What Are the Box 12 Codes on Your W2 Form?

The W-2 form, or Wage and Tax Statement, is a tax document employees receive annually from their employers. This form summarizes an individual’s total wages earned and the federal, state, and local taxes withheld throughout the calendar year. Among its various sections, Box 12 contains specific codes and corresponding amounts that provide additional, detailed information relevant to an individual’s tax filing. Understanding the entries in Box 12 is important for accurate tax preparation.

What Box 12 Represents

Box 12 on the W-2 form serves as a space for employers to report various types of compensation, benefits, and deductions not included in Box 1, which reports taxable wages. These amounts are reported because they may have specific tax treatments, even if not directly part of an employee’s taxable income. Each entry in Box 12 comprises a unique one- or two-letter code followed by a dollar amount, standardizing reporting for the Internal Revenue Service (IRS).

The information reported in Box 12 can represent amounts that are taxable, non-taxable, or informational. For example, some entries reflect pre-tax contributions that reduce an individual’s taxable income, while others may indicate the cost of certain benefits that do not impact tax liability but provide transparency. This system helps ensure employees and the IRS have a clear picture of an individual’s total compensation and benefit structure.

Decoding Specific Box 12 Entries

Box 12 contains various codes, each representing a specific type of income, benefit, or contribution. Understanding these codes is important for proper tax reporting. Code A signifies uncollected Social Security or Railroad Retirement Tax Act (RRTA) tax on tips, indicating uncollected taxes. Code B indicates uncollected Medicare tax or RRTA tax on tips, also indicating uncollected taxes.

Code C reports the taxable cost of group-term life insurance coverage exceeding $50,000 provided by an employer. This amount is included in Box 1 (wages) but listed separately in Box 12 for informational purposes. Code D is used for elective deferrals to a Section 401(k) plan, including SIMPLE 401(k) plans, representing employee retirement contributions. Code DD signifies the cost of employer-sponsored health coverage, reported for informational purposes and does not affect taxable income.

Code E represents elective deferrals made under a Section 403(b) plan, common for employees of non-profit organizations and public schools. Code F indicates elective deferrals under a Section 408(k)(6) SEP plan. Code G reports elective deferrals and employer contributions to a Section 457(b) deferred compensation plan, often for state and local government employees. Code H is for elective deferrals to a Section 501(c)(18)(D) tax-exempt organization plan.

Code P refers to moving expense reimbursements for military orders. These amounts are not included in taxable wages. Code S is for employee salary reduction contributions under a Section 408(p) SIMPLE IRA plan. Code V shows income from the exercise of nonstatutory stock options, included in Boxes 1, 3, and 5.

Code W reports employer contributions to a Health Savings Account (HSA), including amounts contributed by the employee through a cafeteria plan. Code Z indicates income under a nonqualified deferred compensation plan that fails to satisfy Section 409A, included in Box 1 and may be subject to additional taxes. Other codes like AA (Designated Roth contributions under a 401(k) plan) and BB (Designated Roth contributions under a 403(b) plan) also appear.

Impact of Box 12 Codes on Your Taxes

The amounts reported in Box 12 influence an individual’s tax liability and reporting requirements. Certain codes indicate amounts that reduce taxable income. Elective deferrals to retirement plans, such as those identified by codes D (401(k)), E (403(b)), F (SEP), G (457(b)), and S (SIMPLE IRA), are pre-tax contributions that lower an individual’s adjusted gross income (AGI) and their federal taxable income. These pre-tax contributions are reported on Schedule 1 of Form 1040.

Other codes in Box 12 are for informational purposes and do not impact an individual’s taxable income or deductions. Code DD, which reflects the cost of employer-sponsored health coverage, is an example. While this information is valuable for transparency, it is not included in taxable income.

Some Box 12 entries represent amounts that are part of an individual’s taxable income, even if reported separately. Code C, for the taxable cost of group-term life insurance over $50,000, is included in Box 1 wages. Similarly, Code V, showing income from the exercise of nonstatutory stock options, is included in Box 1 wages. However, certain codes like A and B, representing uncollected Social Security or Medicare taxes on tips, may require additional tax calculations or entries on Form 1040, Schedule 2.

Handling Box 12 Issues

If an individual discovers an error or discrepancy in the Box 12 entries on their W-2 form, the first step is to contact their employer’s payroll or human resources department. Request a corrected W-2, known as Form W-2c, used to correct inaccuracies. Employers are responsible for providing accurate W-2s and submitting corrected information to the Social Security Administration (SSA) and the IRS.

Receiving an accurate W-2c before filing a tax return is important to avoid processing delays or inquiries from the IRS. If an employer is unresponsive or unwilling to issue a correction, an individual can contact the IRS for assistance. The IRS may then reach out to the employer on the employee’s behalf. If a corrected W-2 is not received in time, the IRS may allow an individual to file their tax return using Form 4852, “Substitute for Form W-2, Wage and Tax Statement,” as an alternative. Accurate reporting on the W-2 helps ensure a smooth tax filing process.