What does Cafe 125 mean on a W-2 form?

-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.

Does Section 125 go 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 cafe 125 deduction?

A Section 125 Cafeteria Plan is an employer-sponsored benefits plan that lets employees pay for certain qualified medical expenses – such as health insurance premiums – on a pre-tax basis. Typically, they can use the pre-tax money to pay for health insurance premiums, retirement deposits, or other benefit options.

How do I report Cafe 125 on my taxes?

Your employer may report your cafeteria plan deductions in Box 14, which is labeled “Other.” It might use the code “Section 125” or “Café 125,” and then state your pretax payments. This data is optional and can clear up any confusion you have about the amount in Box 1.

What is Section 125 of the IRS code?

Code Section 125 allows employers to establish a type of tax savings arrangement, called a Section 125 plan or cafeteria plan, for their employees. A Section 125 plan provides employees with an opportunity to pay for certain benefits on a pre-tax basis, allowing them to increase their take-home pay.

Is a Section 125 plan worth it?

Section 125 plans offer employees significant tax savings and could be an appealing part of any benefits package. Offering an appealing compensation plan is a great way to attract and retain employees, but a quality compensation plan includes not just a high salary but also an attractive benefits package.

What is code 125 in box 14 on W-2?

Box 14. Your employer may report your cafeteria plan deductions in Box 14, which is labeled “Other.” It might use the code “Section 125” or “Café 125,” and then state your pretax payments. This data is optional and can clear up any confusion you have about the amount in Box 1.

What category is Sec 125 on w2?

SEC 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.

What is ‘Cafe 125’ on a W-2 tax form?

Tweet on Twitter. Cafe 125 on a W-2 tax form refers to a cafeteria plan, in which an employer offers workers a choice between various job benefits. These benefits can include medical insurance, life insurance, adoption assistance, assistance with care for dependent elderly relatives, extra paid vacation days and similar.

What is Cafe 125 on my W2 statement?

Cafe 125 on a W-2 tax form refers to a cafeteria plan, in which an employer offers workers a choice between various job benefits.

Where does Section 125 go on W2?

If your employer wants, it can include your Section 125 premiums in Box 14 of your W-2. In this case, Section 125 may show as S125.

What is IRC 125 on my W2?

The IRC 125 probably refers to pre-tax contributions you made to your employer’s plan for dependent child care reimbursement plan or a medical reimbursement plan or both. This information may be necessary for the preparation of your tax return.