What Does Box 12 Code G Mean on Your W-2?
Clarify the meaning of W-2 Box 12 Code G. Learn how this retirement contribution amount impacts your taxable income and eligibility for certain tax credits.
A Form W-2 is a summary of your annual earnings and tax withholdings used to prepare your income tax return. While many boxes are straightforward, Box 12 uses various letter codes for specific types of compensation or benefits. This article explains what Code G represents and how it factors into your tax situation.
What Box 12 Code G Represents
The appearance of Code G in Box 12 of your W-2 indicates that you have made contributions to a Section 457(b) deferred compensation plan. These retirement plans are available to employees of state and local governments. For some non-profit organizations, these plans are offered only to a select group of management or highly compensated employees.
The amount shown next to Code G represents the total contributions made to your 457(b) plan during the year. This figure is comprehensive, including any elective deferrals you made from your salary. It also incorporates any contributions made by your employer, such as matching funds or non-elective contributions.
These plans allow public sector and certain non-profit employees to save for their future. The reporting in Box 12 is informational, providing the Internal Revenue Service (IRS) with details about the amount of compensation that has been deferred.
How Code G Affects Your W-2 Wages
The amount listed with Code G in Box 12 has a direct impact on the wages reported in other boxes on your W-2. Contributions to a 457(b) plan are made on a pre-tax basis, meaning the funds were deducted from your gross pay before federal income taxes were calculated. This reduces the figure in Box 1, which shows your taxable wages.
For example, if your total annual salary was $70,000 and you contributed $5,000 to your 457(b) plan, your Box 1 wages would be reported as $65,000. This pre-tax treatment effectively lowers your taxable income for the year.
The W-2 reporting structure clarifies this by separating the deferred amount in Box 12 from the currently taxable wages in Box 1. This ensures your retirement contributions are not subject to income tax in the year they are made.
Using the Code G Amount for Tax Credits
While the amount reported under Code G is informational, it serves an important purpose when filing your tax return. For those with a governmental 457(b) plan, this figure is used to determine eligibility for the Retirement Savings Contributions Credit, commonly known as the Saver’s Credit. Contributions to a non-governmental 457(b) plan are not eligible for this credit.
Eligibility for the Saver’s Credit depends on your adjusted gross income (AGI) and your tax filing status. The credit is calculated as a percentage of the first $2,000 of voluntary contributions you made to a retirement account. You will use the Code G amount when completing Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the credit if you qualify.
If you review your W-2 and believe the amount reported in Box 12 with Code G is incorrect, contact your employer. Your payroll or human resources department can review your deferral elections and pay records to verify the accuracy of the reported amount and issue a corrected Form W-2 if necessary.