Understanding IRS-Defined Codes

The IRS uses alphabetic codes to classify different types of earnings. You use these codes when you set up PDBAs to specify the IRS category for each type of employee earnings. Before you begin year-end processing, verify that the IRS-defined codes you have attached to the PDBAs (that you use to pay employees) are correct.

Use the Year-End Special Handling Codes table (06/S2) to maintain the W-2 IRS-defined codes.

Use the codes AA, BB, CC, DD, EE, FF, GG, HH, and A–Z (excluding the codes I, O, and U), in Box 12 of the W-2 form. The IRS defines these codes, and you must not change them.

Use codes, C1,C2 and C3 to designate the paytypes for FFCRA and report the wages paid to the employee under FFCRA in Box 14 of W2 forms.

FFCRA wages can be manually adjusted in the W2 review application.