Understanding the Box 12 Codes on Form W-2: A Quick Guide

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Form W-2, Wage and Tax Statement, is a critical payroll form used to report employee wages, tax withholdings, and certain benefits. Because this information is shared with both the Social Security Administration (SSA) and the Internal Revenue Service (IRS), accuracy is essential.

One area that often confuses is Box 12, which reports special compensation, retirement contributions, health benefits, and other items not shown in standard wage boxes. Errors in this section can lead to SSA rejections, IRS notices, or delays for employees filing their returns.

This guide provides a complete, IRS-accurate breakdown of all Form W-2 Box 12 codes for tax year 2026, including newly introduced codes, and explains how TaxBandits simplifies Box 12 reporting.

What is Form W-2?

Form W-2 is used by employers to report annual wages and tax information for each employee. Form W-2 reports:

• Wages, tips, and other compensation paid to employees
  
• Federal income tax withheld
  
• Social Security and Medicare wages and taxes
  
• Certain employer-provided benefits, retirement deferrals, and special compensation items
  

Employers must file Form W-2 with the SSA and furnish copies to employees. Employees use the information reported on Form W-2 to prepare their federal, state, and local income tax returns.

Who is Required to File Form W-2?

Any employer who pays wages subject to federal income tax withholding, Social Security tax, or Medicare tax must file Form W-2. This requirement applies even if the employee is a family member, provided the wages are taxable.

Incomplete or inaccurate Forms W-2 can result in SSA rejections, IRS penalties, and delays for employees filing their personal returns.

What is Box 12 on Form W-2?

Box 12 is used to report specific types of compensation, benefits, deferrals, or taxes that are not fully explained by the standard wage and tax boxes. 

Key points about Box 12:

• Employers may report up to four entries (Boxes 12a–12d).
  
• Each entry includes a code (A–II) and a corresponding dollar amount.
  
• Some amounts are taxable, some are excluded from income, and others are informational only.
  

Understanding the correct code and how it interacts with other wage boxes is critical for accurate reporting.

Complete List of Form W-2 Box 12 Codes (2026 IRS Instructions)

Code A – Uncollected Social Security or RRTA tax on tips
Reports the Social Security or railroad retirement tax that could not be withheld from employee tips.

Code B – Uncollected Medicare tax on tips
Shows Medicare tax on tips that was not collected from the employee, excluding Additional Medicare Tax.

Code C – Taxable cost of group-term life insurance over $50,000
Represents the taxable value of employer-provided life insurance coverage above IRS limits (over $50,000).

Code D – Elective deferrals to a 401(k) plan
Employee salary deferrals to a qualified 401(k) cash or deferred arrangement.

Code E – Elective deferrals to a 403(b) plan
Employee contributions made under a 403(b) salary reduction agreement.

Code F – Elective deferrals under a SEP plan
Salary reduction contributions under a simplified employee pension (SEP) plan.

Code G – Deferrals and employer contributions to a 457(b) plan
Includes employee deferrals and employer contributions to eligible governmental or tax-exempt deferred compensation plans.

Code H – Elective deferrals under a Section 501(c)(18)(D) plan
Reports contributions to certain tax-exempt organization pension plans.

Code J – Nontaxable sick pay
Reports sick pay that is excluded from taxable income.

Code K – 20% excise tax on excess golden parachute payments
Reflects excise tax under Section 280G for excess parachute payments.

Code L – Substantiated employee business expense reimbursements
Includes reimbursements made under an accountable plan that are excluded from income. 

Code M – Uncollected Social Security or RRTA tax on taxable group-term life insurance (former employees)
Reports uncollected Social Security or RRTA tax on the taxable cost of group-term life insurance coverage over $50,000 provided to former employees.

Code N – Uncollected Medicare tax on taxable group-term life insurance (former employees)
Reports uncollected Medicare tax related to taxable life insurance coverage for former employees.

Code P – Qualified moving expense reimbursements for Armed Forces members
Applies only to eligible active-duty military moving expenses.

Code Q – Nontaxable combat pay
Reports combat zone compensation that may be excluded from income.

