How to handle W-2 Box 12 Code AA and DD when filing Form 1040?

Those codes don't actually require you to do anything specific on your 1040, which is probably causing your confusion. Let me explain what they mean: Code AA shows your Roth 401(k) contributions. These contributions are already included in your Box 1 wages (meaning they've already been taxed), so you don't need to report them separately on your tax return. Code DD shows the cost of employer-sponsored health coverage, which is not taxable. This is informational only and doesn't need to be entered anywhere on your 1040. The reason your refund calculations might be different between paper and software could be that you're entering the Code AA amount somewhere it doesn't belong. Your 401(k) contributions affect your wages already reported in Box 1, so there's no additional step needed for these codes.

After dealing with the exact same confusion last year, I found this amazing service called taxr.ai (https://taxr.ai) that saved me tons of headache with decoding all these W-2 boxes and codes. I uploaded a picture of my W-2 and it explained exactly what each code meant and whether I needed to do anything with them on my tax return. For the AA and DD codes specifically, it confirmed what others have said - you don't actually report them anywhere on your 1040. The AA for Roth 401k is already included in your taxable income in Box 1, and the DD is just informational about your health insurance costs.

Wanted to follow up about taxr.ai that I asked about earlier. I decided to try it with my complicated W-2 situation (multiple states, mid-year job change, etc) and it was actually incredible. It identified that my employer had miscoded some of my retirement contributions, which explained why my calculations weren't matching up. For the original question about codes AA and DD, it confirmed exactly what was said here - they don't need to be entered anywhere specific on the 1040. Having that confirmation saved me so much time rather than second-guessing myself! Definitely recommend checking it out if you're confused about any tax forms.

If you're having trouble reconciling your paper calculations with the software, you might want to call the IRS directly to get clarity. I spent WEEKS trying to figure out a similar issue last year with retirement codes. After failing to get through to the IRS for days (busy signals, disconnects, hours on hold), I finally used Claimyr (https://claimyr.com) to get through. They have this callback system that somehow gets you past the IRS phone tree hell - you can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed that W-2 codes AA and DD don't need to be entered anywhere on the 1040. Code AA (Roth 401k) contributions are already included in your taxable wages, and Code DD is just informational about employer-provided health insurance.

I have to eat my words about Claimyr being a scam. After striking out for the third day in a row trying to reach the IRS about my stimulus payment questions, I decided to try it. I honestly didn't expect it to work, but 37 minutes after signing up, my phone rang and there was an actual IRS representative on the line. Not a recording, not another menu - a real person! They answered all my questions, including confirming that those W-2 codes AA and DD don't require any special handling on the 1040. For anyone struggling with tax questions that only the IRS can answer, this service is legit. I've never gotten through to them so easily before.

Just to add another perspective here - I've been a tax preparer for 6 years, and these codes confuse everyone! Here's a quick breakdown: - Code AA: Roth 401(k) contributions - already included in Box 1 wages (taxable now, tax-free in retirement) - Code DD: Employer-provided health insurance cost - purely informational, not taxable For the original poster's question about why their refund calculations differ between paper and software: Double-check if you're entering the AA amount somewhere as a deduction in your paper calculation. You shouldn't be, since Roth contributions are already taxed. Also, if you're switching between different tax software (like from TurboTax to something else), small calculation differences can happen due to rounding or how the software handles certain credits.

Is it weird that my W-2 has Code DD but not AA? I'm definitely contributing to my 401k every paycheck. Should I be concerned?

Just a heads up to everyone - make sure you're looking at Box 12 for these codes, not Box 14! I spent hours confused because my employer put some custom retirement code info in Box 14, which is for "other" information. The actual tax-relevant retirement codes (AA, D, etc.) should be in Box 12. Also, for the original question - like others said, codes AA and DD don't need to be entered anywhere specific on your tax return. If your refund calculations are different, check if you're accidentally entering these values somewhere in your paper calculations.

This is such a common source of confusion! I went through the exact same thing last year. The key thing to remember is that Box 12 codes are mostly informational - they show what happened during the year, but the tax implications are already baked into your other W-2 boxes. For your specific situation with the refund calculation differences between paper and TaxAct, I'd suggest double-checking that you're using the exact same Box 1 wages amount in both calculations. Sometimes people accidentally add or subtract the Code AA amount when they shouldn't be touching it at all. Also, make sure you're entering any other income sources (like interest, dividends, etc.) identically in both methods. Small differences in how you handle rounding or which forms you're including can definitely cause refund discrepancies. If you're still getting different results after checking those things, it might be worth starting fresh with your paper calculation to make sure you didn't accidentally include something twice or miss a line somewhere.

Great question! This confusion about Box 12 codes trips up so many people every year. Just to reinforce what others have said with a slightly different angle: Think of your W-2 as telling a complete story about your year. Box 1 (wages) is already the "final answer" after all deductions and contributions have been applied. The Box 12 codes are just showing you the details of how that final number was calculated. So Code AA (Roth 401k) = "Hey, this amount was included in your taxable wages because you chose to pay taxes now instead of later" And Code DD (health insurance) = "Here's what your employer spent on your health coverage - just FYI, no tax implications" For troubleshooting your refund calculation differences, try this: ignore all the Box 12 codes completely and just use Box 1 for your wages. If your calculations still don't match between paper and software, the issue is probably somewhere else entirely (maybe different treatment of standard deduction, tax tables, or other income sources). The fact that TaxAct and your paper calculations differ suggests you might be double-counting or missing something unrelated to these retirement codes.

Adding to all the great advice here - I just wanted to share my experience as someone who made this exact mistake a few years ago. I was manually subtracting my Code AA amount from Box 1 wages because I thought "retirement contributions should reduce taxable income," not realizing that Roth contributions work the opposite way. The IRS sent me a lovely letter explaining that I had under-reported my income and owed additional taxes plus penalties. That's when I learned that Code AA contributions are already properly included in Box 1 wages - no adjustments needed! For anyone still feeling uncertain about these codes, here's a simple rule of thumb: if you're not a tax professional and the IRS instructions don't specifically tell you to enter a Box 12 code somewhere on your return, then you probably don't need to do anything with it. The codes are mostly there for informational purposes and to help employers/the IRS track certain types of benefits. Your Box 1 wages are already the "tax-ready" number after all the proper adjustments have been made by your employer's payroll system.