topic Re: Section 125 in Get your taxes done using TurboTax

Section 125

tooheyClock — Wed, 31 Mar 2021 15:28:39 GMT

When going through Turbo Tax, I'm asked how both the Section 125 amount and the LTD amount (both in Box 14) on my W2 are classified. Several of the classifications refer to states other than Indiana where I worked. Which of the following would be the most accurate classification for each?

-State deductible employee expense
-Wages for SDI, VPDI, TDI, UI, etc.
-Code U, V, W, X, Y, Z
-Other deductible state or local tax

Re: Section 125

DianeW777 — Wed, 31 Mar 2021 15:43:11 GMT

Indiana (IN) does not tax Section 125 elections contributions. IN Employer Handbook

An example of compensation that is excluded by the Act is the value of Cafeteria (Section 125) Benefit plans.

Indiana may allow a credit for long term disability premiums. IN Deduction for Long Term Care

If there is no specific code you should check 'Other deductible state or local tax' then watch the questions in the IN state interview.

Also, check the wages in Box 1, of your W-2 and compare them to the wages in Box 16 to see if they match or are different.

Re: Section 125

tooheyClock — Wed, 31 Mar 2021 15:47:46 GMT

Thank you. What is the Indiana State Interview? I notice that the amounts in Boxes 1 and Boxes 16 for all of my W2s are the same. Would this for any reason be of concern?

Re: Section 125

DianeW777 — Wed, 31 Mar 2021 15:56:56 GMT

No, not a concern at all. It just means that IN basically follows the same pre-tax rules, such as your Section 125 contributions, as the IRS.

I was referring to the State Tax in TurboTax. It is step-by-step to make sure you don't miss anything.

For your convenience here is the link to the IN Individual Income Tax Instructions.