Commonly associated with SERP plans. When preparing your state return, you must add the amount associated with the "dd" code to your state taxable income, as it was likely excluded from the state’s calculation of your wages.
W2 Box 12 Code DD Meaning FAQ: Understanding Your State Taxable Income
These plans are often funded through salary reduction agreements. Because these plans do not receive the same tax-favored status, the "dd" code often appears to track the amount that was sacrificed from current taxable income to fund these future payments.
Failure to do so could result in an audit or underpayment penalties. Impact on Your Tax Filing The presence of the "dd" code does not require you to pay additional federal income tax, as the funds were never included in your federal taxable income.
W2 Box 12 Code DD Meaning FAQ: What It Means for Your State Taxes
Often requires addition to state taxable wages. Does not increase federal taxable income (Box 1).
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