Thank you for asking your question on You are corresponding with Jason - Your personal online "Electrical Consultant"HiCustomer First of all, the required wire size will be based on the breakers feeding the circuits. You are correct that the new microwave should be on a dedicated 20 amp circuit. This means you need to use #12 wire. For the other circuit, current NEC regulations require 2 dedicated small appliance circuits for countertops. You should make this a 20 amp circuit as well, again using #12 wire.
Your installation will be safe and legal as long as you use the proper size wire, and all splices are in boxes which are accessible for later servicing.
I'm not sure about this, but I think you may be confusing the physical wire sizes based on the numbers. #12 wire is one size larger than #14 wire. In order to feed a circuit with a 20 amp breaker, ALL wire on the ENTIRE circuit must be #12 or larger. If you feed a circuit with a 15 amp breaker, you can use #14 wire and #12 wire on this circuit, but nothing smaller than #14. This isn't a huge concern, because Romex type wire smaller than #14 does not exist.
As for your wire nuts, two #12 wires will fit in a yellow wire nut. I would not try tp put more than 2 in there though. You may want to consider getting some tan or red wire nuts just in case.