What do the codes in Box 12 on my W-2 mean?
This article focuses on what the codes in Box 12 on Form W-2 mean. Reading your Form W-2 can be tricky and knowing what these Box 12 codes on the W-2 mean is very important.
This article is going to walk you through all possible codes on Box 12 on your W-2.
How to complete Form W-2
If you are looking for information on how to read your W-2, this guide takes you through all the boxes on your W-2 form.
How to interpret the codes on Box 12 of your W-2
Note: Upper-case (capital) letters in Box 12 have different implications.
Code A—Uncollected social security or RRTA tax on tips. Show the employee social security or Railroad Retirement Tax Act (RRTA) tax on all of the employee’s tips that you could not collect because the employee did
not have enough funds from which to deduct it. Do not include this amount in box 4.
Code B—Uncollected Medicare tax on tips. Show the employee Medicare tax or RRTA Medicare tax on tips
that you could not collect because the employee did not have enough funds from which to deduct it. Do not show any uncollected Additional Medicare Tax. Do not include this amount in box 6.
Code C—Taxable cost of group-term life insurance over $50,000. Show the taxable cost of group-term life
insurance coverage over $50,000 provided to your employee (including a former employee). Also include this amount in boxes 1, 3 (up to the social security wage base), and 5. Include the amount in box 14 if you are a railroad employer.
Codes D through H, S, Y, AA, BB, and EE. Use these codes to show elective deferrals and designated Roth contributions made to the plans listed. Do not report amounts for other types of plans. The amount reported as elective deferrals and designated Roth contributions is only the part of the employee’s salary (or other compensation) that they did not receive because of the deferrals or designated Roth contributions. Only elective deferrals and designated Roth contributions should be reported in box 12 for all coded plans; except, when using code G for section 457(b) plans, include both elective and non-elective deferrals.
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. Do not report either section 457(b) or section 457(f) amounts that are subject to a substantial risk of forfeiture.
H: 501(c)(18)(D) plan – Elective deferrals to a section 501(c)(18)(D) tax-exempt organization plan. Be sure to include this amount in box 1 as wages. The employee will deduct the amount on their Form 1040 or 1040-SR.
J: Nontaxable sick pay (information only, not included in boxes 1, 3, or 5). Show any sick pay that was paid by a third party and was not includible in income (and not shown in boxes 1, 3, and 5) because the employee contributed to the sick pay plan. Do not include nontaxable disability payments made directly by a state.
Code K—20% excise tax on excess golden parachute payments (not applicable to Forms W-2AS, W-2CM, W-2GU, or W-2VI). If you made excess golden parachute payments to certain key corporate employees, report the 20% excise tax on these payments. If the excess payments are considered to be wages, report the 20% excise tax withheld as income tax withheld in box 2.
Code L—Substantiated employee business expense reimbursements. Use this code only if you reimbursed your employee for employee business expenses using a per diem or mileage allowance, and the amount that you reimbursed exceeds the amount treated as substantiated under IRS rules.
Code M—Uncollected social security or RRTA tax on the taxable cost of group-term life insurance over $50,000 (for former employees). If you provided your former employees (including retirees) with more than $50,000 of group-term life insurance coverage for periods during which an employment relationship no longer exists, enter the amount of uncollected Social Security or RRTA tax on the coverage in box 12. Do not include this amount in box 4.
Code N—Uncollected Medicare tax on taxable cost of group-term life insurance over $50,000 (for former employees). If you provided your former employees (including retirees) with more than $50,000 of group-term life insurance coverage for periods during which an employment relationship no longer exists, enter the amount of uncollected Medicare tax or RRTA Medicare tax on the coverage in box 12. Do not show any uncollected Additional Medicare Tax. Do not include this amount in box 6.
Code P—Excludable moving expense reimbursements paid directly to a member of the U.S. Armed Forces. The exclusion for qualified moving expense reimbursements applies only to members of the U.S. Armed Forces on active duty who move pursuant to a military order and incident to a permanent change of station. Show the total moving expense reimbursements that you paid directly to your employee for qualified (allowable) moving expenses.
Q: Nontaxable combat pay. If you are a military employer, report any nontaxable combat pay in box 12.
R: Employer contributions to your Archer MSA. Report on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Show any employer contributions to an Archer MSA.
Code S—Employee salary reduction contributions under a section 408(p) SIMPLE plan (this includes salary reduction contributions made to a Roth SIMPLE IRA). Show deferrals under a section 408(p) salary reduction SIMPLE retirement account. However, if the SIMPLE plan is part of a section 401(k) arrangement, use code D.
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 non-statutory 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 a 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.