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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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Is 125-m pre-taxed in box 14 on W2

Customer Question

On the w-2, the wages in box 1 are $71,432.63; box 12a, code (g) $6,398.72(pre-taxed), box 14 414-h 1608.72(pre-taxed)also in box 14 125-m $2,152.58, box 3 $79440.11 (social security wages. I was told the 125-m amount is pre-taxed. Since it along with the other pre-taxed figures does not add up to box 3, I am not sure it is pre-taxed. Please explain.
Submitted: 8 years ago.
Category: Tax
Expert:  Ed Johnson replied 8 years ago.

Box 14 may not add up as you are implying, because it is a miscellaneous and optional reporting block. For example, union dues, employer-paid tuition assistance, health insurance premiums you paid, or after-tax contributions to a retirement plan will be reported here. Some employers report certain state and local taxes in Box 14, such as State Disability Insurance (SDI) premiums.

The codes for the box include: the 125-M medical spending account or other cafeteria plan benefit.

Customer: replied 8 years ago.

I am not sure whether to report the amount indicated as an add-back to New York State and local income.

Expert:  Ed Johnson replied 8 years ago.

I see, so you want to know if New York State taxes this amount or not?

No, you do not have to add the section 125 benefits back in.

REFERENCE: http://www.tax.state.ny.us/pdf/2007/inc/it150_201i_2007.pdf

Section 125 distributions are an excluded distribution.

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