What does Sec 125 on W-2 mean?
cafeteria plan
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.
Does Section 125 go on W-2?
Under a cafeteria, or Section 125, plan, you pay for your employer-sponsored benefits with pretax money. Your employer doesn’t include your pretax payments in your taxable wages on your annual W-2. It may, however, choose to report certain benefits on your W-2 and code them as Café 125.
What does CAF 125 mean on W-2?
Cafe 125 on a W-2 tax form refers to a cafeteria plan, in which an employer offers workers a choice between various job benefits. These benefits can include medical insurance, life insurance, adoption assistance, assistance with care for dependent elderly relatives, extra paid vacation days and similar.
Are health insurance premiums pre-tax?
Medical insurance premiums are deducted from your pre-tax pay. This means that you are paying for your medical insurance before any of the federal, state, and other taxes are deducted. To itemize your medical expenses you will need to complete Form 1040, Schedule A: Itemized Deductions.
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 section 125 in box 14 on my w2?
Box 14 s125 is for the amount of premiums that you paid tax free under an employer’s Section 125 (or Cafeteria) benefits plan.
What is Sec 125 health?
A Section 125 plan typically lets employees use pretax money to pay for health insurance premiums (medical, dental, vision). Other options include retirement deposits, supplemental life or disability insurance, Health Savings Accounts, and various medical or dependent care expenses.
What is a 125 health plan?
A cafeteria plan, also known as a section 125 plan, is a written plan that offers employees a choice between receiving their compensation in cash or as part of an employee benefit. Employee contributions toward cafeteria-plan benefits are made pre-tax.
What is DD on w2?
Many employers are required to report the cost of an employee’s health care benefits in Box 12 of Form W-2, using Code DD to identify the amount. It is included in Box 12 in order to provide comparable consumer information on the cost of health care coverage. …
Is 401k a section 125?
A 401(k) cafeteria plan allows employees who are participating in their employer’s 401(k) plan to also choose additional types of benefits from a smorgasbord of options on a pretax basis. These plans are sometimes referred to as Section 125 Plan (from the applicable IRS code) or a flexible benefits plan.
What is Sec 125 in W-2 box 1?
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. SEC 125 is your employer’s benefit plan.
Do you need health insurance for a section 125 cafeteria plan?
It’s important to note that a Section 125 Cafeteria Plan does not provide health insurance. Instead, it allows employees to use pre-tax money to choose and pay for the types of insurance coverages that are most meaningful to them. To qualify as a Cafeteria Plan, the plan must include:
What can be excluded from a section 125 plan?
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.
What does Section 125 of the Internal Revenue Code mean?
To offer you Section 125 benefits, your employer must establish a plan that meets Section 125 of the Internal Revenue Code. Benefits offered under the plan are pretax, which means your premiums are taken out of your wages before taxes are withheld, which lowers your taxable income and therefore your tax burden.