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.
- Step 1: Report total employee coverage that exceeds $50,000 in Box 1 “Wages, Tips, and Other Compensation” on a Form W-2.
- Step 2: Enter income from employee life insurance coverage in Box 12, using code C.
- Step 3: Include your amount in boxes 3 (“Social Security Wages”) and 5 (“Medicare Wages and Tips”).
- Step 4: Do not forget to fill out either Form 941, Employer’s Quarterly Federal Tax Return, or the annual Form 944, if needed.
This year, Jan. 31 falls on a Saturday, so employers have until Monday, Feb. 2, 2026, to distribute W-2 forms to employees.
People Also Ask
- How do I report income from jury duty on a W-2 form? – Employers should report their employee’s jury duty income in box 1 on a Form W-2.
- Can I use software to generate W-2 forms? – Yes, and using IRS-approved tax software is the best way to avoid making avoidable errors on W-2 forms. Reducing these errors is a proven way of eliminating costly penalties from the IRS.
We streamline Form W-2 reporting and filing with our W-2/1099 Forms Filer software. Download our free 1099-etc Demo software to enter real information and see how the program calculates any of your selected fields.