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Understanding Your W2 – Code DD

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One of the questions I am often asked when preparing taxes ……. What is code DD?

You may have noticed Section 12 of your W2 contains alphabetic codes and amounts.  The two most commonly seen codes are D and DD.  Code D is the amount you have contributed to a retirement plan, such as a 401K.  Code DD is a more recently established and utilized code.  I began seeing it last year.  So what is it?

Code DD is the cost of coverage under an employer-sponsored group health plan.  It shows the amount paid by both you and your employer and is shown for informational purposes only.

According to the IRS here is what you need to know about the value shown on your W-2.

  • The health care law requires certain employers to report the cost of coverage under an employer-sponsored group health plan.
  • The amount of employer-sponsored health insurance coverage appears in Box 12 of the W-2, and has the code letters “DD” next to it.
  • Reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable or that it needs to be reported on your tax return.
  • The amount is only for information, and shows the payments made by you and your employer and is not included in the amount shown in Box 1, which is the amount of taxable earnings.

Visit the IRS website’s W-2 page for more information.

 

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1 Comment

  1. Paul Davidson says:

    This is a good read! It is really helpful. I also want to share this site PDFFiller, Inc which I find very useful in filling out W-2 or any tax forms you may need. It has the capability to save, print, fax, mail, share or send to sign directly from the site. I was also able to fill out my tax form through http://goo.gl/vRlCKo.

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