What does W-2 Box 12 Code L represent?

W-2 Box 12 is used to report specific types of compensation or deductions that are not reported in other boxes on the W-2 form. Code L specifically indicates "Substantiated employee business expenses reimbursements."

When an employee incurs costs while performing their job, such as travel or meals, and is reimbursed for those costs, it qualifies under this code. The term "substantiated" means that the employee has provided adequate documentation of the expenses incurred, which is essential for tax purposes. Unlike other types of benefits or compensation, this code focuses on those reimbursements that are directly related to business activities and are supported by necessary documentation.

Understanding this is crucial because it helps taxpayers know that these reimbursements won’t be subject to income tax, provided they meet the criteria set by the IRS, and can have an impact on how individuals report their expenses and income.