What Is Box 12 on a W-2? Codes and Reporting Explained

The Form W-2, or Wage and Tax Statement, is an annual document employers issue to report wages paid and taxes withheld. It summarizes an employee’s earnings, plan contributions, and tax withholdings for the year. Employees use this information to prepare and file their federal and state income tax returns. Box 12 on the W-2 reports compensation, benefits, and deductions relevant for tax purposes, often not included in primary wage boxes like Box 1. This box contains various codes, each representing different types of income, benefits, or contributions, which are important for accurate tax filing.

Decoding Box 12 Codes

Box 12 provides specific details about different types of income, benefits, or contributions using a series of single or double-letter codes. These codes help both the Internal Revenue Service (IRS) and the taxpayer understand the nature of the reported amounts. Each code corresponds to a specific item, some of which are informational, while others directly affect taxable income.

D: Elective deferrals to a Section 401(k) cash or deferred arrangement, including SIMPLE 401(k) plans. This amount represents pre-tax contributions made to a retirement savings plan.
E: Elective deferrals under a Section 403(b) salary reduction agreement, commonly associated with employees of public schools and certain non-profit organizations.
F: Elective deferrals under a Section 408(k)(6) salary reduction Simplified Employee Pension (SEP) plan.
G: Elective deferrals and employer contributions, including non-elective deferrals, to a Section 457(b) deferred compensation plan, which can be governmental or non-governmental.
H: Elective deferrals to a Section 501(c)(18)(D) tax-exempt organization plan.
J: Nontaxable sick pay, which is informational and not included in Boxes 1, 3, or 5.
K: The 20% excise tax on excess “golden parachute” payments, which are certain compensation paid to executives.
L: Substantiated employee business expense reimbursements that are nontaxable and not included in Box 1 wages.
M: Uncollected Social Security or Railroad Retirement Tax Act (RRTA) tax on the taxable cost of group-term life insurance over $50,000 for former employees.
N: Uncollected Medicare tax or RRTA tax on the taxable cost of group-term life insurance exceeding $50,000 for former employees.
P: Excludable moving expense reimbursements paid directly to a member of the U.S. Armed Forces for military orders.
R: Employer contributions to an Archer Medical Savings Account (MSA).
S: Employee salary reduction contributions under a Section 408(p) SIMPLE IRA plan.
T: Adoption benefits provided by an employer, which may be excludable from income.
V: Income from the exercise of nonstatutory stock options, and this amount is generally already included in Box 1 wages.
W: Employer contributions to a Health Savings Account (HSA), including amounts an employee may have elected to contribute through a cafeteria plan.
Y: Deferrals under a Section 409A nonqualified deferred compensation plan.
Z: Income under a nonqualified deferred compensation plan that fails to satisfy Section 409A. This amount is also included in Box 1 and is subject to an additional 20% tax plus interest.
AA: Designated Roth contributions under a Section 401(k) plan.
BB: Designated Roth contributions under a Section 403(b) plan.
DD: The cost of employer-sponsored health coverage, which is reported for informational purposes and does not affect taxable income.
EE: Designated Roth contributions under a governmental Section 457(b) plan.

These codes (D, E, F, G, H) relate to various types of retirement plan contributions that are excluded from wages in Box 1.

Reporting Box 12 Information on Your Tax Return

After understanding the meaning of the codes in Box 12 of your W-2, the next step involves accurately reporting these amounts on your federal income tax return, typically Form 1040. Not all amounts in Box 12 require direct entry onto a specific line of Form 1040, as some are for informational purposes or have already been accounted for in Box 1. The instructions for Form 1040 or its associated schedules will guide where each Box 12 amount should be placed.

Amounts reported with codes like D, E, F, G, H, AA, BB, and EE represent various retirement plan contributions. These are pre-tax deferrals and are not entered as additional income on Form 1040, though they might affect eligibility for tax credits such as the Saver’s Credit. Codes like DD, indicating the cost of employer-sponsored health coverage, are purely informational and do not require entry on your tax forms.

Amounts from Code V, which represents income from the exercise of nonstatutory stock options, may require careful review. If this income was not fully included in Box 1, or if there are specific adjustments, it might need to be reported on Schedule 1 of Form 1040, specifically on the “Other Income” line. Code Z, indicating income from a nonqualified deferred compensation plan that failed Section 409A, requires additional reporting. The additional 20% excise tax associated with Code Z is reported on Schedule 2 of Form 1040.

Other codes like P (excludable moving expense reimbursements for armed forces) are excluded from taxable income and are primarily informational. If a Box 12 code relates to a specific tax form or schedule, such as adoption benefits (Code T) requiring Form 8839, the instructions for that specific form will guide you on how to handle the amount. Always refer to the IRS instructions for Form 1040 and its schedules to ensure each Box 12 amount is correctly handled based on its specific code and nature.