What is cafe125 on W-2?

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What is cafe125 on W-2?

What is cafe125 on W-2?

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 is other cafe125?

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 is non-taxable interest?

What Is Tax-Exempt Interest? Tax-exempt interest is interest income that is not subject to federal income tax. The most common sources of tax-exempt interest come from municipal bonds or income-producing assets inside of Roth retirement accounts.

Where do I put union dues on TurboTax?

To enter your Union Dues in TurboTax:

  1. Continue your return in TurboTax Online.
  2. Click Tax Tools (lower left of your screen).
  3. Select Tools.
  4. In the pop-up window, select Topic Search.
  5. In the I’m looking for: box, type union dues.
  6. In the results box, highlight union dues, then click GO.

What do you need to know about Cafe 125?

These cafeteria plans allow employees to set aside pre-tax income for certain employer-offered benefits. Benefits provided by plans covered under section 125 include adoption and dependent care assistance, health insurance, 401k and group term life insurance policies.

How is Cafe 125 reported on a tax return?

When Cafe 125 is reported on an employee’s W-2 form, it doesn’t change the way the taxes are filed. The funds that has already been deferred to a cafeteria benefits plan should have already been subtracted from the reported wages entered in box 1 on the W-2 form.

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.

When did the section 125 cafeteria plan start?

One of these plans, called a section 125 cafeteria plan, has been in existence since 1978 and offers some interesting advantages. What Is a Section 125 Cafeteria Plan? A section 125 plan is part of the IRS code that enables and allows employees to take taxable benefits, such as a cash salary, and convert them into nontaxable benefits.

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