cafeteria plan deferrals

[Guest lskin]

Are these deferrals listed in box 1 or 5 of W-2 wages?

[Lori Friedman]

Are you asking about an employee's nontaxable (pre-tax) elective contributions? If yes, such amounts generally don't get reported on Form W-2. You treat the amounts as if the individual never received the compensation, excluding them from Box 1, Box 3, and Box 5.

There are some exceptions to the rule. Adoption benefits, which are subject to Social Security and Medicare tax, are reported in Box 3 and Box 5 and disclosed in Box 12 with Code T. Dependent care benefits are reported in Box 10. Contributions to a HSA (both employer and employee contributions) are disclosed in Box 12 with Code W.

[Guest lskin]

Yes , I was talking about the pretax deferrals. Thanks for letting me know. I just thought they would be reported somewhere on the W-2.

[GBurns]

Aren't there still some states or taxing authorities, such as New Jersey, that require the amount be shown on the W2?

[Lori Friedman]

I believe that the New Jersey rule is a matter of actual taxation, and not merely a Form W-2 disclosure. The last time I checked, certain types of cafeteria elections (some, not all) had to be added back to wages subject to state income taxation.

Anybody else have information about other states?

[JanetM]

Ohio and Nebraska come to mind - contributions to caf plan are subject to state and local withholding. (Haven't checked in a while - these could have changed)

[Guest mjb]

While NJ does not allow for exclusion of 125, 457 or 403(b) deferrals, tax reporting is subject to the employer's payroll system. Employers doing business in NJ usually have separate w-2 fields for NJ and fed tax because NJ tax auditors require reporting of the contributions. However, NY employers who do not have a presence in NJ will follow NY tax rules and exclude 125, 403(b) and 457 contributions for state w-2 reporting purposes and leave it up to the employee to add those amounts to NJ taxable wages.

[GBurns]

If the employer does not provide the employee with the information, How will the employee know the correct amount? So to avoid extra work handling requests from employees, the amount is best shown on the employee's W2.

I have no idea what most payroll systems normally show but all the major ones that I have seen in use in those areas have the amounts on the W2 as a matter of convenience for both the employee and employer..