For W-2 auditing and balancing purposes, the Year-End W-2 Audit Report, PAY00709, displays detailed employee W-2 information listed alphabetically by employee last name. Where an employee's Box 16 state wages differ from the Box 1 Reportable Compensation, a gray warning line displays.
For year-end, review the entire W-2 Audit Report for accuracy. In addition, note any warnings on the W-2 Audit Report and determine if any adjustments are required for compliance. The last three pages of the W-2 Audit Report have the Company Totals, Tax EIN Totals, and the Report Totals, respectively.
From the Report Navigator's filters, you may click directly on the Run Report button to avoid filtering the report.
Year-End W-2 Audit Report, PAY00709
Unless the client is in a state like FL, TX or AK, which have no state withholding, Box 1 and Box 16 should balance. In cases of a variance, an earning or deduction may be set to Reportable Comp, while the box to update FIT taxable wages is unchecked (or vice-versa). Also, there are rare instances of states not following federal taxation rules for specific items – for example, PA does not view 401k contributions as pre-tax. Clients can have employees who move between states, and you would add Box 16-1 and 16-2 together for your comparison.
Box 5 less Box 12 should equal Box 1, unless there is a non-taxed item in Box 12 in addition to the deferred compensation plans.
Box 6 should equal Box 5 x 1.45% within an acceptable margin for individual rounding.
Box 3 plus Box 7 should be less than or equal to Box 5. The combination of wages in Boxes 3 and 7 x 6.2% should equal Box 4 within an acceptable margin for individual rounding.
Boxes 1 through 7 should tie out to the four quarterly 941's issued from the system. Any quarterly adjustment payrolls processed after the original returns were filed can throw a quarter out-of-balance and may require filing corrected 941's (941C's).
Some payroll professionals use the PAY00538, Reporting Period Payroll Report and manually calculate the box-by-box taxable wages to compare against the PAY00709 to make sure there are no employees being omitted completely from one or more boxes. Typically, this is unnecessary unless something is out of balance.