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How to enter W-2 Box 12 Code L reimbursed employee expense in ProConnect Tax

SOLVED•by Intuit•1•Updated June 23, 2023

Starting in tax year 2022 the IRS has redesigned the 1040 line 1. Instead of a single line 1 there is now 1a through 1i showing the breakdown of earned income from various sources. This will not change your data entry or calculations but it will change how amounts are displayed on the 1040. See the 1040 instructions for more information.

To link the W-2 Box 12 Code L amounts to the correct expenses on the 2106:

  1. Go to Input Return ⮕ Income ⮕ Wages, Salaries, Tips (W-2).
  2. Scroll down to Box 12.
  3. In the field If 'L' above, employee business expense schedule name or number click in the drop-down menu and choose the activity number.

The software will take the amount from the W-2 Box 12 code L and report it on the 1040, line 1 as income if a 2106 is required based on Screen 30, Vehicle/Employee Business Expenses (2106). Any reimbursement amount that is greater than the expense, will flow to the 1040 line 1 as additional income.

If the amount is not flowing correctly:

  1. Go to Input Return ⮕ Deductions ⮕ Vehicle/Employee Business Expense (2106).
  2. Review the Form ** selected.
    • This must be Form 2106, not Schedule C, for the expenses to be included as income.
  3. Make sure there is an entry in the field 1=qualified performing artist, 2=handicapped 3=fee=based government official. 

What if my taxpayer is not required to file Form 2106?

  1. Go to Input Return ⮕ Income ⮕ SS Benefits, Alimony, Misc. Income.
  2. Scroll down to Alimony and Other Income section.
  3. Enter the amount in the Other income field.

ProConnect Tax will take the amount from Box 12 L and report it on Line 7 of the 1040 as income unless expenses are entered on Vehicle/Employee Business Expenses (2106).  If the reimbursement is greater than the expense, the difference will flow to line 7 of the 1040 as additional income.

  • On Screen 10, Wages, Salaries, Tips the field If 'L' above, employee business expense schedule name or number needs to indicate the activity number of the 2106 on Vehicle/Employee Business Expenses (2106).  This links reimbursement income to the 2106 where the expenses entered can offset it.
  • In Vehicle/Employee Business Expense, the field Form must be marked Form 2106, not the Schedule C, for the expenses to be included as income.
  • If you do not have to file Form 2106, you can list the type and amount of each expense on the dotted line next to line 21.  This can be entered in, Miscellaneous Income, under the section Alimony and Other Income, in the field Other Income.  Entering the amount here will not change the flow of the W-2 Code L amount to line 7, instead it will reduce the amount when calculating the Total Income.  This information is provided on page 11 of the Schedule A instructions.

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