(Tax Year 2024 – Filed in 2025)
Overview
Box 12 on Form W-2 contains a series of codes and dollar amounts that report non-wage compensation, pre-tax benefits, and retirement contributions. While often overlooked, the information in Box 12 can significantly impact your taxable income, eligibility for credits, and even reporting requirements.
Each entry in Box 12 includes a single-letter or letter-number code followed by a dollar amount. These codes are not random—they help the IRS determine how to handle various compensation elements for tax purposes.
How Box 12 Affects Your Tax Return
Some Box 12 items:
- Reduce taxable income (e.g., Code D – 401(k) contributions)
- Report non-taxable benefits for informational purposes only (e.g., Code DD – health insurance)
- Trigger additional forms or reporting (e.g., Code W – HSA contributions)
It is crucial to understand these codes to file an accurate return and avoid missing deductions or misreporting income.
Common Box 12 Codes and Their Meaning
| Code | Description | Tax Impact |
|---|---|---|
| D | 401(k) plan elective deferrals | Reduces taxable income |
| E | 403(b) salary reduction | Reduces taxable income |
| F | 408(k)(6) SEP plan | Reduces taxable income |
| G | 457(b) deferred compensation | Reduces taxable income |
| W | Employer HSA contributions | May affect Form 8889 |
| AA | Roth 401(k) contributions | Post-tax; no income reduction |
| BB | Roth 403(b) contributions | Post-tax; no income reduction |
| DD | Employer health coverage cost | Informational only |
| P | Moving expenses (certain military only) | May affect Form 3903 |
Box 12 and Pre-Tax Benefits
Contributions shown in Box 12 with codes such as D, E, G, or W are pre-tax and reduce your Box 1 wages, which in turn lowers your federal taxable income.
Example:
If your gross salary is $80,000 and you contributed $6,000 to a 401(k), Box 12 will show D – 6000, and Box 1 will show $74,000.
Codes That Do Not Reduce Taxable Income
Some Box 12 entries are for informational purposes only or relate to post-tax contributions:
- Code AA (Roth 401(k)) – Taxable now, tax-free later
- Code DD – Total cost of employer-sponsored health coverage; not taxable
- Code W – Employer contributions to HSA; reported on Form 8889
How to Use Box 12 Information When Filing
- Identify the Codes
- Locate the codes listed in Box 12
- Note that you may have multiple entries (e.g., D, DD, W)
- Apply to the Correct IRS Forms
- HSA (Code W) – File Form 8889
- Moving Expenses (Code P) – File Form 3903 (military only)
- Most other codes are informational and used for verification
- Do Not Re-Enter Pre-Tax Contributions
- Wages reported in Box 1 already reflect pre-tax reductions
- Avoid double-reporting on your tax return
Example Scenario
Alex earned $90,000 in 2024 and had the following Box 12 entries:
- D – 10,000 (401(k) contributions)
- W – 2,000 (employer HSA contributions)
- DD – 12,000 (health coverage provided by employer)
- AA – 1,500 (Roth 401(k) contributions)
Box 1 shows $80,000 taxable income.
- Form 8889 is required to report HSA amounts (Code W)
- Code DD is ignored for tax purposes
- Code AA is informational—tax already applied
Conclusion
Box 12 on your W-2 plays a significant role in determining what part of your compensation is taxable, deferred, or simply informational. Always check this section when filing your return. Knowing how to interpret each code ensures you don’t miss out on deductions—or worse, incorrectly report your income.
Call to Action
Confused by Box 12 on your W-2? Schedule a consultation with Anshul Goyal, CPA EA FCA. He’ll walk you through every code, ensure your return is accurate, and help you claim the right deductions and benefits.
Top 5 FAQs: Box 12 on W-2
Do all Box 12 codes affect my taxes?
No. Some reduce taxable income (e.g., 401(k) contributions), while others are informational only.
What is Code DD on my W-2?
Code DD shows the total cost of employer-provided health insurance. It is not taxable.
What if I have multiple Box 12 codes?
That’s normal. Review each code individually to determine its tax treatment.
Should I enter Box 12 codes on my tax return?
Only if required (e.g., HSA – Code W). Most are already reflected in your W-2 wages.
What if I don’t understand a Box 12 code?
Check the IRS W-2 instructions or consult a CPA to avoid filing errors.
About Our CPA
Anshul Goyal, CPA EA FCA is a U.S.-licensed Certified Public Accountant and Enrolled Agent admitted to practice before the IRS. He helps individuals and professionals—especially Indian nationals in the U.S.—interpret complex tax forms, claim valid deductions, and file accurately.
Schedule a meeting with Anshul here:
https://calendly.com/anshulcpa/
Disclaimer
This blog is for informational purposes only. It does not constitute legal or tax advice. For professional guidance tailored to your situation, consult a licensed CPA.