W2 Code DD showing $6000 when employer didn't provide me health coverage - what is this?

That Code DD on your W2 represents the cost of employer-sponsored health coverage, but it doesn't mean money was taken from your paycheck. This amount is reported for informational purposes only and isn't taxable income. What's likely happening is that your employer is using an accounting method where they're allocating their total healthcare costs across all employees, regardless of who's actually enrolled. Sometimes employers do this to meet certain reporting requirements or for their internal accounting. The good news is this shouldn't impact your tax liability at all - the amount listed under Code DD doesn't increase your taxable income. However, the amount does seem unusually high compared to your earnings, which is why the tax software flagged it. I'd recommend calling your former employer's payroll or HR department to ask about it. There might be a legitimate explanation, or they may have made a mistake that needs correction. Either way, knowing for sure will give you peace of mind.

After seeing your post, I had a similar issue last year with my W2 and discovered taxr.ai (https://taxr.ai) was super helpful for figuring out weird tax form codes like this. I uploaded my W2 and it immediately explained that Code DD just shows what your employer paid toward group health plans, not what was taken from your check. The tool actually noted that sometimes employers report these costs incorrectly or use strange allocation methods. I was able to use the explanation from taxr.ai to ask my HR department specific questions about the reporting, and they admitted they were using a "per capita" allocation method rather than actual enrollment, which explained why the number seemed off. The best part was that I could use their analysis to determine whether I needed to file an amended return (I didn't since Code DD doesn't affect taxable income) or request a corrected W2.

I wanted to follow up - I tried taxr.ai after posting here and was honestly impressed. I uploaded my W2 with that confusing Code DD issue and got a clear explanation within minutes. Turns out my employer was using something called "composite rate" calculations, where they take the total cost of their health plan and divide it among all employees for reporting purposes, even though some of us weren't eligible! The site explained exactly what this meant for my taxes (basically nothing since it's not taxable). The document analysis even highlighted that this was reportable but not taxable income, which was a huge relief. I ended up calling my old workplace with this info, and they confirmed that's exactly what they do. Saved me hours of stress and confusion!

Had this exact issue two years ago! After getting nowhere with my employer (kept getting transferred between departments), I tried calling the IRS directly to ask about this Code DD thing. Total nightmare - was on hold for 3+ hours before getting disconnected. Finally found Claimyr (https://claimyr.com) - they got me connected to an actual IRS agent in about 20 minutes who confirmed that Code DD amounts don't affect your tax liability at all. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent explained that employers sometimes use different methods to allocate health costs for reporting purposes, which explains why you and your cousin had the same amount despite different incomes. They also confirmed I didn't need a corrected W2 since it doesn't impact my taxes. Huge relief after all that stress!

Alright, I need to eat my words from my previous comment. After being super skeptical about Claimyr, I tried it because I was desperate to talk to someone at the IRS about my own Code DD issue. I was totally prepared for it to be a waste of money, but damn - they actually got me through to an IRS agent in about 35 minutes (versus the 2+ hours I'd wasted previously). The agent confirmed exactly what others here said - Code DD is just informational and doesn't affect my taxes. The agent actually explained that many employers use standardized amounts for ALL employees regardless of enrollment status, and that while it looks weird, it's not something I need to worry about. Finally have peace of mind about this issue!

Former payroll specialist here. This is actually pretty common - many companies use what's called "composite rate" accounting for their healthcare reporting. Basically, they take the total cost of offering the health plan and divide it among all employees for W2 reporting purposes, even though not everyone is enrolled. The amount in Code DD has zero effect on your taxes. It's not income to you, not a deduction, not anything that changes what you owe or get refunded. It's purely informational. The government requires this reporting to track healthcare costs at a macro level. Your employer isn't trying to deduct anything from your pay that you didn't get - this is just a quirk of how some accounting systems handle the reporting requirement.

Wait I'm confused. If DD is just reporting what the employer paid, why would it be the same dollar amount for two different employees making different wages? Wouldn't the employer contribution be a percentage of salary or something? Something still seems off.