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“Federal tax withheld is more than the wages”

What this flag on a W-2 means, why it matters, and what to check.

What it means

Box 2 is larger than box 1.

Why it matters

Withholding comes out of wages and can't exceed them.

Ordinary explanations

What to check

Ask the applicant for the IRS wage and income transcript (free at irs.gov or with Form 4506-T), which lists W-2 amounts as the employer reported them.

A flag is a reason to verify with the source, not proof. Apply the same steps to every applicant.

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