Updated September 29, 2026. Quick answer: code V in Box 12 is the spread on nonstatutory stock options you exercised during the year. That amount is already included in your wages in Box 1, so code V is a reporting label, not extra income on top.
What the IRS tells the employer
The instructions define code V as “Income from the exercise of nonstatutory stock option(s).” and say: “Show the spread (that is, the fair market value (FMV) of stock over the exercise price of option(s) granted to your employee with respect to that stock) from your employee’s (or former employee’s) exercise of nonstatutory stock option(s).”
Where else it appears
“Include this amount in boxes 1, 3 (up to the social security wage base), and 5.”
What does not use code V
“This reporting requirement does not apply to the exercise of a statutory stock option, or the sale or disposition of stock acquired pursuant to the exercise of a statutory stock option.” The difference between the two option types is on the NSO versus ISO tax page.
Common mistakes
- Adding the code V amount to your wages again. It is already included in Box 1.
- Expecting code V for incentive stock options. The IRS instruction says the requirement does not apply to statutory options.
Related: code GG, code Z, and nonstatutory versus incentive stock options.
Every code in one place: the Box 12 codes table. If a withdrawal from one of these accounts is your question, see the Form 1099-R Box 7 codes.
Figures verified against the IRS 2026 General Instructions for Forms W-2 and W-3 on September 30, 2026.
Sources
- IRS, 2026 General Instructions for Forms W-2 and W-3: https://www.irs.gov/pub/irs-pdf/iw2w3.pdf
- IRS, About Form W-2, Wage and Tax Statement: https://www.irs.gov/forms-pubs/about-form-w-2
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How our partner relationships workCode meanings are read from the IRS 2026 General Instructions for Forms W-2 and W-3 (Box 12) at irs.gov on September 29, 2026. General information, not tax advice. Your own facts decide the outcome, and a payroll professional, a preparer or the IRS is the right place to confirm anything consequential.