,400 |
| 401(k) deferral (Box 12, code D) | $8,000 | -$8,000 | no change | no change |
| Cafeteria plan health premium | $3,600 | -$3,600 | -$3,600 | -$3,600 |
| Group-term life over $50,000 (Box 12, code C) | not on stub | +$420 | +$420 | +$420 |
| Personal use of company car | not on stub | +$1,200 | +$1,200 | +$1,200 |
| Total | $86,420 | $94,420 | $94,420 |
Box 1 is $9,980 below the stub's gross even though no one made a mistake. Box 3 equals Box 5 here only because $94,420 is under the $184,500 wage base. If Jordan had earned $205,000 gross with the same health premium, Box 5 would show about $203,020 after the same additions, and Box 3 would stop at $184,500.
Fringe benefits on the W-2 but not the final pay stub
Fringe benefits are non-cash items an employer provides, such as life insurance or a company car. Some taxable fringe benefits appear on the W-2 but never on the final pay stub, because the employer adds their value at year-end. The common ones are group-term life coverage above $50,000 and personal use of an employer vehicle.
The IRS 2026 General Instructions for Forms W-2 and W-3 say the taxable cost of group-term life coverage over $50,000 goes in Box 12 with code C and is also included in Boxes 1, 3 (up to the wage base) and 5. They also say the value of any personal use of an employer-provided vehicle must be included in Boxes 1, 3 and 5.
Timing adds another wrinkle. IRS Publication 15-B (2026) describes a special accounting rule that lets an employer treat the value of taxable noncash fringe benefits provided in the last two months of the calendar year as paid in the next year. An employer that uses it may report a November car benefit on next year's W-2, so the gap between stub and W-2 can shift from one year to the next.
Items posted after the last check matter too. A bonus paid in a separate off-cycle run, or a manual adjustment entered after the final regular payroll, can reach the W-2 without appearing on the stub the employee kept. Ask whether a later stub or adjustment exists before calling the gap unexplained.
Checking each year's stubs against each other is its own task. The post on whether pay stub to Excel totals match the year-to-date column shows how to lay out a year of stubs and confirm the running totals before you compare them with the W-2.
When does a W-2 and final pay stub gap mean an error?
A W-2 and final pay stub gap points to an error when it survives the reconciliation: after pre-tax deductions, taxable fringe benefits, the wage base and late adjustments are accounted for, a difference remains. Common signs are a 401(k) deferral left in Box 1, a Box 3 above the wage base, or a missing final paycheck.
Look for these patterns:
- Box 1 equals the stub's gross even though the stub shows 401(k) or cafeteria plan deductions. The deductions may not have been applied.
- Box 3 is above $184,500 for 2026. The IRS 2026 General Instructions for Forms W-2 and W-3 cap Boxes 3 and 7 combined at that amount.
- Box 1 falls short of the reconciled figure by exactly one pay period. The last check may have been left off.
- Two W-2s from the same employer with overlapping amounts. One may be a duplicate or a correction.
The fix belongs to the employer. The same IRS instructions say to use Form W-2c to correct errors on a W-2 already filed with the Social Security Administration, to file it as soon as possible after the error is found, and to give the employee a W-2c when the error was for the prior year. The firm's role is to show the employer the reconciliation and ask for the corrected form.
A W-2 that never arrives is a different problem. Read how to file taxes with a missing W-2 for the steps when the form is absent rather than wrong.
Year-end payroll is rarely the only form chase a bookkeeping client has. The same weeks bring vendor paperwork: W-9 collection for every vendor the client pays and checking the TIN on each returned W-9 both land in January alongside the W-2 review.
Schema CPA reads both W-2s and pay stubs, classifying each by issuer and period, so the final stub and the W-2 from the same employer sit in one client file when the reconciliation starts. The document categories on the homepage list the payroll documents it reads.