What Is a CAF on the W-2?

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The CAF box on a W-2 form refers to an employees cafeteria plan. Find out about a CAF on the W-2 form with help from a business and finance professional in this free video clip.

Part of the Video Series: Business Tips & Insurance Info
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Video Transcript

Hi, I'm Ernie Bray. What is a CAF on the W2? Well, it's a cafeteria plan. Now, it's box 12 on the W-2. And what it is, is it's usually set up by an employer. Now it benefits an employer because the employer doesn't have to pay taxes on the set aside income that's done by the employee. Now, the benefit to the employee is that they can actually set aside income that they are not taxed on to take advantage of benefits, such as daycare assistance, adoption benefits, or even life insurance. Now that allows the employee to have more money in their take-home pay, and not be taxed on these benefits that they set aside. Now, it has to be set up by the employer, and it's kind of like an a la carte menu. But, it's a great thing to have for your company, and I suggest you look into it. Hi, I'm Ernie Bray, and thanks for listening, and I hope these tips help you in your business.

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