What Is Box 12c on a W-2 Form and How Does It Affect You?

Form W-2, the Wage and Tax Statement, summarizes an employee’s annual earnings and taxes withheld. This document is essential for accurate tax filing, detailing income types and deductions. Box 12c, a specific section on the W-2, reports compensation, benefits, or deductions not reflected in the primary wage box. Understanding Box 12c entries is important for individuals to correctly prepare their tax returns.

Understanding Box 12c on Form W-2

Box 12c is one of four lines (12a, 12b, 12c, and 12d) located in Box 12 of the Form W-2. This section reports specific types of compensation, benefits, or deductions distinct from regular wages, tips, and other compensation in Box 1. Each entry in Box 12 consists of a single or double-letter code (A to HH) followed by a monetary amount. These codes provide detailed information to the Internal Revenue Service (IRS) about financial items impacting an employee’s tax situation.

Amounts in Box 12c may be included in Box 1 taxable income, be purely informational, or represent pre-tax contributions. The presence of a code and amount indicates a benefit or contribution was provided, influencing how income is treated for tax purposes. This box details items like retirement plan contributions, Health Savings Account contributions, or the cost of employer-sponsored health coverage.

Common Codes and Their Meanings

Box 12c contains a variety of codes, each representing a specific type of compensation or benefit.
Code D: Elective deferrals to a 401(k) plan (pre-tax contributions).
Code E: Elective deferrals to a 403(b) plan, often utilized by employees of public schools and certain non-profit organizations for retirement savings.
Code F: Elective deferrals to a 457(b) deferred compensation plan, which is a retirement plan available to state and local government employees, as well as some non-governmental tax-exempt organizations.
Code G: Elective deferrals and employer contributions, including non-elective deferrals, to a 457(b) deferred compensation plan.
Code P: Excludable moving expense reimbursements paid directly to U.S. Armed Forces members, which are generally not included in taxable income.
Code S: Employee salary reduction contributions made under a section 408(p) SIMPLE IRA plan.
Code V: Income from the exercise of nonstatutory stock options, an amount that is generally included in Box 1 wages.
Code W: Employer contributions to a Health Savings Account (HSA), which can include amounts an employee elected to contribute through a cafeteria plan.
Code DD: Total cost of employer-sponsored health coverage, which is an informational code that does not affect taxable income. This code provides transparency regarding the value of health benefits provided.

How Box 12c Information Affects Your Tax Return

The information in Box 12c significantly impacts how a taxpayer prepares their annual return. Amounts reported with codes such as D, E, F, G, and S represent pre-tax contributions to retirement plans. These contributions reduce the taxable wages reported in Box 1 of the W-2, lowering an individual’s federal taxable income and potentially their Adjusted Gross Income (AGI). This reduction can lead to a lower tax liability or influence eligibility for certain tax credits.

Other codes, like V for income from nonstatutory stock options, are included in the taxable wages reported in Box 1. While detailed in Box 12c, this serves as a breakdown of income already accounted for in Box 1. Certain codes, such as W for HSA contributions, may require the taxpayer to file additional forms, like Form 8889, Health Savings Accounts (HSAs), to account for these amounts.

Informational codes, such as DD for the cost of employer-sponsored health coverage, do not directly impact the taxable income calculation. These amounts are provided for transparency. Taxpayers should carefully review all codes and amounts in Box 12c to ensure accurate reporting on their tax returns, cross-referencing these figures when completing relevant tax forms.