Box 14 UI/WF/SWF: Are These Taxes Deductible?

Box 14 on a W-2 form serves as a miscellaneous space for employers to report items that do not have a dedicated box. The appearance of unfamiliar codes such as UI, WF, or SWF can cause confusion. These notations represent specific state-mandated withholdings from your paycheck. Understanding what these codes mean is the first step in determining how they might affect your annual tax filing.

Defining Box 14 UI, WF, and SWF Codes

While federal and state governments levy unemployment taxes on employers, a few states also require employees to contribute directly to these funds. The amounts in Box 14 with labels like UI, WF, or SWF represent these mandatory employee-paid state taxes, which are required by state law.

The acronyms stand for different, but related, state programs. UI is the most common and stands for Unemployment Insurance, WF typically means Workforce Development Fund, and SWF stands for Supplemental Workforce Fund. States like Alaska, Pennsylvania, and New Jersey require employees to pay into these systems. These funds provide benefits to eligible unemployed workers and support workforce training.

Federal Tax Deductibility

The amounts listed in Box 14 for UI, WF, and SWF are considered mandatory state taxes paid by the employee, making them potentially deductible on your federal income tax return. These payments can be included with your other state and local taxes as part of the State and Local Tax (SALT) deduction. This deduction is claimed on Schedule A of IRS Form 1040, which is used for itemized deductions.

There are two limitations to claiming this deduction. First, you must choose to itemize your deductions instead of taking the standard deduction. For many taxpayers, the standard deduction is higher than their total itemized deductions, so it is important to calculate which option provides a greater tax benefit.

The second limitation is the SALT deduction cap. A limit on the total amount of state and local taxes that can be deducted is set at $10,000 per household, per year ($5,000 for married taxpayers filing separately). This total includes any state income or sales taxes, real estate taxes, personal property taxes, and the state unemployment taxes from Box 14. If your combined state and local taxes already exceed $10,000, you will not receive any additional federal tax benefit from including the Box 14 amounts.

How to Report on Your Tax Return

When using tax preparation software, the process for reporting these amounts is straightforward. You will begin by navigating to the section for entering your Form W-2 information and transcribing the information from your W-2 into the software.

For Box 14, the software will provide fields to enter both the description and the dollar amount shown on your W-2. You should enter the code, such as “UI/WF/SWF,” exactly as it appears, along with the corresponding monetary value.

After entering the amount, the software will present a dropdown menu or a list of categories to classify the Box 14 item. You should look for a category description such as “State Unemployment/Disability Insurance” or “Other deductible state or local tax.” Selecting the correct category signals to the software that this amount is a state tax payment, which will then be carried to Schedule A and applied toward the SALT deduction limit.