What Is S125 on a W2?

Don't enter the S125 amount anywhere on your 1040 form.

Don't enter the S125 amount anywhere on your 1040 form.

Knowing what specific codes mean on your W-2 will prevent you from entering unnecessary information on your income tax return. Not all W-2 figures belong on your return. Some coded amounts, such as "S125," are for informational purposes only. S125 stands for Section 125 of the Internal Revenue Code, the section of the tax rules that apply to certain employee benefits.


A W-2 form is a statement your employer is required to prepare for you each year. The W-2 shows your total earnings for the year before taxes, the amount of your earnings subject to Social Security and Medicare taxes, and other amounts deducted from your pre-tax income, such as federal and state income taxes. The employer gives copies of your W-2 to you, the Social Security Administration, the Internal Revenue Service and the local taxing agency, such as your state of residence.


An S125 notation appears in Box 14 of your W-2 form, the box reserved for miscellaneous information. Section 125 of the Internal Revenue Code provides the rules for and tax benefits of employee cafeteria plans. Your employer must report the amount contributed in your name under a cafeteria plan to the IRS and the other government agencies. You shouldn't need to do anything with the amount shown in Box 14 of your W-2 for S125, but you can verify the amount shown by checking your own records.

Cafeteria Plans

Cafeteria plans are employee-benefit programs, such as a flexible spending account, that allow employees to pay qualified expenses using pre-tax dollars. For example, you put pre-tax money into a flexible spending account and use the money in the account to pay for medical expenses allowed under the IRS rules. Employers may also contribute to accounts that fall under a cafeteria plan.


If you believe the amount shown for S125 in Box 14 of your W-2 is incorrect, contact your employer. You'll need to compare your records with your employer's to determine if there's been a mistake. The IRS does set limits on how much you can contribute before you're subject to taxes. For example, for the 2012 tax year, a single taxpayer can't contribute more than $2,500 to a flexible spending account.

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About the Author

Anna Assad began writing professionally in 1999 and has published several legal articles for various websites. She has an extensive real estate and criminal legal background. She also tutored in English for nearly eight years, attended Buffalo State College for paralegal studies and accounting, and minored in English literature, receiving a Bachelor of Arts.

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