What does other Cafe 125 mean on my W-2?
SECTION 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.
What box is section 125 on W-2?
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.
How is cafeteria plan reported on W-2?
Cafeteria, or Section 125 plans include employer-sponsored benefits that are exempt from federal and typically, state taxes. Your employees pay for these benefits with pre-tax money, which you don’t include in their taxable wages on their annual W-2s.
What is included in section 125 cafeteria plan?
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.
Why is Cafe 125 not included on W2?
Taxes on wages, such as withholding, Medicare and Social Security, are not charged on cafeteria plan items. For this reason, cafeteria plan benefits are not included on the W2 in Box 1, which is reserved for wages. Because they are not taxed, you also won’t find the Café 125 plan included in Box 3 for Social Security, or Box 5 for Medicare.
What’s the difference between Box 1 and 5 on a W2?
Knowing the differences in Boxes 1, 3, and 5, on a W-2 is important in determining income. “Wages, tips, and other compensation,” “Social security wages,” and “Medicare wages and tips” do not appear to be all that different. In some cases, the amounts in those boxes are the same.
Is the cafeteria plan reported on W2 box 1?
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 Cafe 125 reported on a tax return?
When Cafe 125 is reported on an employee’s W-2 form, it doesn’t change the way the taxes are filed. The funds that has already been deferred to a cafeteria benefits plan should have already been subtracted from the reported wages entered in box 1 on the W-2 form.
