Which Box 12 Code involves uncollected Medicare tax on tips?

The Box 12 Code that pertains to uncollected Medicare tax on tips is represented by the letter B. This code is specifically used to indicate any uncollected Medicare tax on tips that employees have received, which is necessary for proper tax reporting and compliance.

In situations where tips exceed a certain threshold, employees may owe additional Medicare tax based on those tips. If the employer has not collected this tax from the employee during payroll processing, it must still be reported for accurate income tax calculations. This ensures that the employee is accountable for their tax liability, even if it was not withheld at the time of payment.

Understanding this code is crucial for payroll professionals as it directly affects an employee's tax obligations and ensures that there is transparency regarding all forms of compensation received by an employee, including tips and any associated tax responsibilities.