Expert: Arthur Naman - 7/15/2009

Question
Do the employer paid  federal income taxes get reported in box 2 of the W-2 as well as the employment taxes which are reported in boxes 4 and 6?   Or asked another way do the grossed up taxes get reported in boxes 2,4 and 6 of the W-2?  

If so, the employer gets a grossed up wages deduction and a deduction for the employer paid employee 1/2 of payroll taxes plus the income tax withholding?

Answer
Yes, if payroll is grossed up, the "employee" taxes which would normally be withheld, but are in this case paid by the employer are included on the employee's W-2 as you indicated.

In addition, as you stated, the employer gets a deduction for the grossed up wages and for the normal employer paid payroll taxes.