Why does my W-2 say less Other Cafe 125?

SECTION 125 is your employer’s benefit plan. It is also known as a “cafeteria plan”. Usually, what is reported there is your medical insurance premiums that are paid with pre-tax income. They are not taxed and are not included in your W-2 Box 1 wages so you can not deduct them as medical expenses.

What does Cafe 125 mean on a W-2?

tax-free cafeteria plans
You might be confused to see “Cafe 125” listed on your W-2 form. This may sound like it has something to do with where you go on your lunch break, but there is a more reasonable explanation. “Cafe 125” stands for IRS regulation code section 125 regarding tax-free cafeteria plans.

What box is section 125 on W-2?

The total dependent care benefits the employer paid to the employee or incurred on the employee’s behalf (including amounts from a section 125 plan) should be reported in Box 10 of Form W-2.

What is a section 125 form?

A Section 125 Premium Only Plan document allows your employees to voluntarily agree to a “salary reduction” so that the employer can pay their insurance premium as a business expense.

What is Section 125 Premium Only plan?

A Section 125 premium-only-plan (POP), is a cafeteria plan which allows employees to pay their health insurance premiums with tax-free dollars. Using a Section 125 POP to pay for insurance premiums benefits both employers and their employees.

Why is Cafe 125 not included on W2?

Taxes on wages, such as withholding, Medicare and Social Security, are not charged on cafeteria plan items. For this reason, cafeteria plan benefits are not included on the W2 in Box 1, which is reserved for wages. Because they are not taxed, you also won’t find the Café 125 plan included in Box 3 for Social Security, or Box 5 for Medicare.

What does Cafe 125 stand for on a tax form?

Here, your employer may indicate your enrollment in these unique tax plans. Cafeteria plans are also known as Section 125 plans, referencing that section of the IRS code, hence the name Café 125. Section 125 plans are available to all employees, as well as their spouses and dependents.

What kind of benefits are covered by Cafe 125?

Benefits provided by plans covered under section 125 include adoption and dependent care assistance, health insurance, 401k and group term life insurance policies. They are called cafeteria plans because employees are given a list of benefits to choose from, similar to a cafeteria-style menu.

What does Section 125 mean on a W-2?

Section 125 plans are available to all employees, as well as their spouses and dependents. What you will see on your W-2 is a reduction in your gross wages because the cafeteria plan lowered your salary.