W-2 Box 14 Code for Health Insurance Premiums

The Form W-2 is an annual statement detailing an employee’s total earnings and the amount of taxes withheld by their employer. While many boxes on the form are standardized by the Internal Revenue Service (IRS), Box 14 functions as a miscellaneous category. Employers use this space to report various informational items that do not have a designated spot elsewhere on the form. This flexibility means the content of Box 14 can differ significantly from one employer to another.

The Purpose of W-2 Box 14

Box 14 serves as a flexible, informational field for employers to communicate financial details not covered by other standardized boxes. The IRS does not mandate a uniform list of codes, granting employers discretion in what they report. Consequently, the labels used can vary widely, with employers often creating their own abbreviations like “HINS” for health insurance or “CASDI” for state disability insurance. If an abbreviation in Box 14 is unclear, the most direct way to get a definitive explanation is to contact the employer’s human resources or payroll department.

Common Reasons for Health Premiums in Box 14

One of the most specific uses of Box 14 relates to health insurance premiums for certain S-corporation owners. Tax law requires that premiums paid for health, dental, and long-term care insurance on behalf of a shareholder who owns more than 2% of the company must be included in their taxable wages. This amount is added to the figures in Box 1 and Box 16. To help the shareholder-employee identify this amount for a potential deduction, employers will often report the value of these premiums separately in Box 14.

Another frequent entry in Box 14 involves mandatory contributions to state-run disability insurance funds. Some states require employees to pay into a state disability insurance program through payroll deductions. These deductions are made with after-tax dollars, meaning they do not reduce the employee’s taxable income. Employers use Box 14 to inform the employee of the total amount of these contributions, often using an abbreviation like “SDI” or “VPDI”.

Employers might also use Box 14 to report other types of post-tax premium payments. For instance, if an employee pays for a portion of their health insurance with after-tax dollars, perhaps for a domestic partner’s coverage, an employer might choose to list that amount in Box 14 for the employee’s records.

Tax Treatment and Reporting Instructions

The information in Box 14 often corresponds to a specific action on your tax return. For a more-than-2% S-corporation shareholder, the health insurance premium amount shown in Box 14 is eligible for the Self-Employed Health Insurance Deduction. This deduction is claimed on Schedule 1 (Form 1040), which allows the shareholder to subtract the cost of the premiums from their gross income. This effectively cancels out the inclusion of the premiums in their Box 1 wages.

Amounts listed in Box 14 for state-mandated disability insurance (SDI) may also provide a tax benefit. These contributions are considered state taxes paid. If a taxpayer chooses to itemize deductions, they can include these SDI amounts as part of their state and local tax (SALT) deduction on Schedule A (Form 1040). This deduction is subject to a combined limit of $10,000 per household for all state and local taxes.

It is important not to confuse an amount in Box 14 with the figure reported in Box 12 using code DD. The Box 12 DD amount represents the total cost of an employee’s employer-sponsored health coverage, including both the employer’s and employee’s share. Mandated for reporting by the Affordable Care Act, this figure is for informational purposes only and is not taxable. In contrast, amounts in Box 14 often directly relate to a deduction that can impact an individual’s tax liability.