What Is Box 12 for on a W-2 Form? Codes Explained

The W-2 Form, or Wage and Tax Statement, is a fundamental document for U.S. employees. Employers issue it annually to report wages, tips, other compensation, and withheld federal, state, and local taxes. It summarizes an individual’s earnings and tax deductions for the year. Understanding the W-2 is essential for accurate tax return preparation. Box 12 reports income, benefits, or deductions not detailed in Boxes 1, 3, or 5. Correct interpretation ensures tax compliance.

Understanding Box 12 on Your W-2

Box 12, located on the right side of the W-2, uses one or two-letter codes to identify compensation, benefits, or deferred compensation. Employers must report certain items in this box. It often has sub-sections (12a, 12b, 12c, 12d), each listing a code and amount. An additional W-2 is required if more than four codes are reported.

Amounts in Box 12 may or may not be included in Box 1 (taxable wages). Tax treatment varies by code; some are informational, others represent taxable income or retirement contributions. Understanding these codes is important for accurate tax preparation.

Key Box 12 Codes and Their Significance

Box 12 contains numerous codes for income, benefits, or contributions. Understanding them is key to interpreting your W-2. Common codes and their implications include:

Code A signifies uncollected Social Security or Railroad Retirement Tax Act (RRTA) tax on tips. Code B indicates uncollected Medicare tax on tips. Both amounts are generally reported as additional tax on Form 1040, Schedule 2.

Code C reports the taxable cost of employer-provided group-term life insurance exceeding $50,000. This amount is typically included in Boxes 1, 3, and 5.

Code D represents elective deferrals to a Section 401(k) plan, including SIMPLE 401(k)s. These pre-tax contributions reduce Box 1 wages.

Code DD shows the cost of employer-sponsored health coverage. This amount is for informational purposes only and is not taxable.

Code E indicates elective deferrals under a Section 403(b) salary reduction agreement, common for public school and tax-exempt organization employees. Like 401(k) contributions, these are pre-tax.

Code F represents elective deferrals under a Section 408(k)(6) salary reduction Simplified Employee Pension (SARSEP). Code G denotes elective deferrals and employer contributions to a Section 457(b) deferred compensation plan, often used by state and local government employees. Code H signifies elective deferrals to a Section 501(c)(18)(D) tax-exempt organization plan.

Code P reports excludable moving expense reimbursements for U.S. Armed Forces members on military orders. These are not included in Boxes 1, 3, or 5 wages.

Code V indicates income from nonstatutory stock option exercise. This amount is included in Boxes 1, 3, and 5 wages, reflecting the taxable gain.

Code W represents employer contributions to a Health Savings Account (HSA). These are generally not taxable.

Code Z reports income from a Section 409A nonqualified deferred compensation plan that fails requirements. This amount is included in Box 1 and may be subject to an additional 20% tax plus interest.

Code AA signifies designated Roth contributions under a Section 401(k) plan. These are made with after-tax dollars and allow for tax-free withdrawals in retirement. Code BB indicates designated Roth contributions under a Section 403(b) plan. Code EE represents designated Roth contributions under a governmental Section 457(b) plan.

Code FF indicates permitted benefits under a qualified small employer health reimbursement arrangement (QSEHRA). Code GG reports income from qualified equity grants under Section 83(i). Code HH represents aggregate deferrals under Section 83(i) elections as of the close of the calendar year.

Reporting Box 12 Amounts on Your Tax Return

When preparing your tax return, how you report Box 12 amounts depends on the specific code. Each code has distinct reporting requirements. Transfer these amounts to the correct lines or forms for accurate filing.

For example, Code DD (employer-sponsored health coverage) is typically informational and does not need to be entered on Form 1040. Code P (excludable moving expense reimbursements for military members) is also generally informational and may be used with Form 3903.

Code V (income from nonstatutory stock option exercise) is included in Box 1 wages. However, it must be reported separately as an adjustment on your tax return, often on Form 1040, Schedule 1, line 8, as “Other income.”

Code W (employer contributions to a Health Savings Account (HSA)) requires completing Form 8889 to report contributions and distributions.

Deferred compensation amounts, such as Code G (457(b) plans), are generally informational. They reflect pre-tax contributions that reduce Box 1 wages and do not require additional income reporting.

Uncollected Social Security (Code A) or Medicare (Code B) taxes on tips must be included as additional taxes on Form 1040, Schedule 2, line 13.

For other codes, consult official IRS instructions for Form W-2 or tax preparation software for guidance. Accurately transferring these amounts is crucial to avoid errors.