Code 806 on Tax Transcript - What Does This Amount Mean?

Good news! Code 806 is like finding money in your pocket that you forgot about. It represents your withholding credits - essentially the tax that was already taken out of your paychecks throughout the year. Think of it as money you've already paid to the IRS, like putting money in a savings account that you can now withdraw at tax time. The amount beside it is exactly how much was withheld, and it counts toward your total tax payment for the year. I was so relieved when I finally understood what all these codes meant!

When I see code 806, I always double-check a few things: • Verify the amount matches the total federal withholding from all your W-2s combined • Compare with last year's transcript to see if the pattern makes sense • Make sure it's not showing duplicate withholding credits • Check if you had any estimated tax payments (those would be code 766 instead) Does the amount seem to match what you were expecting from your withholdings? I'm pretty sure I'm right about this, but would someone mind confirming?

I was SO confused about these codes too! According to TurboTax's help forum and the IRS.gov explanation pages I found, Code 806 is definitely your withholding credits. But when I needed to confirm if mine was correct (it seemed too high), I spent HOURS trying to reach the IRS! Finally used Claimyr (https://www.claimyr.com) and got through to an agent in like 20 minutes who confirmed everything. They basically connect you to an IRS agent without the endless hold times. Saved me so much anxiety wondering if my withholding was reported correctly!

I had the exact same question on March 12th this year. Code 806 is definitely your withholding credits. As of January 2024, the IRS updated their transcript format slightly, but the codes remain consistent with previous years. I verified this against my 2022 and 2023 transcripts where the 806 code perfectly matched my W-2 Box 2 withholding totals. Just be aware that if you have multiple income sources, the system sometimes takes until April 18th to fully reconcile all withholding sources, though I'm not entirely convinced the IRS processing timeline is as predictable as they claim.

If you want to confirm your 806 code is correct, here's what to do: 1. Gather all your W-2 forms 2. Add up Box 2 from each form (Federal income tax withheld) 3. Check any 1099 forms for federal withholding 4. Add those numbers together 5. Compare that total to the amount next to code 806 They should match! I'm curious - does yours match up? I'm always interested in how accurate the IRS systems are at tracking withholdings.

I encountered Code 806 on my transcript, and it is, in most cases, the sum of federal income tax withheld throughout the tax year. For example, my transcript showed $24,680 beside Code 806, which was precisely the combined total from my primary employer ($22,130) and my consulting income ($2,550). The IRS generally applies this credit automatically based on information returns, such as W-2s and certain 1099s, that were submitted by January 31st. If there's any discrepancy, it might, though not always, indicate missing documentation or reporting errors.