How does the W-2 Auto Tax Calculation work in TaxBandits?

Our Tax Auto-Calculation feature automatically calculates Social Security and Medicare taxes based on the wage details you enter on your W-2 form, saving you time and reducing the risk of manual errors.

Step 1: Sign in to your TaxBandits account. Navigate to ‘1099/W-2’ Dashboard → Click ‘Start New Form’.

Step 2: Select ‘W-2 Federal & State’ under the ‘Form W-2’. 

Step 3: We support W-2 filing for both current and previous tax years. Select the tax year for which you need to file the W-2 form. 

Step 4: Select ‘Preparation Settings’ at the top-right corner of the W-2 form to enable the Tax Auto-Calculation (W-2) to auto-fill the respective fields based on the wage amount entered.

 

Step 5: By enabling the Form W-2 tax auto-calculation and entering the values for wages, tips, and other compensation in Box 1, the system automatically calculates the Social Security Tax (Box 4) and Medicare Tax (Box 6) amounts.

 

Social Security and Medicare Tax Details for the 2025 Tax Year Social Security Tax (Box 4): Calculated at 6.2% of the combined total of Box 3 (Social Security wages) and Box 7 (Social Security tips). The total of Boxes 3 and 7 cannot exceed $176,100 for the 2025 tax year. For reference, the wage base limits were $168,600 for 2024 and $160,200 for 2023. Any earnings above the wage base limit are not subject to Social Security tax. Medicare Tax (Box 6): Calculated at 1.45% of Medicare wages and tips (Box 5), with no wage cap. If Box 5 wages exceed $200,000, an additional 0.9% Medicare tax applies on the amount above that threshold.

Enable/ Disable Tax Auto-Calculation (W-2)

You can enable or disable the Tax Auto-Calculation for Form W-2 anytime from the ‘Preparation Settings’ section under ‘Account Settings’. Once enabled, this setting will be applied as the default for all future W-2 filings, unless you disable it.