What Does Box 12 Code S on Your W-2 Mean?
Understand how Box 12 Code S on your W-2 reflects your SIMPLE IRA savings and learn why this amount has already reduced the taxable income shown in Box 1.
Form W-2, the Wage and Tax Statement, summarizes your annual earnings and withheld taxes. While many boxes are straightforward, Box 12 can be confusing because it uses letter codes to report various types of compensation and benefits. This box is subdivided into four sections (12a, 12b, 12c, and 12d), and understanding the codes is needed to interpret your financial data for the year.
Defining Box 12 Code S
Code S in Box 12 of your W-2 signifies your contributions to a SIMPLE IRA plan. SIMPLE stands for Savings Incentive Match Plan for Employees, a retirement plan offered by small businesses with 100 or fewer employees. The amount next to Code S is the total sum of your own money deducted from your paychecks and deposited into your SIMPLE IRA.
This figure reflects only your contributions; any employer contributions are not included in this amount. Your employer will indicate your participation in the plan by checking the “Retirement plan” box in Box 13.
Impact on Your Taxable Income
SIMPLE IRA contributions can be made on a pre-tax basis or, if the plan allows, as after-tax Roth contributions, each with different tax treatments. Traditional, pre-tax contributions lower your income subject to federal income tax. The amount shown with Code S has already been subtracted from your gross wages, and the resulting lower figure is reported in Box 1, “Wages, tips, other compensation.”
Alternatively, Roth contributions are made after-tax and do not lower your taxable income for the year. In this case, the contributions reported with Code S will not have been subtracted from the wages in Box 1. For both contribution types, the amounts are subject to Social Security and Medicare taxes, so the wages in Box 3 and Box 5 will likely be higher than the amount in Box 1.
Reporting on Your Tax Return
The amount shown in Box 12 with Code S is for your information and is not entered on a separate line of your Form 1040 tax return. The income figure you report is from Box 1 of your W-2.
The Code S amount is used for other calculations, such as determining your eligibility for the Retirement Savings Contributions Credit, also known as the Saver’s Credit. To claim this credit, you will use the Box 12 amount when completing Form 8880, Credit for Qualified Retirement Savings Contributions.