What does Sec 125 mean on my w2?
SEC 125 is your employer’s benefit plan. It is also known as a “cafeteria plan”. Usually, what is reported there is your medical insurance premiums that are paid with pre-tax income. They are not taxed and are not included in your W-2 Box 1 wages so you can not deduct them as medical expenses.
How is cafeteria plan reported on w2?
Your employer may report your cafeteria plan deductions in Box 14, which is labeled “Other.” It might use the code “Section 125” or “Café 125,” and then state your pretax payments.
Should Box 1 and Box 3 be the same on w2?
The amounts in box 1 and box 3 of your W-2 will be different if you had a pre-tax deduction. Some pre-tax deductions reduce your taxable income (box 1) and your social security income (box 3). Other pre-tax deductions only reduce your taxable income (box 1).
What is Cafe in Box 14 of w2?
Café 125 aka IRC Section 125 aka (Pretax) Health Insurance. Unless you live or work in the State of New York, this information is only that – information. You don’t need to enter it, and it won’t go anywhere.
Where does Section 125 go on w2?
The total dependent care benefits the employer paid to the employee or incurred on the employee’s behalf (including amounts from a section 125 plan) should be reported in Box 10 of Form W-2.
What is Med 125 on my paycheck?
Section 125 is part of the Internal Revenue Code that allows employees to convert a taxable cash benefit (salary) into non-taxable benefits. Under a Section 125 plan, you may choose to pay your medical premiums, unreimbursed medical expenses and dependent child care before any taxes are deducted from your paycheck.
Where does Section 125 go on W-2?
What is Cafe 125 on tax return?
A Section 125 Cafeteria Plan is an employer-sponsored benefits plan that lets employees pay for certain qualified medical expenses – such as health insurance premiums – on a pre-tax basis. Typically, they can use the pre-tax money to pay for health insurance premiums, retirement deposits, or other benefit options.
What is the difference between Box 3 and Box 5 on W-2?
Box 3 reports the total amount of your wages subject to Social Security tax. Box 5 reports the amount of wages subject to the Medicare Tax.
Is Box 3 and 5 the same on W-2?
However, depending on the level and source of income, the amount in these three boxes could be very different. Box 1 includes income subject to federal income tax. Box 3 includes income subject to employee Social Security tax. Box 5 includes income subject to Medicare tax.
How do I report section 125 on my W-2?
What does Cafe 125 include?
Benefits provided by plans covered under section 125 include adoption and dependent care assistance, health insurance, 401k and group term life insurance policies. They are called cafeteria plans because employees are given a list of benefits to choose from, similar to a cafeteria-style menu.
What is covered under Section 125?
A section 125 plan document outlines specific details, such as a description of the employee benefits that are covered through the plan and what they cost. It also includes participation rules, annual limits, and election procedures like what constitutes a qualifying event, such as a spouse’s job loss or a move.
What are the benefits of Section 125?
A Section 125 Plan provides flexibility. Employers decide the types of benefits they want to include, such as medical, dental, and vision care. They can also provide spending accounts that workers can use to pay medical and child care expenses.
What are the rules for Section 125?
The rules in IRS Section 125 require each cafeteria plan to be governed by a written plan document. Plans are only allowed to offer certain benefits. Plans have to pass non-discrimination tests and follow compliance rules about things like notifications. Rules allow for several types of cafeteria plans.
Where does Section 125 go on W2?
If your employer wants, it can include your Section 125 premiums in Box 14 of your W-2. In this case, Section 125 may show as S125.
