Completing Form W-2 and Box 12 Codes
This article focuses on completing form W-2 and box 12 codes. Preparing W-2 forms for filing with the Social Security Administration can be tricky. This article will help:
- Employer seeking to fill out the forms correctly.
- Employee needing further information on how to fill their income tax forms (1040 tax returns)
Completing Form W-2
What Information Goes to Which Box?
Box 1. Wages, also referred to as income.
Box 2. Federal income tax withheld.
Box 5. You may be required to report this amount on Form 8959, Additional Medicare Tax. See the Form 1040 instructions to determine if you are required to complete Form 8959.
Box 6. This amount includes the 1.45% Medicare Tax withheld on all Medicare wages and tips shown in box 5, as well as the 0.9% Additional Medicare Tax on any of those Medicare wages and tips above $200,000.
Box 8. This amount is not included in boxes 1, 3, 5, or 7. For information on how to report tips on your tax return, see your Form 1040 instructions.
You must file Form 4137, Social Security and Medicare Tax on Unreported Tip Income, with your income tax return to report at least the allocated tip amount unless you can prove that you received a smaller amount. If you have records that show the actual amount of tips you received, report that amount even if it is more or less than the allocated tips.
On Form 4137 you will calculate the social security and Medicare tax owed on the allocated tips shown on your Form(s) W-2 that you must report as income and on other tips you did not report to your employer. By filing Form 4137, your social security tips will be credited to your social security record (used to figure your benefits).
Box 10. This amount includes the total dependent care benefits that your employer paid to you or incurred on your behalf (including amounts from a section 125 (cafeteria) plan). Any amount over $5,000 is also included in box 1. Complete Form 2441, Child and Dependent Care Expenses, to compute any taxable and nontaxable amounts.
Box 11. This amount is (a) reported in box 1 if it is a distribution made to you from a nonqualified deferred compensation or nongovernmental section 457(b) plan or (b) included in box 3 and/or 5 if it is a prior year deferral under a nonqualified or section 457(b) plan that became taxable for social security and Medicare taxes this year because there is no longer a substantial risk of forfeiture of your right to the deferred amount.
This box should not be used if you had a deferral and a distribution in the same calendar year. If you made a deferral and received a distribution in the same calendar year, and you are or will be age 62 by the end of the calendar year, your employer should file Form SSA-131, Employer Report of Special Wage Payments, with the Social Security Administration and give you a copy.
Box 12. The following list explains the codes shown in box 12. You may need this information to complete your tax return. Elective deferrals (codes D, E, F, and S) and designated Roth contributions (codes AA, BB, and EE) under all plans are generally limited to a total of $18,000 ($12,500 if you only have SIMPLE plans; $21,000 for section 403(b) plans if you qualify for the 15-year rule explained in Pub. 571). Deferrals under code G are limited to $18,000. Deferrals under code H are limited to $7,000.
However, if you were at least age 50 in 2016, your employer may have allowed an additional deferral of up to $6,000 ($3,000 for section 401(k)(11) and 408(p) SIMPLE plans). This additional deferral amount is not subject to the overall limit on elective deferrals. For code G, the limit on elective deferrals may be higher for the last 3 years before you reach retirement age. Contact your plan administrator for more information. Amounts in excess of the overall elective deferral limit must be included in income. See the “Wages, Salaries, Tips, etc.” line instructions for Form 1040.
Box 12 Codes
Upper-case (capital) letters in Box 12 have different implications:
A and B: Uncollected social security and Medicare tax on tips. This amount represents the social security and Medicare tax on the tips you reported to your employer. There will be an amount here if your employer didn't withhold social security or Medicare taxes on these tips. If you have one of these codes on your W-2, you cannot file a Form 1040EZ.
C: Taxable cost of group-term life insurance. You received group-term life insurance valued at more than $50,000 from your employer. The amount is also reported in Boxes 1, 3 and 5 of your W-2 and appears in Box 12 for your information only.
