Florida small businesses that file fewer than 250 W-2s in the prior calendar year are exempt from the ACA's mandatory W-2 Box 12 code DD reporting of employer-sponsored health coverage. Most small businesses fall under this exception — but understanding what code DD reports, how to calculate it, and what counts (versus what doesn't) matters for any business approaching the threshold or any owner who wants accurate total compensation reporting on employee W-2s.
The IRS requires Box 12 code DD reporting only for employers that filed 250 or more W-2s in the prior calendar year. Florida small businesses well under that threshold can — but are not required to — report. Reporting voluntarily creates a useful total-compensation statement employees can see, but adds payroll administrative work.
| Prior-Year W-2 Count | Box 12 DD Required? |
|---|---|
| Fewer than 250 | No (transitional relief continues) |
| 250 or more | Yes (mandatory) |
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For employers actually subject to the requirement (250+ W-2s), incorrect or missing Box 12 DD reporting triggers IRS information-return penalties under §6721/§6722. As of 2026, those penalties are $310 per W-2 (each side — payee and IRS copy) for failures, capped depending on size. Small businesses below the 250 threshold face no penalty for omitting code DD because the requirement does not apply.
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