What is the purpose of the W-2 Box 12 codes?

The purpose of the W-2 Box 12 codes is to indicate various tax-related items for employees. These codes provide information on specific types of compensation or deductions that may affect the employee's tax situation. For instance, they can include contributions to retirement plans, the cost of employer-sponsored health insurance, and other earnings or benefits that may need special attention when filing taxes. This detail helps ensure that taxpayers and the IRS understand any adjustments or additional considerations relevant to the employee's tax return, making it crucial for accurately reporting taxes owed or refunds due.

The other options do not capture the full scope of what Box 12 codes are intended for. While total wages are indeed reported on the W-2, the specific codes in Box 12 serve a different function related to tax nuances. The categorization of health insurance benefits is just one aspect of the diverse information that can be represented in Box 12, which also covers various other tax-related items. Additionally, Box 12 codes do not calculate Adjusted Gross Income directly; rather, they provide complementary information that can influence AGI calculations.