941 vs W2 Gross Wages - Which Box Should Match When Comparing Forms?

The 941 quarterly totals should match Box 5 (Medicare wages) on the W2. Here's why: Form 941 reports total wages subject to Medicare tax each quarter, which has the fewest exemptions of the wage categories. Box 1 on the W2 won't match because it's reduced by pre-tax deductions like health insurance and 401(k) contributions. Box 3 might not match if an employee exceeds the Social Security wage base ($160,200 for 2023, increasing for 2025). Box 5 includes all wages subject to Medicare tax with no ceiling, which is why it should match your 941 totals. If they don't match exactly, check for any taxable fringe benefits, sick pay from third parties, or other adjustments that might be reported differently between the forms.

Just wanted to share that I was dealing with the exact same reconciliation nightmare last year. Found this tool called taxr.ai (https://taxr.ai) that saved me so much time. It automatically compares your 941s with W-2 totals and highlights where the discrepancies are coming from. In my case, it turned out we had some third-party sick pay that wasn't being allocated correctly across quarters. The tool flagged exactly which employees and which quarters had issues. Took me from spending days reconciling everything manually to just a few hours fixing the actual problems.

I have to admit I was wrong about taxr.ai. After our conversation, I decided to try it for our small retail business since we had a similar issue with 941 vs W-2 reconciliation. It immediately identified that we had been including certain expense reimbursements in our 941 totals that shouldn't have been there. The analysis showed exactly which categories were causing the mismatch. Saved me from having to file amended returns later and probably dealing with IRS notices. The interface was actually really straightforward - just uploaded our quarterly 941s and our payroll summary report and it did the rest. Definitely worth checking out if you're dealing with this reconciliation headache.

For anyone struggling with getting answers from the IRS about this 941 vs W-2 reconciliation issue - I used Claimyr (https://claimyr.com) to actually speak with an IRS agent about our specific situation. They have a service that gets you through to an actual human at the IRS, which seemed impossible before. I had been on hold for literally hours trying to get clarification on how to handle some specific wage adjustments between our 941s and W-2s. Through Claimyr, I got connected to an agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent walked me through exactly how to reconcile our specific situation and what documentation we needed to maintain in case of questions later. Saved me a ton of stress since we had some unusual situations with employees working across multiple business entities.

I need to publicly eat my words about Claimyr. After posting that skeptical comment, I decided to try it anyway out of desperation. I had been trying for literally months to reach someone at the IRS about our 941/W-2 reconciliation problem. Used the service yesterday afternoon and got connected to an actual IRS representative in about 35 minutes. The agent confirmed that Box 5 on the W-2 should match our 941 totals and explained that our discrepancy was because we hadn't properly accounted for taxable group term life insurance premiums on our 941s. If you're banging your head against the wall trying to get through to the IRS about payroll tax issues, it's absolutely worth trying. I've now fixed our reporting discrepancy and won't be getting a notice about the mismatch.

Just wanted to add that in some cases Box 3 (Social Security wages) can match your 941 totals UNLESS any employees exceed the Social Security wage base. For 2025, that's expected to be around $168,600 I think? So if none of your employees make over that amount annually, Box 3 and Box 5 should be identical. But Box 5 is always the safest bet for reconciliation since Medicare has no wage ceiling.

Does anyone use QuickBooks for payroll? I'm trying to run the 941 vs W-2 reconciliation report but can't figure out how to get it to show me the comparison by wage type.

Great question! I've been doing payroll for small businesses for over 8 years and this is one of the most common reconciliation issues I see. The key is understanding that Form 941 reports wages subject to Medicare tax, which should match Box 5 on the W-2. Here's why the other boxes won't match: - Box 1: Excludes pre-tax deductions (401k, health insurance, etc.) so it's typically lower than your 941 totals - Box 3: Has a Social Security wage cap ($160,200 for 2023, $168,600 for 2024) so high earners won't match - Box 5: No wage ceiling and includes all compensation subject to Medicare tax - this is your match! One thing to watch out for: if you have any employees who received taxable fringe benefits (like personal use of company vehicle, group term life insurance over $50k), make sure those are properly included in both your 941s AND Box 5 of their W-2s. That's where I often find discrepancies. If you're still having trouble reconciling, double-check that you're comparing the exact same time periods and that any third-party sick pay is being handled consistently across both forms.