What Are the Codes in Form W2 Box 12?

Form W-2 can appear overwhelming, particularly Box 12 with its long list of technical codes. Start with an understanding of what the codes represent.

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Naomi Levenspil
by

Naomi Levenspil

Updated on: July 8, 2026
Read time: 3 min

Form W-2, Wage and Tax Statement is a year-end tax document that reports wage, salary, and tax withholding information. Employees use information from the form to complete their federal and state tax returns.

As a small business owner, you are responsible for providing employees with a timely W-2 as well as furnishing a copy to the IRS. While the concept is straightforward, the W-2 has many boxes and codes, so it's essential to understand what to report in each field.

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What is Box 12 on a W-2?

Box 12 is a general catch-all for recording various types of income. Box 12 consists of four sections, 12a-12d. These are just references to organize the space and don't have any significant meaning.

W2 Box 12 uses codes A through HH to identify a variety of employee benefits that must be reported to the IRS. Some Box 12 amounts are taxable and included in total income, while others are non-taxable and reported for informational purposes only.

“Misclassifying a Box 12 item as taxable or informational can create downstream problems that are harder to fix than the original mistake. If employees report income incorrectly, the W-2 will not match the underlying benefit plan. From the employer side, the safest approach is to tie each Box 12 code back to written plan documents and payroll policies, so there is a clear basis for how it is treated. That kind of documentation becomes critical if the IRS ever asks how you determined the reporting.”

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Rebekah Mears, Esq.

W2 Box 12 codes and explanations

Below is a handy reference guide for what the codes in Box 12 represent. Note that the codes appear alphabetically, but some letters are unused. For more detailed explanations, reference the IRS Instructions to Form W-2.

  • A and B: This section reports the uncollected Social Security and Medicare taxes employees owe on tip income.
  • C: Complete this section when you provide group-term life insurance to your employees and the cost of the policy exceeds $50,000. 
  • D, E, F, G, H, S, Y, AA, BB, EE: These lines all provide information about elective deferrals to retirement plan contributions, and designated Roth contributions.

“Retirement plan reporting is one of the areas where small errors can create a lot of cleanup later. If elective deferrals or Roth contributions are reported incorrectly in Box 12, employees may file inaccurate returns or think they exceeded contribution limits when they did not. On the employer side, it can also raise questions about whether payroll and the plan administrator are aligned. I recommend periodic reconciliation between payroll records and plan reports during the year, not just at year end, to catch issues early.”

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Rebekah Mears, Esq.
  • D: Elective deferrals under a section 401(k) plan, including a simple 401(k).
  • E: Elective deferrals under a section 403(b) salary reduction agreement.
  • F: Elective deferrals under a section 408(k)(6) salary reduction SEP.
  • G: Elective deferrals and employer contributions to a 457(b) deferred compensation plan.
  • H: Elective deferrals under a 501(c)(18)(D) tax-exempt plan.
  • S: Employee contributions under a section 408(p) simple retirement plan.
  • Y: Deferrals under a section 409A nonqualified deferred compensation plan.
  • AA: Designated Roth contributions under a section 401(k) plan.
  • BB: Designated Roth contributions under a section 403(b) plan.
  • EE: Designated Roth contributions under governmental section 457(b) plan.
  • J: Non-taxable sick pay by a third party that was not includible in income, since the employee contributed to the sick pay plan. Do not include non-taxable disability payments made by a state.
  • K: 20% excise tax on golden parachute payments, used primarily to pay executives in publicly traded companies.
  • L: Non-taxable employee business expense reimbursement. (Taxable reimbursement is included as income in boxes 1, 3, and 5.)
  • M and N: Uncollected Social Security and Medicare tax on life insurance premiums exceeding $50,000. This is for former employees only.

“When employees see a taxable amount tied to employer-provided life insurance, it often catches them off guard, but it is a good prompt to review their broader planning. I suggest confirming that beneficiary designations are current and consistent with the rest of their estate plan, especially if they have a trust in place. Outdated designations can override what someone thought their plan would accomplish. Coordinating those details early helps avoid confusion and unintended outcomes later.”

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Rebekah Mears, Esq.
  • P: Excludable moving expense reimbursements paid directly to members of the U.S. Armed Forces.
  • Q: Nontaxable combat pay.
  • R: Employer contributions to an Archer MSA.
  • T: Employer-provided adoption benefits.
  • V: Income from the exercise of non-statutory stock options. 
  • W: Employer contributions to a health savings account (HSA).
  • Z: Income under a nonqualified deferred compensation plan that fails to satisfy Section 409A.
  • DD: Cost of employer-sponsored health care. This amount is non-taxable.
  • FF: Permitted benefits under a qualified small employer health reimbursement arrangement.
  • GG: Income from qualified equity grants under Section 83(i).
  • HH: Aggregate deferrals under Section 83(i) elections as of the close of the calendar year.

Although there are many codes available, most employees won't use the majority of them, if any. The IRS provides detailed instructions, and there are many reputable software programs that can walk you through the intricacies of preparing your W-2s in an accurate and timely fashion.

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This article is for informational purposes. This content is not legal advice, it is the expression of the author and has not been evaluated by LegalZoom for accuracy or changes in the law.