W-2 forms are the essential documents that reveal the financial journey of their employees over the past year. These forms not only report wages and tax withholdings but also ensure compliance with IRS regulations, making tax season smoother for both employers and employees.
Overview
The W2 form covers the details of an employee’s annual earnings and tax deductions, including Federal Income Tax, Social Security, and Medicare. Employers must file W-2 Forms for the previous year by January 31.
What is W-2 Form BOX 12?
Box 12 on the Form W-2 serves as a critical information hub, detailing various special compensations and deductions. Box 12 includes employer contributions to a retirement plan or even amounts under non-taxable income categories. You might need to use Form W-2 Box 12 codes to accurately fill out Form W-2.
Form W-2 Box 12 codes: Instructions
If you are not familiar with Box 12, there are currently 26 codes to report certain compensation and benefit amounts. The codes range from life insurance coverage to the amount you contributed to an employee’s adoption expenses.
Box 12 is divided into four parts: 12a, 12b, 12c, and 12d.
Each line (12a, 12b, 12c, 12d) is used to report different codes and their corresponding amounts on Form W-2. If you need to report more than four codes, you will have to use an additional Form W-2.
| Label | Description |
|---|---|
| 12a | Line for reporting a specific code and amount (e.g., D for 401(k) contributions) |
| 12b | Line for reporting another code and amount (e.g., DD for employer-sponsored health coverage) |
| 12c | Line for reporting another code and amount (e.g., E for 403(b) contributions) |
| 12d | Line for reporting another code and amount (e.g., AA for Roth 401(k) contributions) |
What are W-2 Form Box 12 codes?
As an employer, you need to be aware of the following codes and limits when reporting employee deferrals and contributions in Box 12 of Form W-2:
- Elective Deferrals:
- Codes D, E, F, and S: These represent elective deferrals under various plans and are generally limited to a total of $23,000.
- Codes AA, BB, and EE: These are designated Roth contributions under all plans, also limited to $23,000.
- Code G: Deferrals under section 457(b) plans, limited to $23,000.
- Code H: Deferrals under section 501©(18)(D) plans, limited to $7,000.
- Additional Deferrals for Employees Aged 50 and Over:
- Employees aged 50 or older in 2024 may be allowed an additional deferral of up to $7,500.
- For section 401(k)(11) and 408(p) SIMPLE plans, the additional deferral limit is $3,500.
- These additional deferrals are not subject to the overall limit on elective deferrals.
- Special Limits for Code G:
- The limit on elective deferrals under code G may be higher for the last 3 years before the employee reaches retirement age. Employees should contact their plan administrator for more information.
- Excess Deferrals:
- Any amounts exceeding the overall elective deferral limit must be included in the employee’s income.
W-2 Form Box 12 codes
Each W-2 Form Box 12 code is either a single or double letter code. The codes range from A to HH. Let’s dig further and decode the codes of Box 12.
- A: Uncollected Social Security or RRTA tax on tips.
- AA: Roth contributions to a 401(k) plan.
- B: Uncollected Medicare tax on tips (excluding Additional Medicare Tax).
- BB: Roth contributions to a 403(b) plan.
- C: Taxable cost of group-term life insurance over $50,000.
- D: Contributions to a 401(k) plan.
- DD: Cost of employer-sponsored health coverage.
- E: Contributions to a 403(b) plan.
- EE: Designated Roth contributions to a governmental 457(b) plan.
- F: Contributions to a 408(k)(6) plan.
- FF: Benefits under a small employer health reimbursement arrangement.
- G: Contributions to a 457(b) plan.
- GG: Income from qualified equity grants.
- H: Contributions to a 501©(18)(D) plan.
- HH: Aggregate deferrals under Section 83(i).
- II: Medicaid waiver payments excluded from income.
- J: Non-taxable sick pay.
- K: 20% excise tax on excess golden parachute payments.
- L: Reimbursed employee business expenses.
- M: Uncollected Social Security or RRTA tax on group-term life insurance over $50,000 (for former employees).
- N: Uncollected Medicare tax on group-term life insurance over $50,000 (excluding Additional Medicare Tax, for former employees).
- P: Moving expense reimbursements for U.S. Armed Forces members.
- Q: Nontaxable combat pay.
- R: Company contributions to an Archer MSA.
- S: Employee contributions to a SIMPLE plan.
- T: Employer-provided adoption benefits.
- V: Income from exercising nonstatutory stock options.
- W: Company contributions to a health savings account (HSA).
- Y: Deferrals under a nonqualified deferred compensation plan.
- Z: Income from a nonqualified deferred compensation plan that fails to meet requirements, subject to an additional 20% tax.
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Information Required to file W-2 Forms
To complete a W-2 form, you need the employee’s Social Security number, name, and address, as well as the employer’s EIN, name, and address. You’ll also need details on total wages, tips, and other compensation, along with the amounts of federal, state, and local taxes withheld. Additionally, information on retirement plan contributions, employer-sponsored health coverage, and other benefits or compensation is required.
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