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amounts paid or incurred (regardless of any employee

Do not report special wage payments, such as

TIP

forfeitures), including those in excess of the $5,000

accumulated sick pay or vacation pay, in box 11. For

exclusion. This may include (a) the FMV of benefits provided

more information on reporting special wage

in kind by the employer, (b) an amount paid directly to a

payments, see Pub. 957.

day-care facility by the employer or reimbursed to the

Box 12 — Codes. Complete and code this box for all items

employee to subsidize the benefit, or (c) benefits from the

described below. Note that the codes do not relate to where

pre-tax contributions made by the employee to a section 125

they should be entered for boxes 12a-12d on Form W-2. For

dependent care flexible spending account. Include any

example, if you are only required to report code D in box 12,

amounts over $5,000 in boxes 1, 3, and 5. For more

you can enter code D and the amount in box 12a of Form

information, see Pub. 15-B.

W-2. Do not report in box 12 any items that are not listed as

codes A – BB. Also, do not report in box 12 section 414(h)(2)

An employer that amends its cafeteria plan to

contributions (relating to certain state or local government

TIP

provide a grace period for dependent care

plans). Instead, use box 14 for these items and any other

assistance may continue to rely on Notice 89-111, by

information that you wish to give to your employee. For

reporting in Box 10 of Form W-2 the salary reduction

example, union dues and uniform payments may be

amount elected by the employee for the year for dependent

reported in box 14.

care assistance (plus any employer matching contributions

attributable to dependent care).

On Copy A (Form W-2), do not enter more than

TIP

four items in box 12. If more than four items need

Box 11 — Nonqualified plans. The purpose of box 11 is for

to be reported in box 12, use a separate Form W-2

the SSA to determine if any part of the amount reported in

to report the additional items (but enter no more than four

box 1 or boxes 3 and/or 5 was earned in a prior year. The

items on each Copy A (Form W-2)). On all other copies of

SSA uses this information to verify that they have properly

Form W-2 (Copies B, C, etc.), you may enter more than

applied the social security earnings test and paid the correct

four items in box 12 when using an approved substitute

amount of benefits.

Form W-2. See Multiple forms on page 9.

Reporting in box 11 is unaffected by the changes

Use the IRS code designated below for the item that

TIP

made by the American Jobs Creation Act of 2004.

you are entering, followed by the dollar amount for that

item. Even if only one item is entered, you must use the IRS

code designated for that item. Enter the code using a capital

Show distributions to an employee from a nonqualified

letter. Leave at least one space blank after the code, and

plan or a nongovernmental section 457(b) plan. Also report

enter the dollar amount on the same line. Use decimal

these distributions in box 1. Make only one entry in this

points but not dollar signs or commas. For example, if you

box. Distributions from governmental section 457(b) plans

are reporting $5,300.00 in elective deferrals to a section

must be reported on Form 1099-R, Distributions From

401(k) plan, the entry would be D 5300.00 (not A 5300.00

Pensions, Annuities, Retirement or Profit-Sharing Plans,

even though it is the first or only entry in this box). Report

IRAs, Insurance Contracts, etc., not in box 1 of Form W-2.

the IRS code to the left of the vertical line in boxes

If you did not make distributions this year, show

12a-d and money amount to the right of the vertical line.

deferrals (plus earnings) under a nonqualified or any

See the Form W-2 Reference Guide for Box 12 Codes on

section 457(b) plan that became taxable for social

page 16. See also the detailed instructions below for each

security and Medicare taxes during the year (but were

code.

for prior year services) because the deferred amounts

Code A — Uncollected social security or RRTA tax on

were no longer subject to a substantial risk of forfeiture. Also

tips. Show the employee social security or Railroad

report these amounts in boxes 3 (up to the social security

Retirement Tax Act (RRTA) tax on all of the employee’s tips

wage base) and box 5. Do not report in box 11 deferrals

that you could not collect because the employee did not

that are included in boxes 3 and/or 5 and that are for

have enough funds from which to deduct it. Do not include

current year services (such as those that have no risk of

this amount in box 4.

forfeiture).

Code B — Uncollected Medicare tax on tips. Show the

If you made distributions and are also reporting any

employee Medicare tax or RRTA Medicare tax on tips that

deferrals in box 3 and/or 5, do not complete box 11.

you could not collect because the employee did not have

See Pub. 957, Reporting Back Pay and Special

CAUTION

enough funds from which to deduct it. Do not include this

Wage Payments to the Social Security Administration, and

amount in box 6.

Form SSA-131, Employer Report of Special Wage

Code C — Taxable cost of group-term life insurance

Payments, for instructions on reporting these and other

over $50,000. Show the taxable cost of group-term life

kinds of compensation earned in prior years. However, do

insurance coverage over $50,000 provided to your

not file Form SSA-131 if this situation applies but the

employee (including a former employee). See Group-term

employee will not be age 62 or older by the end of that

life insurance on page 6. Also include this amount in boxes

year.

1, 3 (up to the social security wage base), and 5.

Unlike qualified plans, nonqualified deferred

Codes D through H, S, Y, AA, and BB. Use these

compensation plans do not meet the qualification

codes to show elective deferrals and designated Roth

requirements for tax-favored status. Nonqualified plans

contributions made to the plans listed. Do not report

include those arrangements traditionally viewed as deferring

amounts for other types of plans. See below for an example

the receipt of current compensation. Accordingly, welfare

of reporting elective deferrals to a section 401(k) plan.

benefit plans, stock option plans, and plans providing

The amount reported as elective deferrals and

dismissal pay, termination pay, or early retirement pay are

designated Roth contributions is only the part of the

not nonqualified plans.

employee’s salary (or other compensation) that he or she

Report distributions from nonqualified or section 457

did not receive because of the deferrals or designated Roth

plans to beneficiaries of deceased employees on Form

contributions. Only elective deferrals and designated Roth

1099-R, not on Form W-2.

contributions should be reported in box 12 for all coded

Military employers must report military retirement

plans; except, when using code G for section 457(b) plans,

payments on Form 1099-R.

include both elective and nonelective deferrals.

-11-

Instructions For Forms W-2 And W-3 - Wage And Tax Statement And Transmittal Of Wage And Tax Statements - 2006 Page 15

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