Decoding the W-2 box 12 — What is it and is it added to my income?

If you have an amount listed on your W-2 box 12, it could be one of several things. Read more as we outline the instructions for box 12 on a W-2 form to help you as you compute income tax on your wages, whether they’re from your paycheck, state wages, Medicare wages, Social Security wages, or otherwise.

What is W-2 box 12?

The W-2 form is one of the most common tax forms used by the Internal Revenue Service for U.S. taxpayers. Specifically, it’s a tax statement that reports the taxes withheld from your taxable wages — including state wages as well as federal wages and withholding on those wages for federal, state and sometimes local tax.

If you’ve ever really looked at the form’s details, you may be overwhelmed as it has many boxes and codes on it.

One particularly detailed area is box 12. On the W-2 form, box 12 has a number of sub-categories ranging from A to HH. Long story short, the W-2 box 12 codes provide more information and determine if the amount is income for income tax reporting. However, if any amount is gross income, it’s already included in W-2 Box 1. Each W-2 Form box 12 code is either a single or double letter code.

Instructions for box 12 on W-2

It’s important to understand the instructions for box 12 on the IRS form W-2 whether you are doing taxes yourself or getting help from a tax pro.

The W-2 box 12 codes are:

• A – Uncollected Social Security tax or Railroad Retirement Tax Act (RRTA) tax on tips. Include this tax on Form 1040 Schedule 2, line 13
• B – Uncollected Medicare tax on tips. Include this tax on Form 1040 Schedule 2, line 13
• C – Taxable costs of group-term life insurance over $50,000 (included in W-2 boxes 1,3 (up to Social Security wages base), and box 5); Taxable costs are information only
• D – Elective deferral under a Section 401(k) cash or arrangement plan. This includes a SIMPLE 401(k) arrangement. You may be able to claim the Saver’s Credit, Form 1040 Schedule 3, line 4. See Form 1040 Instructions for details.
• E – Code E includes elective deferrals under a Section 403(b) salary reduction agreement. You may be able to claim the Saver’s Credit, Form 1040 Schedule 3, line 4. See Form 1040 Instructions for details.
• F – Elective deferrals under a Section 408(k)(6) salary reduction SEP. You may be able to claim the Saver’s Credit, Form 1040 Schedule 3, line 4. See Form 1040 Instructions for details.
• G – Elective deferrals and employer contributions (including non-elective deferrals) to a Section 457(b) deferred compensation plan. You may be able to claim employer contributions the Saver’s Credit, Form 1040 Schedule 3, line 4. See Form 1040 Instructions for details.
• H – Elective deferrals to a Section 501(c)(18)(D) tax-exempt organization plan. You may be able to claim the Saver’s Credit, Form 1040 Schedule 3, line 4. See Form 1040 Instructions for details.
• J – Nontaxable sick pay (information only, not included in W-2 boxes 1, 3, or 5)
• K – 20% excise tax on excess golden parachute payments. Include this tax on Form 1040 Schedule 2, line 17k, enter the total amount of the tax
• L – Substantiated employee business expense reimbursements (nontaxable). You may need to file Form 2106, Employee Business Expenses. This amount is reported on that form on line 7. See Form 2106 Instructions for details.
• M – Uncollected Social Security tax or RRTA tax on taxable cost of group-term life insurance over $50,000 (former employees only). Include this tax on Form 1040 Schedule 2, line 8, identify as “UT”.
• N – Uncollected Medicare tax on taxable cost of group-term life insurance over $50,000 (former employees only). Include Medicare wage tax on Form 1040 Schedule 2, line 6.
• P – Excludable moving expense reimbursements paid directly to a member of the U.S. Armed Forces (not included in Boxes 1, 3, or 5). Use Form 3903, Moving Expenses, to figure your moving expense deduction and report on Form 1040 Schedule 1, line 14, assuming you qualify.
• Q – Nontaxable combat pay. See the instructions for Form 1040 or Form 1040-SR for details on reporting this amount.
• R – Any employer contributions to your Archer medical savings account (MSA). Report on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, line 1.
• S – Employee salary reduction contributions under a Section 408(p) SIMPLE. (Not included in Box 1). You may be able to claim the Saver’s Credit, Form 1040 Schedule 3, line 4. See Form 1040 Instructions for details.
• T – Employer Provided Adoption benefits (not included in Box 1). Complete Form 8839, Qualified Adoption Expenses, to compute any excludable 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 Publication 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 (HSA). (Not included in Box 1, 3, or 5.) Report on Form 8889, Health Savings Accounts (HSAs).
• Y – Deferrals under a Section 409A 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 and is subject to an additional 20% tax plus interest. See Form 1040 instructions, Schedule 2, line 17h, Other Taxes, for more information.
• AA – Designated Roth contributions under a 401(k) plan. Roth contributions are not deductible; however, you may be able to claim the Saver’s Credit, Form 1040 Schedule 3, line 4. See Form 1040 Instructions for details.
• BB – Designated Roth contributions under a 403(b) plan. Roth contributions are not deductible; however, you may be able to claim the Saver’s Credit, Form 1040 Schedule 3, line 4. See Form 1040 Instructions for details.
• DD – Code DD includes cost of employer-sponsored health coverage. Information only.
• EE – Designated Roth contributions under a governmental 457(b) plan. This amount doesn’t apply to contributions under a tax-exempt organization Section 457(b) plan. Roth contributions are not deductible; however, you may be able to claim the Saver’s Credit, Form 1040 Schedule 3, line 4. See Form 1040 Instructions for details.
• FF – Permitted benefits under a qualified small employer health insurance reimbursement arrangement. Information only.
• GG – Income from qualified equity grants under Section 83(i). Information only. This amount is includible in gross income from qualified equity grants under section 83(i)(1)(A) for the calendar year. This amount is wages for box 1.
• HH – Aggregate deferrals under Section 83(i) elections as of the close of the calendar year. Information only.

Form W-2 includes your Social Security number and your employer identification information number.

More help with box 12 codes

If you need more help understanding box 12 codes – as well as other W-2 box codes or internal revenue code in general, let us help. Our tax pros are on-call to support you with any tax question related to state income tax as well as federal income tax.

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