Understanding The Meaning Of Letter Codes In Box 12 Of W-2 Form

Being a US resident, you must be aware of the W-2 form. You might be paying various kinds of tax for numerous services.

Accordingly, the W-2 form is the most common and mandatory tax statement, which records taxpayers’ data. It doesn’t matter whether your tax is state wages or federal wages; the W-2 form is crucial to move forward.

Many folks might be unaware of the W-2 form and the importance of letter codes in box 12. In this writeup, you’ll find your guidance on Understanding the meaning of letter code in box 12 of the W-2 Form.

You’ll also bring a lot of hunks of data that you require to realize about the W-2 form. Therefore, without squandering a moment, let’s hop into it. 

What Do You Know About W-2 Box 12?

As we know, the W-2 form is a basic necessity in US states. The W-2 document contains all the crucial information of taxpayers about income and taxes. But you might be thinking, “Why is W-2 box 12 so hyped?”.

There’s no need to be concerned. This writing is here for your salvation. In W-2 form, box 12 plays a significant role. When you take a look at box 12, you’ll see that box 12 has further subcategories which ramble from A to HH.

Here you can catch the importance of box 12 in the W-2 Form. It is also said that box 12 contains vast information and also plays a vital role in determining the tax. Hence, let’s stride ahead and scrutinize further about the W-2 form.

Are There Any Instructions For W-2 Box 12?

When you visit the firm and analyze the W-2 form, there will be an officer or a person who will assist you in understanding the instructions of box 12.

Nevertheless, if there’s a time when no one will be there for your help and you have to examine the W-2 form on your own, you should know the meaning of box 12 letter codes.

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For further insights, let’s dive in and see the enlisted codes and their importance in form. Here we come,

●      A

The A letter code in box 12 illustrates the RRTA or the Uncollected social security tax. Here RRTA prevails over the Railroad Retirement Tax Act. The letter A contains Tax on form 1040 schedule 2. It can be seen in line 3. 

●      B

The B letter code of box 12 in the W-2 form exemplifies the Uncollected Medicare Tax. This tax is also discerned on page 1040, schedule 2. The B letter code can also be detected on line 13.  

●      C

In the C letter code of box 12, you’ll come to see Life Insurance’s taxable costs that are over $50,000. The taxable expenses shown in the W-2 form are just for information purposes.  

●      D

In the letter code D, it is said that you might be able to assert the Saver’s Credit. You can see this statement on form 1040, schedule 3, and line 4. In D Code, you can also glimpse an arrangement plan or an elective deferral under section 401(K- Cash).  

●      E

In the E letter of box 12, you can claim the Saver’s credit too. The E code depicts the Elective deferrals under section 403. Section 403 is also known as the salary reduction agreement; for further details, see line 4 of schedule 3 of form 1040.

●      F

In the F code of box 12, you can discover the salary reduction SEP.  This letter code also illustrates the elective deferral under section 408. You can see more details on the form 1040’s line 4.  

●      G

G letter code allows you to claim the Saver’s Credit which is the employer contributions. The G letter of box 12 gives you the information about employers’ contributions and elective deferrals. This illustration is under section 457.

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●      H

The instructions of the H letter include the tax-exempt organization plan and Elective deferrals, which belongs to section 501. You can also receive remote input about the H letter, Form 1040, line 4. 

●      J

J letter is known to be the most simple code which tells you about the Non-taxable sick pay. This section is also written just for information purposes.

●      K

The letter K demands the total amount of tax on Form 1040, line 17k. The K letter describes the 20% excise surcharge on golden parachute expenditures.

●      L

In the L letter code, you need to shift the form from form 1040 to form 2106. Form 2106 is for the employee business expenses. Put, the letter L demonstrates the corroborated laborer business fee compensations

●      M

The M letter of box 12 can be identified as UT in the form 1040, line 8. In the M box, you can see the life insurance over $50,000 regarding RRTA and the uncollected social security tax.  

●      N

In the N letter code, you will learn the medicare wages shown on Form 1040, line 6. Likewise, the M letter and the N letter demonstrate the uncollected medicare tax of over $50,000.

●      P

In the P letter, the form is moved to the 3903, considered on line 14. Form 3903 is certainly for concluding your striding charges rebate. The P letter code will provide information regarding excludable shoving fee repayments. This surcharge can be reimbursed promptly to the U.S armed forces. 

And so on to the Z letter code of box 12. Further, you can see the double letters, which also contain valuable information you should know. Here we go.

●      AA

In AA, you’ll come to know the designated Roth contributions, which appear under section 401. With Roth’s assistance, you might be able to claim the Saver’s credit because it is a non-deductible tax. In this letter code, you have to see form 1040.   

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●      BB

Likewise, in AA, the BB letter of box 12 also shows the designated Roth contribution but under section 403 instead of 401. Similarly, the tax will be non-deductible here. Nevertheless, you can avail the saver’s credit.

●      DD

DD is the only letter code of box 12 that contains information about the cost of employer-sponsored health coverage.

●      EE

EE is the letter code comprising Roth’s contribution but under the government section of 457. This letter will also be the same as before we discussed that the Roth is non-deductible but can permit you to claim the saver’s credit. 

●      FF

FF is known to be the informative letter that tells us about the permitted benefits under a qualified small employer health insurance agreement.

●      GG

GG is also an informative letter code of box 12, but it illustrates the income from qualified equity grants. These eligible equity grants lie under section 83.

●       HH

In the HH letter code of box 12, you can get the instructions about aggregate deferrals under section 83. It is also said that the election closes at the end of the year.     

Elaborate on The W-2 Boxes Individually?

The W-2 form contains a set of 14 boxes with a vast range of informative stuff. You should also know the instructions for assortments despite the letters’ information. The following table gives you a quick insight into the boxes and their information.

Box No.Features
Box 1Box 1 contains the following; Employee tipsEmployee wages Employee prices Yearly compensation
Box 2Box 2 comprises the following terms; Total federal income tax Paycheck for the tax year Line of your return
Box 3Box 3 shows the following stuff; Social Security Tax Your employee compensation
Box 4In Box 4, you’ll notice the social security tax that can be suppressed from your pay.  
Box 5Box 5 clarifies the following aspect; Medicare tax Additional Medicare tax Your allowances
Box 6Box 6 tells you about the exact amount of medicare tax, such as; Additional Medicare Tax = 0.9% Medicare Tax = 1.45%
Box 7Box 7 will instruct you about the Social Security income. It also reports the income of social security to the employee. 
Box 8Box 8 shows you the subsequent material; Income allocated to you.
Box 9Box no. 9 is not yet clarified on the W-2 form.
Box 10The dependent care assistant program is seen in box 10. Report the amount of the dependent care assistant program.
Box 11Box 11 ascertains the deferred reimbursement strategy. The entire proportion is disseminated to you from your employer’s non-qualified taxes.
Box 12Box 12 contains various code letters varying from A to HH. All letters have their informational section, which exemplifies the instructions that should be followed while filling out the W-2 form. 
Box 13Box 13 is known to be the retirement plan box. Particular thresholds can pertain to the percentage of IRA subsidies.
Box 14Used to report information like: Uniform payments Non-taxable income Union dues Educational Assistance payments State disability insurance taxes Health insurance premium deductions

Final Verdict

Presently, you have all the essential information about the W-2 form that you need to know before going to take the structure into your hands.

You should keenly read out the instructions of the letter code of box 12 as a little mistake in letter codes can make a big difference in the complete W-2 form. Therefore, now you’re prepared to carry the configuration into your hands. Good luck!