Year-end payroll reconciliation
Should your W-2 match the gross pay on your last pay stub?
Not necessarily. Match each W-2 box to its corresponding year-to-date wage or withholding total, not the last check's gross or the year's deposits. Pre-tax benefits can make federal wages different from Social Security and Medicare wages without any reporting error.
The hypothetical reconciliation covers one employer's ordinary 2026 Texas wages, no tips, stock compensation, taxable noncash benefits or payroll corrections, and valid benefit elections within their limits. It excludes special ownership, employment exemptions and state/local reporting.
Select the right year and employer first
Collect the W-2, the final year-to-date payroll statement and any off-cycle payments or year-end adjustments. Match the employer and tax year before comparing totals. W-2 reporting generally follows the year wages are paid: ordinary December work paid in January belongs in the following year's W-2, not automatically the year the work occurred.
Make a small reconciliation with three columns: the W-2 box, the matching payroll year-to-date line and any documented adjustment. Do not combine two employers into one comparison. Do not use the current-period column on the final statement as if it covered the year.
A $96,000 salary with three employee deductions
Assume 24 equal payments of $4,000. Each deducts $400 for a traditional 401(k), $150 for a qualifying Section 125 health premium and $100 for a Roth 401(k). The health premium is fully exempt from federal income tax and FICA. Annual totals are $9,600 traditional, $3,600 health and $2,400 Roth. The single W-4 has Step 2 unchecked and Steps 3-4 blank.
| W-2 field | Reconciliation | Example amount |
|---|---|---|
| Box 1: federal wages | $96,000 - $9,600 - $3,600 | $82,800.00 |
| Box 2: federal income tax withheld | 24 actual lines of $391.08 | $9,385.92 |
| Box 3: Social Security wages | $96,000 - $3,600 | $92,400.00 |
| Box 4: Social Security tax withheld | 24 actual lines of $238.70 | $5,728.80 |
| Box 5: Medicare wages | $96,000 - $3,600 | $92,400.00 |
| Box 6: Medicare tax withheld | 24 actual lines of $55.83 | $1,339.92 |
| Box 12: code D | Traditional 401(k) deferrals | $9,600.00 |
| Box 12: code AA | Roth 401(k) contributions | $2,400.00 |
The $9,600 difference between Box 1 and Boxes 3/5 is the traditional deferral. Roth does not reduce any of these wage totals. Code D and code AA describe contributions already reconciled here; do not subtract them again from Box 1.
Sum taxes actually withheld rather than recomputing an annual bill
In the constructed payroll, federal taxable wages are $3,450 per check. Worksheet 1A produces $391.083333 before rounding, so 24 deductions of $391.08 total $9,385.92. Box 2 is that withholding total, not a new calculation of the employee's final tax liability.
Each payment has $3,850 of Medicare wages: $3,850 x 1.45% = $55.825, rounded here to $55.83. Adding 24 actual deductions produces $1,339.92, whereas multiplying annual Medicare wages by 1.45% gives $1,339.80. The twelve-cent difference comes from the specified per-payment rounding. Compare the actual ledger; a payroll system using another permitted rounding approach may produce a different small difference.
Use deposits only as a separate cash check
The example's net payment is $4,000 - $400 - $150 - $100 - $391.08 - $238.70 - $55.83 = $2,664.39. Over 24 payments, deposits total $63,945.36. No W-2 wage box is supposed to equal that cash total. Bank splits, reimbursements and other after-tax deductions would require additional cash entries.
Check one payment before the Roth deduction. The calculator shows $2,764.39 before the $100 Roth contribution, which must be subtracted separately because the tool has no after-tax deduction field. It does not prepare a W-2 or reconcile year-end adjustments.
When a difference needs payroll's explanation
Ask for the reconciliation detail when the wage difference is not explained by an election or documented adjustment, or when a tax box does not match actual withholding. Identify the exact box, the matching year-to-date line and the amount of the discrepancy. An error in a filed W-2 may require the employer to issue Form W-2c; do not replace a W-2 number with your own estimate just to make it match the bank.
Above the Social Security wage base, Boxes 3 and 5 can legitimately diverge. Tips, taxable fringe benefits, third-party sick pay and stock transactions also break this simple example. Review those items rather than forcing every employee into the same gross-minus-deductions formula.
Sources checked September 7, 2026: 2026 IRS W-2/W-3 instructions, calendar-year reporting, boxes 1-6, codes D/AA and corrections, IRS retirement contribution withholding and W-2 reporting table, 2026 IRS Publication 15-B, cafeteria plans and health benefits, and 2026 IRS Publication 15-T, Worksheet 1A and rounding. The ledger is hypothetical and assumes every payment's tax lines are rounded to cents.