What is the code S125 in box 14?

What do I put in box 14 on my taxes?

Box 14: Your employer may report additional tax information here. If any amounts are reported in Box 14, they should include a brief description of what they're for. For example, union dues, employer-paid tuition assistance or after-tax contributions to a retirement plan may be reported here.

Is s125 pre-tax?

What are section 125 plan deductions? Contributions to cafeteria plans are withheld on a pretax basis, thereby lowering taxable income, which means employees pay less in federal income tax and Medicare and Social Security taxes.

How do I know if my HSA is a cafeteria plan?

To qualify as a cafeteria plan, it has to have both one taxable benefit option as well as one qualified pre-tax benefit. A big draw of this type of plan is that many of the options available are exempt from taxation. Though, certain offerings may require Social Security and Medicare taxes.

What is s125 Flex spending?

Flexible Spending Accounts (FSAs), governed by Internal Revenue Code (IRC) Section 125, allow you to have pre-tax payroll deductions for certain medical and dependent care expenses. Section 125 also permits your insurance premiums to be taken on a pre-tax basis. This provides up to 40% tax savings to you.

What are the codes for Box 14 on W-2?

There are no standardized codes for box-14 because the federal government doesn't provide standardized codes for box 14 items, so employers can assign their own code that adequately describes the reported item.

What is the category for box 14 on Turbo Tax?

Employers can put just about anything in box 14; it's a catch-all for items that don't have their own dedicated box on the W-2. In TurboTax, enter the description from your W-2's box 14 on the first field in the row.

How much is FICA tax?

FICA tax is a 15.3% tax that's actually a combination of two taxes: Social Security (12.4%) and Medicare (2.9%). You and your employer split these taxes fifty-fifty, each paying 7.65% of your pretax wages as tax each payday.

Who needs a Section 125 plan?

IRS Requirement for pre-taxed employee benefits. If you are an employer wanting to allow your employees to pay group health and other insurance premiums with pre-tax salary deductions, the answer is yes, you need a Section 125 plan document.

What is the basic 125 plan?

BASE^® 125 Cafeteria Plan allows employers to customize benefits and save money. Employers that sponsor a BASE^® 125 Cafeteria Plan can allow employees who are paying medical expenses, insurance premiums or dependent care expenses to do so on a pre-tax basis.

What is the difference between HSA and flex spending?

HSAs and FSAs both help you save for qualified medical expenses. HSAs may offer higher contribution limits and allow you to carry funds forward, but you're only eligible if you're enrolled in a HSA-eligible health plan. FSAs have lower contribution limits and generally you can't carry over funds.

What are the benefits of Section 125 cafeteria plan?

Cafeteria Plan Benefits for Employees

The primary advantage of a Cafeteria Plan to employees is the range of healthcare options they can acquire with Section 125 money to fit their needs. Typically, these pre-tax options include health insurance premiums, retirement contributions, or other benefit options.

How do I report Cafe 125 on my taxes?

The exclusion cannot be more than the earned income of either the employee or the employee's spouse. 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.

Is an HSA a 125 cafeteria plan?

An HSA can be offered as part of a Section 125 Cafeteria Plan to allow employees to make pre-tax payroll contributions to their HSAs. Once an employer allows employees to make pre-tax contributions, the Section 125 non-discrimination testing rules apply instead of the HSA comparability rules.

What is Section 125 for dummies?

Again, a section 125 plan gives pre-tax benefits to employees. With pre-tax benefits, you deduct the employee's contribution before withholding taxes, reducing their taxable income. Typically with pre-tax deductions, the employee pays less in federal income and FICA (Social Security and Medicare) taxes.

What is the Section 125 premium conversion plan?

Premium Conversion is a tax-savings benefit under Sec. 125 of the Internal Revenue Code. It enables employees to save both FICA (7.65%) and Federal Income Tax (15-35%) on their portion of insurance premiums that are deducted from their paychecks.

What comes out of paycheck pre-tax?

Pre-tax deductions: Medical and dental benefits, 401(k) retirement plans (for federal and most state income taxes) and group-term life insurance. Mandatory deductions: Federal and state income tax, FICA taxes, and wage garnishments. Post-tax deductions: Garnishments, Roth IRA retirement plans and charitable donations.

Is Box 14 on W-2 optional?

Generally, the amount in Box 14 is for informational purposes only. However, some employers use Box 14 to report amounts that should be entered on your employee's personal tax returns.

Do I add the numbers in box 14 on W-2?

Should I add them up and enter the total? No. Enter each item separately on it's own row.

Are Box 14 donations tax deductible?

Can I use this as a tax deduction? If you itemize deductions, you will be able to use the amount in Box 14 as a charitable deduction. Depending on the code you enter, the program may enter it automatically.

What are the cons of Section 125?