How Do I Report Income from Employee Life Insurance Coverage on a W-2?

Employers must report the income from the employee life insurance coverage in a few boxes on a W-2 form. All employers must first determine whether or not their business provides more than $50,000 of group-term life insurance coverage. A business does not face tax consequences if a total policy amount does not surpass that threshold. Report total employee coverage that does exceed $50,000 in Box 1 “Wages, Tips, and Other Compensation” on a Form W-2. Enter income from employee life insurance coverage in Box 12 using code C as well. Include your amount in boxes 3 (“Social Security Wages”) and 5 (“Medicare Wages and Tips”). Do not forget to fill out either Form 941, Employer’s Quarterly Federal Tax Return, or the annual Form 944, if needed.

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