What is Non-Taxable Income?
Non-taxable income is income given to an employee or individual without any taxes withheld( taxes such as income, federal, state, etc.). However, a major portion of income paid falls under the taxable category.
What are Non-Taxable Wages?
- Disability wages.
- States without income tax.
- Partnership income.
- Insurance provided by the employer.
- Scholarship and financial aid.
- Welfare benefits.
How to Find Non-Taxable Income on W2?
Non-taxable income includes, for instance:
Contributions made by employers to retirement plans (like 401(k) or 403(b) plans)
- Health coverage is given by the employer.
- specific forms of educational support.
- Benefits from workers’ compensation.
- profits from life insurance.
- a few different forms of disability benefits.
On your W2, search for boxes 12a through 12d to determine your non-taxable income. The amounts of various forms of pay and perks that are exempt from federal income tax are displayed in these boxes.
With respect to the kind of income or benefit, different codes will be used in these boxes.
If your employer contributed contributions to a retirement plan, for instance, you might notice the code “D” in box 12a, which represents the total amount of contributions made over the course of the year. You might see the code “DD” in box 12c, which represents the entire cost of the plan if you had health insurance via your workplace.
You should get advice from a tax expert or get assistance from the IRS if you have any concerns about the data on your W2 or how to interpret it.
Also, See: Call-Back Pay | Standby Pay | Per Diem Pay