Introduction to Box 12 on W2
The W2 form is a crucial document for employees and employers alike, as it reports income and taxes withheld from an employee’s wages. One section of the W2 form that can be particularly confusing is Box 12, which is designated for reporting various types of compensation and benefits. In this article, we will delve into the details of Box 12 on the W2 form, exploring what it represents, the different codes used, and how it affects an employee’s tax return.
What is Box 12 on the W2 Form?
Box 12 on the W2 form is used to report special types of income, benefits, or deductions that are not included in the regular wage and salary amounts reported in Box 1. This box is divided into four sub-boxes (12a, 12b, 12c, and 12d), each representing a different type of code. These codes are used to identify the specific type of income or benefit being reported. The most common codes used in Box 12 include: - C: Cost of group-term life insurance over $50,000 - D: Elective deferrals to a 401(k) or other qualified plan - E: Elective deferrals to a 403(b) plan - F: Elective deferrals to a 408(k)(6) SEP plan - G: Elective deferrals and employer contributions to a 457(b) plan - H: Elective deferrals to a 501©(18)(D) plan - J: Nontaxable sick pay (information only, not included in Box 1) - K: 20% excise tax on excess golden parachute payments - L: Substantiated employee business expense reimbursements - M: Uncollected Social Security or RRTA tax on tips - N: Uncollected Medicare tax on tips - P: Excludable moving expense reimbursements paid directly to a qualified moving company - R: Employer contributions to an Archer MSA - S: Employee salary reduction contributions under a Section 408(p) SIMPLE plan - T: Adoption benefits (amounts are not included in Box 1) - V: Business expense reimbursements for a qualified nonpersonal use vehicle - W: Employer contributions to an employee’s health savings account (HSA) - Y: Deferrals under a Section 409A on a nonqualified plan - Z: Income under Section 409A on a nonqualified plan - AA: Designated Roth contributions under a Section 401(k) plan - BB: Designated Roth contributions under a Section 403(b) plan - CC: Hire retention credit (excluded from Box 1) - DD: Cost of employer-sponsored health coverage - EE: Designated Roth contributions under a governmental Section 457(b) plan - FF: Permitted benefits under a qualified small employer health reimbursement arrangement - GG: Income from qualified equity grants under Section 83(i) - HH: Agora compensation deferred
Understanding the Codes in Box 12
Each code in Box 12 represents a specific type of income or benefit that may affect an employee’s tax liability. For example, code D represents elective deferrals to a 401(k) plan, which are contributions made by the employee to their retirement plan on a pre-tax basis. These contributions reduce the employee’s taxable income for the year. On the other hand, code C represents the cost of group-term life insurance over $50,000, which is included in the employee’s taxable income.
Impact of Box 12 on Tax Returns
The amounts reported in Box 12 can have a significant impact on an employee’s tax return. For instance, elective deferrals to a retirement plan (codes D, E, F, G, S, AA, BB, and EE) reduce an employee’s taxable income, potentially lowering their tax liability. In contrast, certain benefits, such as the cost of group-term life insurance over $50,000 (code C), may increase an employee’s taxable income.
Table of Common Box 12 Codes
| Code | Description |
|---|---|
| C | Cost of group-term life insurance over $50,000 |
| D | Elective deferrals to a 401(k) or other qualified plan |
| E | Elective deferrals to a 403(b) plan |
| F | Elective deferrals to a 408(k)(6) SEP plan |
| G | Elective deferrals and employer contributions to a 457(b) plan |
| H | Elective deferrals to a 501©(18)(D) plan |
| J | Nontaxable sick pay (information only, not included in Box 1) |
| K | 20% excise tax on excess golden parachute payments |
| L | Substantiated employee business expense reimbursements |
| M | Uncollected Social Security or RRTA tax on tips |
| N | Uncollected Medicare tax on tips |
| P | Excludable moving expense reimbursements paid directly to a qualified moving company |
| R | Employer contributions to an Archer MSA |
| S | Employee salary reduction contributions under a Section 408(p) SIMPLE plan |
| T | Adoption benefits (amounts are not included in Box 1) |
| V | Business expense reimbursements for a qualified nonpersonal use vehicle |
| W | Employer contributions to an employee’s health savings account (HSA) |
| Y | Deferrals under a Section 409A on a nonqualified plan |
| Z | Income under Section 409A on a nonqualified plan |
| AA | Designated Roth contributions under a Section 401(k) plan |
| BB | Designated Roth contributions under a Section 403(b) plan |
| CC | Hire retention credit (excluded from Box 1) |
| DD | Cost of employer-sponsored health coverage |
| EE | Designated Roth contributions under a governmental Section 457(b) plan |
| FF | Permitted benefits under a qualified small employer health reimbursement arrangement |
| GG | Income from qualified equity grants under Section 83(i) |
| HH | Agora compensation deferred |
💡 Note: The information provided in Box 12 is for informational purposes only and may not be included in the employee’s taxable income. It is essential to review the W2 form carefully and consult with a tax professional if there are any questions or concerns.