D, E, F, G, S, and H: These codes give you information about contributions to your retirement plan at work, and they are for your information only:
D: 401(k) plan - Elective deferrals to a section 401(k) cash or deferred arrangement. Also includes deferrals under a SIMPLE retirement account that is part of a section 401(k) arrangement.
E: 403(b) plan - Elective deferrals under a section 403(b) salary reduction agreement
F: 408(k)(6) plan - Elective deferrals under a section 408(k)(6) salary reduction SEP
G: 457(b) plan - Elective deferrals and employer contributions (including nonelective deferrals) to a section 457(b) deferred compensation plan
S: 408(p) salary reduction SIMPLE retirement account
H: 501(c)(18)(D) plan - Elective deferrals to a section 501(c)(18)(D) tax-exempt organization plan. See “Adjusted Gross Income” in the Form 1040 instructions for how to deduct.
J: Nontaxable sick pay (information only, not included in boxes 1, 3, or 5)
K: 20% excise tax on excess golden parachute payments. See “Other Taxes” in the Form 1040 instructions. Workers with this code on their W-2 you cannot file a Form 1040EZ.
L: Substantiated employee business expense reimbursements (nontaxable). This amount is for expenses that the employer reimbursed the employee for business expenses that were paid out of the employee's own pocket and the amount reimbursed is greater than the amount actually spent. This amount isn't included in income in Box 1, so the employee cannot deduct any of the expenses related to this reimbursement.
M and N: Uncollected social security and Medicare tax on group-term life insurance. If the employer pays for life insurance for employee, employee has to pay tax on premiums for the life insurance coverage that is in excess of $50,000. The amount of the excess premiums are included in Box 1 of Form W-2, so employee pays income tax on them when filing tax return.
P: Excludable moving expense reimbursements paid directly to employee (not included in boxes 1, 3, or 5). An employee with this code on form W -2 cannot file a Form 1040EZ.
Q: Nontaxable combat pay. See the instructions for Form 1040 or Form 1040A for details on reporting this amount.
R: Employer contributions to your Archer MSA. Report on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts.
T: Adoption benefits (not included in box 1). Complete Form 8839, Qualified Adoption Expenses, to compute any taxable and nontaxable amounts.
V: Income from exercise of nonstatutory stock option(s) (included in boxes 1, 3 (up to social security wage base), and 5). See Pub. 525, Taxable and Nontaxable Income, for reporting requirements.
W: Employer contributions (including amounts the employee elected to contribute using a section 125 (cafeteria) plan) to your health savings account. Report on Form 8889, Health Savings Accounts (HSAs).
Y: Deferrals under section 409(A) on an 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. It is subject to an additional 20% tax plus interest. See “Other Taxes” in the Form 1040 instructions.
AA: Designated Roth contributions under a section 401(k) plan.
BB: Designated Roth contributions under a section 403(b) plan.
DD: Cost of employer sponsored health coverage. The amount reported with Code DD is not taxable.
EE: Designated Roth contributions under governmental section 457(b) plan. This amount does not apply to contributions under a tax-exempt organization section 457(b) plan.
Box 13. If the “Retirement plan” box is checked, special limits may apply to the amount of traditional IRA contributions you may deduct. See Pub. 590-A, Contributions to Individual Retirement Arrangements (IRAs).
Box 14. Employers may use this box to report information such as state disability insurance taxes withheld, union dues, uniform payments, health insurance premiums deducted, nontaxable income, educational assistance payments, or a member of the clergy's parsonage allowance and utilities. Railroad employers use this box to report railroad retirement (RRTA) compensation, Tier 1 tax, Tier 2 tax, Medicare tax and Additional Medicare Tax. Include tips reported by the employee to the employer in railroad retirement (RRTA) compensation.
Note: Keep Copy C of Form W-2 for at least 3 years after the due date for filing your income tax return. However, to help protect your social security benefits, keep Copy C until you begin receiving social security benefits, just in case there is a question about your work record and/or earnings in a particular year.