How are annual average wages determined?
Average annual wages are calculated by dividing total wages paid by the employer to employees during a taxable year (box 5 of W-2 wages) by the number of FTEs for the year. The result is rounded down to the nearest $1,000. Example: For the tax year 2010, an employer pays $224,000 in wages and has 10 FTEs. The employer’s annual average wage would be: $22,000 ($224,000 divided by 10 = $22,400, rounded down to the nearest $1,000).