Code R – Employer contributions to an Archer MSA
Reports employer-funded Medical Savings Account contributions.

Code S – Employee salary reduction contributions to a SIMPLE plan
Includes salary reduction contributions to a SIMPLE IRA, including Roth SIMPLE IRA contributions.

Code T – Adoption benefits
Includes employer-provided adoption assistance benefits.

Code V – Income from the exercise of nonstatutory stock options
Reports taxable income from nonqualified stock option exercises.

Code W – Employer contributions to an HSA
Includes employer contributions and employee pre-tax HSA contributions made through a cafeteria plan.

Code Y – Deferrals under a Section 409A nonqualified deferred compensation plan
Reports deferred compensation subject to Section 409A rules.

Code Z – Income under a noncompliant Section 409A plan
Includes income required in wages due to failure to meet Section 409A requirements. 

Code AA – Designated Roth contributions to a 401(k) plan
Reports employee Roth contributions under a qualified 401(k).

Code BB – Designated Roth contributions to a 403(b) plan
Used for Roth contributions under a 403(b) plan.

Code DD – Cost of employer-sponsored health coverage
Informational only; reports the total cost of coverage, not taxable income.

Code EE – Designated Roth contributions to a governmental 457(b) plan
Reports Roth contributions made under a governmental 457(b).

Code FF – Qualified Small Employer HRA (QSEHRA) benefits
Shows permitted benefits provided under a QSEHRA arrangement.

Code GG – Income from qualified equity grants under Section 83(i)
Reports deferred income from certain qualified equity grants.

Code HH – Aggregate deferrals under Section 83(i) elections
Shows total deferred income related to qualified equity grants as of year-end.

Code II – Medicaid waiver payments
Reports certain Medicaid waiver payments excluded from gross income.

New and Recently Introduced Codes (2026 Instructions)

For the 2026 tax year, the IRS has introduced 3 new codes.

Code TA – Employer contributions to Trump accounts
Reports employer contributions made under a Section 128 Trump account contribution program for an employee or the employee’s dependent. These contributions are excluded from the employee’s gross income, subject to applicable annual limits.

Code TP – Total cash tips reported to the employer
Shows the total amount of cash tips the employee reported. This code is informational only; reported tips remain subject to federal income tax withholding and Social Security and Medicare taxes, and may require related tipped occupation reporting elsewhere on the form. 

Code TT – Total qualified overtime compensation
Reports the premium portion of overtime compensation above the employee’s regular rate, as defined under the Fair Labor Standards Act (FLSA). Qualified overtime compensation remains subject to federal income tax withholding and Social Security and Medicare taxes.

How TaxBandits Simplifies Box 12 Reporting

Box 12 is one of the most error-prone areas of filing Form W-2 because many items are informational, partially taxable, or must align with other wage boxes. In addition, when more than four coded items must be reported, employers must follow specific IRS instructions regarding multiple Forms W-2.

TaxBandits simplifies both Box 12 reporting and compliant form distribution by aligning directly with IRS and SSA requirements.

Supporting multiple Box 12 entries per employee (12a–12d)

The IRS allows only four Box 12 entries (12a–12d) per Form W-2. If you need to report more than four coded items:

• An additional Form W-2 must be issued to the same employee. It should report only the Box 12 items not included on the original form.
  
• Duplicate federal wage or tax data must not be reported on multiple Copy A submissions to the SSA.

TaxBandits automatically handles this scenario in accordance with IRS instructions.

Pre-submission validation checks

Before transmission, TaxBandits reviews Box 12 entries for missing amounts, invalid combinations, and mismatches with other wage boxes, reducing the risk of SSA rejections or post-filing corrections.

IRS-compliant form distribution

When more than four Box 12 codes are entered for an employee, the system generates the necessary additional Form(s) W-2 and distributes them correctly without duplicating SSA-reported wage data.

By structuring Box 12 reporting correctly from the start, TaxBandits helps you avoid rejections, reduce corrections, and deliver the right outcome for both employers and employees.