At this time of year, many questions emerge about the intersection of benefits and taxes as employees review their IRS Form W-2.
Several employee benefits programs that Stanford offers to eligible faculty and staff are non-taxable, meaning the university can help you pay for services without it being considered income; other programs are tax-advantaged, meaning that you can pay for services with part of your paycheck before taxes are calculated. In both cases, you have the capacity to save money throughout the year.
The Form W-2 reports what you earned and what taxes you paid during the tax year. Some benefits are reported on the forms even if they are non-taxable, and this causes confusion. It’s important to note that just because benefits are reported doesn’t mean you’ve paid taxes or will have to pay taxes on them. If you aren’t sure about your tax liability, consult with a tax professional or the IRS directly.
Below is an interactive Form W-2 to highlight where you might see benefits-related sums reported. Also included below is an alphabetical listing of benefits and directions to find them on your form.
Your W-2 forms are mailed to you by the end of January each year, but we encourage you to opt-in for electronic delivery, which means you'll have secure online access to your W-2 through Axess starting Jan. 15 each year. Full descriptions of the W-2 boxes can also be found on Fingate.
Box A: You should always double check your Social Security Number. If there is an error, Fingate provides directions for how to correct it.
Box 1: This reflects what you earned this year, which includes taxable benefits. This does not include:
Box 2: This amount is determined based on your withholdings on your Form W-4. If it’s been a while since you looked at that form, you may want to log into Axess and review it. Details about changing withholdings can be found on Fingate.
Box 10: Employers report dependent care benefits, which include your before-tax contributions to your dependent care FSA, the Child Care Subsidy Grant, as well as usage of Stanford's Back-Up Care program available through Bright Horizons. You have not paid taxes on the first $5,000 of dependent care benefits; anything over $5,000 will be added to your Boxes 1, 3 and 5 (e.g. a CCSG award recipient who also participates in the Stanford Back-Up Care program in a given tax year). You may need to complete Form 2441, Child and Dependent Care Expenses, to compute any taxable and nontaxable amounts.
Box 12: This is a collection of status codes and amounts to determine if something is taxable income. The IRS website offers a complete list of codes. Here are some common codes that may relate to Stanford benefits:
Box 14: CAVDI or CASDI refers to California state disability leave insurance, and the amount to which you paid into the insurance program this year. If you are unable to work due to a non-work related illness or injury, such as maternity leave, this income protection plan pays a benefit. Stanford automatically enrolls you in the VDI plan (if you live in California) or a short-term disability plan (if you live outside of California) starting on your date of hire. Learn more about state disability insurance on Cardinal at Work.