"Gross Income" or "Subj to Withholding"?

[ItsJustMe]

Sorry for the elementary question. We have our Gross (obviously, gross), Subject to Withholding (gross minus insurance, dues, etc) and Net. Which is used for the means test? I assmed gross, but now am wondering if it's actually the subjec to withholding?

[jribe]

it's always your gross income.. wish it were the other way around though!

Sorry for the elementary question. We have our Gross (obviously, gross), Subject to Withholding (gross minus insurance, dues, etc) and Net. Which is used for the means test? I assmed gross, but now am wondering if it's actually the subjec to withholding?

[ItsJustMe]

Thanks! I figured as much, but then when I went to calculate things based on the paycheck and remembered that we had 3 'income' fields, I was like...hmm.

[justbroke]

Yes, it is always gross income (what's on line 1 on your W-2). You can then make deductions for payroll taxes, health insurance and "compulsory" union dues or other compulsory deductions.

[ItsJustMe]

I don't think that our w-2 line 1 is our gross income. I don't have my husbands last paycheck of the year, but our line 1 is lower than our line 5 (midicare wages). I think line 5 is our 'gross', right?

[ItsJustMe]

I'm sure I'm just totally misunderstanding something . I'm starting to think I might be an idiot LOL.

[justbroke]

I'm sure I'm just totally misunderstanding something . I'm starting to think I might be an idiot LOL.

No, it's not you, it's me. Yes, in some cases, Box 1 of the W-2 does not represent all wages, because certain things (like medical insurance, 401(k) contributions and the like) are not included there.

Similarly, if you make over $94K a year, the number on Box 3 is not accurate either.

For many taxpayers, however, Box 1, 3, and 5 are all the same. Apparently, like myself, your Box 1, 3, and 5 are three totally different numbers with Box 5 representing your true gross income.

So, it seems that Box 5 is the best to use.

[ItsJustMe]

Well, then, box 5 it is! LOL

(and we don't even HAVE a 3! DH is a gov employee and is SS exempt)

[ItsJustMe]

Yes, it is always gross income (what's on line 1 on your W-2). You can then make deductions for payroll taxes, health insurance and "compulsory" union dues or other compulsory deductions.

Me again! LOL. What about retirement contributions? We don't currently contribute, but if it would take down our income.....

And what about a cafeteria account?

If we are super careful, we fall about $1K under the 7 limit, and I'm totally paranoid that we will 'accidentally' go over. I want to make sure I do everything I can in my favor.

[justbroke]

Me again! LOL. What about retirement contributions? We don't currently contribute, but if it would take down our income.....

And what about a cafeteria account?

If we are super careful, we fall about $1K under the 7 limit, and I'm totally paranoid that we will 'accidentally' go over. I want to make sure I do everything I can in my favor.

I would check to see if your District allows contributions to 401(k)/403(b) and other retirement accounts, without much gripe. However, if you do this just before filing, they may be concerned you're trying to move money. However, they really have no leg to stand on, but some Districts still do pester people who contribute!

As for cafeteria accounts... what kinda of food do they serve? For cafeteria plans, I don't know the how a Trustee deals with pretax things... so... it could be considered income by them. However, I would "assume" that if it's medical, then it's moot as medical is an allowed expense, so it would cancel the "income" out. (If that makes sense!)

Being close to the limit is not so bad... but you are right that you don't want to have one "expense" not allowed by the Trustee which then pushes you to Chapter 13.

Best wishes!

[ItsJustMe]

Thank you

We are new to this, so we'll file in Sept, I think. We are picking an attorney right now. So. That's where we're at LOL. I think I'll ask about the 401K contributions and how our district handles it.

Oh, and yes, it is the medical plan that we are paying in to. Unfortunately we'll only have a few months of contributions to help us out.

Crossing my fingers.