Do employer HSA contributions need to be reported on W-2?
Asked by: Deborah Quigley | Last update: September 29, 2023Score: 4.8/5 (69 votes)
Employers must report all employer and employee Health Savings Account (HSA) contributions made through payroll as a single aggregated amount on the employee's form W-2 in Box 12 using code W.
How do I report employer paid HSA contributions?
- Report health savings account (HSA) contributions (including those made on your behalf and employer contributions),
- Figure your HSA deduction,
- Report distributions from HSAs, and.
- Figure amounts you must include in income and additional tax you may owe if you fail to be an eligible individual.
Are employer contributions to an HSA considered income?
Contributions, other than employer contributions, are deductible on the eligible individual's return whether or not the individual itemizes deductions. Employer contributions aren't included in income. Distributions from an HSA that are used to pay qualified medical expenses aren't taxed.
What if HSA is not on W-2?
- If the HSA contribution was excluded from the wages shown on the W-2, then they were considered pretax deductions under an employer's S125 plan and the amount should be included in Box 12W. - If an employee contributes to their HSA using after tax money, then the amount they contributed should not show up in Box 12W.
Is HSA included in box 1 of W-2?
Employee contributions to their HSAS via payroll deduction on a "pre-tax basis" reduce their Form w-2 Box 1 taxable wages (like a 401K contribution). Those pre-tax contributions (made pursuant to the employer's Section 125 "cafeteria plan") are also reported as "Code W" on Box 12 of their Form W-2.
Health Savings Account HSA Tax Forms and Tax Reporting Explained!
Does box 5 on W-2 include HSA?
W – Employer contributions (including amounts the employee elected to contribute using a Section 125 cafeteria plan) to your health savings account (HSA). (Not included in Box 1, 3, or 5.) Report on Form 8889, Health Savings Accounts (HSAs). Y – Deferrals under a Section 409A nonqualified deferred compensation plan.
What wages are excluded from box 1 on W-2?
Answer: The amount in Box 1 represents Taxable Earnings which is your YTD Earnings minus tax-deferred retirement contributions as well as pre-tax benefits such as medical, dental, health care reimbursement, dependent care reimbursement, parking and vision insurance.
How does the HSA work on a W-2?
The number reported in box 12 of Form W-2 (Code W) is the amount your employer contributed to your health savings account (including cafeteria plan contributions). You will need to complete IRS Form 8889 Health Savings Account.
Do I have to report HSA on taxes if I didn't contribute?
You won't get a 5498-SA form if you didn't have contributions and your balance was zero dollars at the end of the year. You must report contributions from your HSA on IRS Form 8889.
Do I have to claim HSA contributions on my tax return?
Are HSA contributions tax deductible? In short, contributions to an HSA made by you or your employer may be claimed as tax deductions, even if you don't itemize deductions on a Schedule A (Form 1040). Additionally, contributions made by your employer may be tax-free and excluded from your gross income.
What is Box 12 DD on W-2?
Employers. The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee's Form W-2, Wage and Tax Statement, in Box 12, using Code DD.
Do I have to use my employer's HSA?
If you don't like your employer's HSA, your best option is to open your own HSA and transfer the money you've been saving into that account! If your employer contributes money to your HSA every month, you can set up monthly transfers of the same amount to funnel cash from one account to the other.
Are HSA accounts exempt from FICA?
Making contributions through your employer's payroll can provide added tax benefits — HSA contributions are not subject to the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA) taxes, which amounts to a typical savings of 7.65% (subject to limits of the Social Security Wage Base).
What is box 14 on W-2 for health?
Box 14 is used to report amounts that don't belong in other boxes on Form W-2. Employers can use it to report additional tax or income information for filing or informational purposes. Some employers use box 14 to report amounts deducted for State Disability Insurance taxes or union dues that may be tax deductible.
Do I need to attach 1099 SA to tax return?
Amounts shown on Form 1099-SA must be reported on the taxpayer's federal income tax form.
What is the box 12 of HSA contributions on W-2?
Question: What are the employer Form W-2 reporting requirements with respect to HSA contributions? Short Answer: Both the employer and pre-tax employee HSA contributions made through payroll are reported on the Form W-2 in Box 12 with Code W.
Why does my HSA 5498 and W-2 not match?
Q. Why doesn't my W-2 match the Form 5498-SA? A. If the contributions on your W-2 don't match your Form 5498-SA, you likely made after-tax contributions or contributions between January 1 and tax day for the previous tax year.
Why are my HSA contributions being taxed?
Although funds in your HSA are tax-free, tax penalties may arise. There are two primary causes for these tax penalties. Each year, the IRS sets a limit on how much can be contributed to an HSA. If the contributions exceed this limit, then you may be penalized after filing your taxes.
What other income is not reported on W-2?
Other Income is money or income generated from activities unrelated to business, work, or performing services. Generally, this is income not from wages, self-employment, retirement, home or property rentals, or investments; from a tax perspective, this is any income not reported on a W-2 or 1099 form.
Does Box 14 on W-2 affect taxes?
In most cases, the information that your employer lists in Box 14 of your W-2 does not affect your income tax return. In fact, for many Box 14 entries, the IRS does not even provide a place for it to get reported on your return forms.
Is Box 1 on W-2 earned income?
Box 1 "Wages, tips, other compensation": This is federal, taxable income for payments in the calendar year. The amount is calculated as YTD earnings minus pre- tax retirement and pre-tax benefit deductions plus taxable benefits (i.e., certain educational benefits).
Where is HSA reported on tax return?
HSA distributions are reported to the account owner on Form 1099-SA. This form is issued by the financial institution. Form 8889 must be filed with your annual Form 1040 federal tax filing if you make contributions to or take distributions from an HSA.
Do HSA contributions reduce Box 3 wages?
That is, contributions to a tax-deferred 401(k), contributions to a traditional IRA, and contributions made from a checking account to an HSA will all reduce your adjusted gross income (and therefore taxable income), but they do not reduce the amount that shows up in Box 3 of Form W-2 (“Social Security wages”).
What goes into W-2 box 5?
Box 5 — Shows your wages subject to Medicare tax. The amount, which also may not be the same as the amount reported in W-2 Box 1, might be required on Form 8959, Additional Medicare Tax, if your income is high enough.
Are employee HSA contributions subject to payroll taxes?
Within limits, contributions to an HSA made by, or on behalf of, an eligible individual are deductible by the individual in determining adjusted gross income (AGI). Contributions to an HSA are excludable from income and employment taxes if made by the employer. Earnings on amounts in HSAs are not taxable.