Payroll Mystery Solved: Code CC in Box 12 of the W-2

Whether you’re an employer or an employee, you may be wondering: what the heck is “code CC” in Box 12 of the W-2?

Here’s your answer: the special “code CC” on the 2010 W-2 has to do with the HIRE Act (Hiring Incentives to Restore Employment), which was signed into law in last year.

With the HIRE Act, employers could take a payroll tax exemption of their 6.2% share of Social Security if they added a new qualified employee to their payroll during the period of March 19 - December 31, 2010.

To claim the payroll tax exemption, employers must follow some very specific instructions (including having the employee fill out an affidavit). These employers can also receive a retention credit through the HIRE Act if they retain the employee on their payroll for a certain length of time.

Any amount reported using code CC in box 12 on the employee’s W-2 is required for IRS information only; it doesn’t mean additional payroll wages are being reported for the employee.

Mystery solved! To learn more, read the training article about the HIRE Act.