What does W-2 Box 12 Code T refer to?

W-2 Box 12 Code T specifically refers to non-taxable adoption benefits provided by an employer to their employees. When employers assist with adoption costs, they can provide benefits that are not subject to federal income tax, and these amounts are reported in Box 12 of the W-2 form with the corresponding code T.

This code helps ensure that employees understand how much of the adoption assistance they received is tax-free, which can affect their overall tax liability. The inclusion of this information supports accurate tax filing, as it distinguishes between taxable and non-taxable benefits, allowing employees to take full advantage of the tax benefits available for adoption assistance without risking improper reporting to the IRS.

Understanding the specific nature of these codes is essential for both employees and tax professionals, as it helps in accurately interpreting income and benefits when preparing tax returns.