Contributed by: TriciaD, FreeTaxUSA Agent, Tax Pro
For many employees, the annual arrival of W-2 forms signals the start of tax season. While most people focus on wages, federal income tax withheld, and social security details, Box 14 often stands out as a source of confusion. What do the codes in Box 14 mean, and how do they affect your tax return?
What is Box 14 on a W-2?
Box 14 is a catch-all section on your W-2 where employers report a variety of information not covered in other boxes. Entries in this box aren't standardized, meaning employers often use their own codes to report items such as state disability insurance tax withheld, union dues, uniform payments, deducted health insurance premiums, nontaxable income, pension plan contributions, educational assistance payments, etc. Because codes can vary greatly, it’s important to consult the legend on your W-2 or contact your employer for clarification.
Box 14 codes and information vary by employer, but commonly include the following items and codes:
- State mandated insurance programs – Some states require employees to contribute to disability and/or unemployment insurance funds. These amounts are typically withheld from after-tax wages and may impact state returns, not federal. The following codes are commonly used:
- State Disability Insurance (most commonly SDI, occasionally CASDI)
- State Unemployment Insurance (SUI)
- Family Leave Insurance (FLI)
- Voluntary Plan Disability Insurance (VPDI)
- Short-Term Disability: Employer-paid short-term disability premiums or benefits
- Educational Assistance: Tuition reimbursement or other educational benefits
- Nontaxable income such as, employer educational assistance or workers compensation, for example.
- Excess Life: Cash value of group term life insurance benefits (over $50,000)
- Employer-sponsored health coverage (DD): (under the Affordable Care Act)
- Union Dues (UD) - amount deducted (post-tax) for union membership fees
- Vehicle Allowance: 100% of a business vehicle’s annual lease value included in the employee’s income
- Ministers' parsonage allowance and utilities
- Nonelective employer contributions: Make-up amounts
- Voluntary after-tax contributions: Not designated Roth contributions deducted from an employees pay
- Required employee contributions
- Employer matching contributions
- Railroad Retirement Tax Act compensation (RRTA), Tier 1 & 2, Medicare (excluding Additional Medicare tax), and additional Medicare tax withheld
How do Box 14 codes affect your tax return?
The effect of Box 14 codes on your tax return varies by the type of benefit or deduction. Some items, such as educator expenses, may be deductible if eligible, while health insurance premiums (code DD) are for your information only and don’t affect your federal return.
Taxable benefits like life insurance or educational assistance are already included in Box 1 of your W-2 and don’t need to be added elsewhere. Box 14 simply provides details for your records.
If Box 14 lists “SDI” or similar state insurance codes, you may qualify for a refund in certain states if you overpaid. Be sure to report these amounts on your state return.
Box 14 information in FreeTaxUSA
Box 14 is typically provided for informational purposes only, and codes used can differ. As a result, FreeTaxUSA software is unable to distinguish codes and doesn’t automatically apply amounts to your state tax return.
Depending on your state, additional questions regarding Box 14 and 19 may be presented to determine if SDI, FLI, SUI, or VPDI was reported. Enter the amount from Box 14 or 19 next to the applicable code. This ensures all necessary information is accurately reported on your state return.
Likewise, after entering W-2 information, you’ll be asked if you’re a minister or clergy member. If Yes is selected for either question, additional boxes will be provided to collect more information.
If your W-2, Box 14 shows multiple entries, simply select Add Another Item for each additional entry. If your W-2 doesn't include or have anything in Box 14, don't enter anything.
How does Box 19 differ from Box 14?
Box 19 typically reports local income tax withheld. However, some employers report state insurance program contributions (like SDI) in Box 19 instead of Box 14. If Box 19 shows a code like 'SDI,' those are state insurance contributions. If it's labeled 'Local income tax,' it's not related to state insurance programs.
FreeTaxUSA will prompt you to confirm if state insurance contributions are included in Box 14 or 19. If you have doubts or need clarification, check with your employer or payroll department.
When should you take action?
Always review Box 14 carefully and refer to your employer’s documentation for code definitions. If you believe you qualify for deductions or credits based on what’s reported, include the information on your tax return and attach supporting documentation, if required. When in doubt, consult a tax professional for guidance. FreeTaxUSA customer service agents are also happy to help you.
Summary
Box 14 is a valuable section of your W-2, offering information regarding benefits and deductions that may affect your tax situation. Understanding the codes and knowing when to act can help you file your return accurately and potentially maximize your refund.