It doesn’t impact your tax return. It’s Section 125 or cafeteria plan amount. Probably your health insurance through your employer.
What is S125 on w2 category?
Box 14 s125 is for the amount of premiums that you paid tax free under an employer’s Section 125 (or Cafeteria) benefits plan. It does not reduce your refund.
Are employee health insurance deductions taxable?
Generally speaking, any expenses an employer incurs related to health insurance (for employees or for dependents) are 100% tax-deductible as ordinary business expenses, on both state and federal income taxes. This increases the employee’s take-home pay and lowers the amount of the employee’s taxable income.
Are Section 125 deductions subject to Social Security tax?
Certain contributions made through a Section 125 plan are exempt from federal income tax in the usual way but they are subject to Social Security and Medicare taxes. These benefits include 401(k) contributions and adoption assistance.
What is s125 category?
In the context of Section 125, “pre-tax” means that a deduction is exempt from Federal Income Tax Withholding, Social Security and Medicare Taxes. The employer also saves, because a Section 125 deduction also reduces the employer’s portion of the Social Security and Medicare tax liability.
Are there any tax deductions for Section 125?
Individual employers establish Section 125 plans voluntarily as a fringe benefit for their employees. While the expenses paid from FSA contributions technically are not tax-deductible on your annual income tax return, they are exempt from income and social security tax.
What is S125 on a W-2 tax form?
What Is S125 on a W-2? What Is ‘Cafe 125’ on a W-2 Tax Form? A Section 125 plan, also known as a “cafeteria plan”, allows employees to convert otherwise taxable items, such as a salary, into nontaxable benefits if they so choose.
How does Section 125 work for health insurance?
The basis of a Section 125 plan is that it’s a premium-only plan (POP) and/or a flexible spending account (FSA). The POP aspect allows you, the employee, to pay into the employer-sponsored health plan directly from your paycheck before any taxes are deducted.
How to know if Section 125 premiums count as taxable wages?
To know whether Section 125 premiums count as taxable wages for state and local income tax, contact your state revenue agency or your employer’s payroll or human resources department.
