- For Health Insurance Premiums, Dependent Care Assistance Program (DeCAP), and Health Care Flexible Spending Account (HCFSA):
The amounts for these programs, covered under Section 125 of the IRS code, are reflected in Box 14, IRC125. The amount for DeCAP is shown also in Box 10. They are not subject to federal, Social Security, and Medicare taxes. The reduction in earnings shows on your W-2 but not on your pay statement.
The amount in the IRC 125 Box is subject to New York State and City taxes. The NYS income tax instructions direct the income tax filer to report wages as they appear on the W-2 in Box 1 then to add back the amount to arrive at New York State/City taxable wages.
IRC125 for Pre-Tax Benefit Programs
These are the payroll deductions covered under the Internal Revenue Code Section 125 for flexible spending account programs.
These include:
- Health insurance premiums
- Dependent Care Assistance Program (DeCAP)
- Health Care Flexible Spending Account (HCFSA)
If you added a domestic partner to your health insurance, a portion of the amount paid by the City is taxable and is included in Box 14.
The amount in the IRC125 box is treated on a pre-tax basis for federal income purposes. It reduces your taxable wages (Box 1) and social security and Medicare wages (Boxes 3 and 5). The reduction in year-to-date earnings shows in your W-2, not in your pay statement.
This amount is subject to state and City taxes and must be added back to the taxable wages in Box 1 when you file your taxes. The amount for DeCAP is shown in Box 14 and Box 10.
These are both from the nyc.gov site. I did look at the IT-225 directions and see that the A-101 code says "New York City flexible benefits program" and read further on to see some examples of entities that entails.
It does seem that health insurance premiums from a private employer would not be subject to completing the IT-225, but I just wanted to make sure, as those to items I posted above seem more loosely worded in my opinion.
