How do I assign a W-2 code (Box 12)?

Set up a pay code with a W-2 code.

The IRS states there are several types of compensation and benefits that can be reported in Box 12 on the W-2 Form. This list offers a description of the W-2 codes. Use the options in this list to select the W-2 Code (Box 12) code.

Assigning a W-2 code

1. Open Connect Payroll > Organization > Pay Codes.

2. Use the field titled Pay Code to enter a pay code and sub code.

3. Click to select the W-2/1099 tab.

4. Use the W-2 Code (Box 12) menu to select the code to print in Box 12 on the W-2 form.

Government Reporting will print the code in Box 12.

W-2 Codes

Code A

Uncollected Social Security or RRTA tax on tips. Include this amount as part of your total tax on Form 1040.

Code B

Uncollected Medicare tax on tips. Include this amount as part of your total tax on Form 1040.

Code C

Taxable benefit of group term-life insurance over $50,000. This amount is already included as part of your taxable wages in Boxes 1, 3, and 5.

Code D

Non-taxable elective salary deferrals to a 401(k) or SIMPLE 401(k) retirement plan.

Code E

Non-taxable elective salary deferrals to a 403(b) retirement plan.

Code F

Non-taxable elective salary deferrals to a 408(k)(6) SEP retirement plan.

Code G

Non-taxable elective salary deferrals and non-elective employer contributions to a 457(b) retirement plan.

Code H

Non-taxable elective salary deferrals to a 501(c)(18)(D) tax-exempt plan.

Code J

Non-taxable sick pay. This amount is not included in taxable wages in Boxes 1, 3, or 5.

Code K

Excise tax (equal to 20%) on excess "golden parachute" payments. Include this amount as part of your total tax on Form 1040.

Code L

Non-taxable reimbursements for employee business expenses.

Code M

Uncollected Social Security or RRTA tax on taxable group term life insurance over $50,000 for former employees. Include this amount as part of your total tax on Form 1040.

Code N

Uncollected Medicare tax on taxable group term life insurance over $50,000 for former employees. Include this amount as part of your total tax on Form 1040.

Code P

Non-taxable reimbursements for employee moving expenses, if the amounts were paid directly to the employee.

Code Q

Non-taxable combat pay. Some individuals may elect to include combat pay when calculating their Earned Income Credit.

Code R

Employer contributions to an Archer Medical Savings Account. This amount should be reported on IRS Form 8853.

Code S

Non-taxable salary deferral to a 408(p) SIMPLE retirement plan.

Code T

Employer paid adoption benefits. This amount is not included in Box 1 wages. You must use IRS Form 8839 to calculate the taxable and non-taxable portion of these adoption benefits.

Code V

Income from the exercise of non-statutory stock options. This amount is already included as taxable income in Boxes 1, 3, and 5. However, you will still need to report separately the sale of any stock options on Schedule D.

Code W

Employer contributions to your Health Savings Account. Report this amount on IRS Form 8889.

Code Y

Salary deferrals under 409A non-qualified deferred compensation plan.

Code Z

Income received under 409A non-qualified deferred compensation plan. This amount is already included in taxable wages in Box 1. This amount is subject to an additional tax of 20% plus interest as part of your total tax on Form 1040.

Code AA

After-tax contributions to a Roth 401(k) retirement plan.

Code BB

After-tax contributions to a Roth 403(b) retirement plan.

Code DD

Reports the cost of health insurance provided through your employer.

Code EE

After-tax contributions to a Roth 457(b) retirement plan offered by government employers.