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How do I Interpret Box 12 on My W-2? Does it Affect My Income?

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Box 12

How do I Interpret Box 12 on My W-2? Does it Affect My Income?

A box 12 amount on your W-2 can be due to several reasons. Let’s look at how to fill out W-2 box 12.

Box 12 of the W-2 is what?

Taxpayers in the United States use the W-2 form to report their income and expenses. Your wage statement shows the taxes withheld from your wages as well as your wages. Looking at how many boxes and codes are on the form can make you feel overwhelmed if you haven’t done so before.

Box 12 is especially detailed. There are several subcategories of box 12 on the W-2 form, ranging from A to HH. Short answer: W-2 box 12 codes give more information and let you know if the amount is income. However, if there is gross income on the W-2, it’s already listed in Box 1 of the form. A single letter or double letter code is assigned to each W2 box 12 codes.

How to fill out box 12 on a W-2

If you are filing your taxes yourself, you need to understand the instructions for box 12 on the W-2. A tax professional from H&R Block can assist you. By submitting your docs to our tax pro review, you will be able to let them handle the rest. We’ll only need your approval of the return. Meetings can take place in an office, via chat, phone, or video conferencing – whatever works best for you.

These are the W2 box 12 codes:

  • Tip taxes owing to the Social Security Administration or the Railroad Retirement Tax Administration. On Line 8 of Schedule 2 of Form 1040, insert box c and, in the space next to that box, enter the tax amount as well as the tax code, which here is “UT”.
  • Taxes on tips that have not been collected by Medicare. Check box c and identify as “UT” on Schedule 2, line 8, of Form 1040.
  • In: W-2 boxes 1,3 (up to Social Security’s wage base), and box 5 (taxable costs of group-term life insurance over $50,000). For information only.

Section 401

  • D – Employees can elect to defer their retirement under Section 401(k) plans. Examples include SIMPLE plans. The Saver’s Credit may be claimed on Form 1040 Schedule 3, line 4. For details, see the instructions.
  • E – Salary reductions under Section 403(b) agreements. Saver’s Credit may be claimed on Form 1040, Schedule 3, line 4. For details, please see the instructions.
  • A Section 408(k)(6) salary reduction SEP entitles you to elective deferrals. Form 1040 Schedule 3, line 4, may be eligible for the Saver’s Credit. For details, refer to the form instructions.
  • Section 457(b) deferred compensation plans that permit participant deferrals and employer contributions (inclusive of non-elective deferrals). Form 1040 Schedule 3, line 4 may let you claim the Saver’s Credit. Details are in the instructions.
  • Elective deferrals to a tax-exempt organization plan under Section 501(c)(18)(D). Form 1040 Schedule 3, line 4 may allow you to claim the Saver’s Credit. Refer to instructions for details.
  • W-2 lines 1, 3, or 5 do not include nontaxable sick pay.

Excess Payments

  • Golden parachute excess payments are subject to an excise tax of 20%. The amount and the code identifying this tax are to be entered next to the box on Schedule 2 of Form 1040, line 8, where the tax is included.
  • Reimbursements for employee business expenses (not taxable). For employee business expenses, you may need to file Form 2106. This amount appears on line 7 of that form. Instructions included with the form.
  • Uncollected Social Security or RRTA taxes on group-term life insurance premiums over $50,000 (former employees only). 
  • Non-collected Medicare tax on taxable life insurance costs over $50,000 (former employees only). On Schedule 2, line 8, identify this tax as “UT”.
  • Excludable moving expenses paid directly to members of the  military (not included in Box 1, 3, or 5). You can deduct moving expenses on Schedule 1, line 13 of Form 1040, if you qualify.
  • Pay for combat that is not taxable. You can report this amount in the instructions for Form 1040 or Form 1040-SR.
  • Archer medical savings accounts (MSAs) funded through employer contributions. Line 1 of Form 8853, Archer MSAs and Long-Term Care Insurance Contracts.
  • SIMPLE – Section 408(p) contributions by employees. (Not shown in box 1) Form 1040 Schedule 3, line 4 may allow you to claim the Saver’s Credit. Please refer to the instructions for further information.
  • Box 1 does not include Employer Provided Adoption Benefits (T). Compute any excludable amounts using Form 8839, Qualified Adoption Expenses.

Non-statutory stock

  • V – Income from exercise of non-statutory stock options (included in Boxes 1 through 3 (up to the Social Security wage base), and 5). Reporting requirements can found in Publication 525, Taxable and Nontaxable Income.
  • To your health savings account (HSA), your employer contributes (including amounts you elect to contribute under a cafeteria plan). Box 1, 3 and 5 do not apply to Health Savings Accounts (HSAs).
  • Deferrals under nonqualified deferred compensation plans under Section 409A.
  • There is an additional 20% tax plus interest on income under a nonqualified deferred compensation plan that fails to satisfy Section 409A. This amount will also appear in Box 1. 
  • Roth contributions under a 401(k) plan with a designated Roth contribution. Form 1040 Schedule 3, line 4 of the Form 1040 is the place to claim the Saver’s Credit if you contributed to a Roth. 
  • Plan 403(b) designated Roth contributions. Roth contributions are not tax deductible, but you may be eligible for the Saver’s Credit, Schedule 3, line 4. 
  • DD – The cost of health insurance sponsored by an employer. Only for informational purposes.
  • Roth contributions under a government 457(b) plan that designated. Tax-exempt organizations may not use this amount for contributions to Section 457(b) plans. Form 1040 Schedule 3, line 4 can used to claim the Saver’s Credit if you made Roth contributions. 
  • Benefits covered by a qualified small employer health reimbursement arrangement. For informational purposes only.
  • Section 83(i) qualified equity grants accounted for under GG. Only for informational purposes. According to section 83(i)(1)(A), this amount is includible in gross income for the year. This is income in box 1.
  • As of the close of the calendar year, aggregate deferrals under Section 83(i) elections. Only for informational purposes.

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