Reporting HSA employer contributions

[jeromedawg]

Hey all,

The HSA contribution limit is $6750 but in the case that an employer contributes to the plan, does that affect what amount I would enter as my contribution to the HSA? For example, if my previous employer contributed $1000 and then the HSA was rolled over to my current employer who also ended up contributing about $1300~ (this came from completing various activities to earn "Healthy Rewards"), would I count all of that as the full $6750 HSA deduction? Or would I only put in $6750-$1000-$1300?

[jeromedawg]

On my W2 for the current company, Box 12 includes Code W (Employer contributions to your HSA) and the amount $5750. So it seems that those "Healthy Rewards" dollars I earned are in fact considered part of *my* contributions.

[jeromedawg]

Actually, the $1000 that was contributed by my previous employer doesn't seem to have been reported anywhere on the W2 for that employer. Are they going to need to issue a W2C correction for this?

[Nothlit]

Box 12 code W should include contributions made by your employer as well as contributions made by you via a salary reduction agreement (aka cafeteria plan) through your employer. For the purposes of Form 8889, you would include box 12W amounts on line 9, not line 2. However, all contributions (employer, employee, pretax or after tax) are subject to the overall contribution limit. My guess is your previous employer should have reported their $1000 contribution in box 12W.

Also, are you saying that there was a total contribution of $5750+1300 through employer #2, or is the $1300 included as part of the $5750? If your total contributions for the year were $1000+1300+5750 then you may owe some sort of penalty for excess contributions.

[jeromedawg]

Box 12 code W should include contributions made by your employer as well as contributions made by you via a salary reduction agreement (aka cafeteria plan) through your employer. For the purposes of Form 8889, you would include box 12W amounts on line 9, not line 2. However, all contributions (employer, employee, pretax or after tax) are subject to the overall contribution limit. My guess is your previous employer should have reported their $1000 contribution in box 12W.

Also, are you saying that there was a total contribution of $5750+1300 through employer #2, or is the $1300 included as part of the $5750? If your total contributions for the year were $1000+1300+5750 then you may owe some sort of penalty for excess contributions.

So the $1300~ is part of the $5750 ($1300 was contributed by my employer). I shouldn't have any excess contributions. I guess I'll need to call my prior employer and have them correct the 'missing' entry for the $1000. I'm wondering if they're going to try to reclaim the $1000 back though - I did open enrollment in November of 2015 and left the company end of December 2015. This must have not been enough time for them to retract everything from open enrollment and they ended up contributing $1000 into my HSA the first of 2016. They never reversed it or requested it back so I thought it was just irreversible.

[jeromedawg]

Thinking about it further, the $1000 my former employer contributed doesn't seem to count against my gross income. If I proceed to file my taxes without accounting for the $1000 (effectively, just going by the "I contributed $5750 to my HSA" account, which in reality I actually contributed *less* than that), will that screw things up or will the IRS come back at me? I guess, to set the record straight, I would want to get the amended W2C and report that $1000 for the sake of accounting, but it doesn't seem like it would affect the amount owed or anything, especially because it is not part of my gross income.

"Generally, contributions made by an employer to the health savings account (HSA) of an eligible employee are excludable from an employee's income and are not subject to federal income tax, Social Security or Medicare taxes. In addition, employer contributions are deductible as a business expense to the company."
(https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/areemployercontributionstoehsahsaconsideredtaxableincometothee.aspx)

[jeromedawg]

Oddly enough, the $1000 contributed by my prior employer into my HSA was not reflected on any paycheck and ADP cannot reconcile this or issue a W2C based on that. Is it necessary/important to get this documented regardless? Or is it not a big deal if I just omit reporting it?

[geo_kale]

Oddly enough, the $1000 contributed by my prior employer into my HSA was not reflected on any paycheck and ADP cannot reconcile this or issue a W2C based on that. Is it necessary/important to get this documented regardless? Or is it not a big deal if I just omit reporting it?

Hey jeromedawg, did this get sorted out for you? I'm running into a similar issue while tax planning.

At the start of the year my employer puts $700 in my HSA. I contribute the remaining $2700 throughout the year to get to the max of $3400. The $700 employer contribution doesn't show up on my paycheck, it just lands in my HSA account. It is also not reflected on my W-2 at the end of the year (checked a 2016 W-2). This seems wrong...shouldn't that employer contribution factor in somewhere?

[MDM]

Any employer contribution to an HSA should be entered on line 9 of the Form 8889 you attached to your federal tax return.  You did attach one, I hope...?

See  2016 Form 8889 - f8889.pdf and 2016 Instructions for Form 8889 - i8889.pdf.

[geo_kale]

Any employer contribution to an HSA should be entered on line 9 of the Form 8889 you attached to your federal tax return.  You did attach one, I hope...?

See  2016 Form 8889 - f8889.pdf and 2016 Instructions for Form 8889 - i8889.pdf.

Phew, yes! That ominous ellipsis had me worried. For the last two years I've done mine and my BF's taxes with FreeTaxUSA. That program asks about HSA contributions and I confirmed that they do fill out and attach an 8889 form for me. Still, I have a sneaking suspicion that our employer is doing something incorrectly in this area....I'll use my BF's docs as the example b/c I didn't have an HSA last year.

His 2016 8889 info:
-Line 2: -
-Line 9: 3,149. (This matches with the value in box 12 code W on his W-2 form)
-The confusion: Last year our employer contributed $200 to his HSA. He contributed the 3,149.

The $200 from the employer does not appear anywhere. For this situation shouldn't the form 8889 be filled out as such:
-Line 2: 3149
-Line 9: 200

If this is the case I think the W-2 is incorrect as well.

[MDM]

Any employer contribution to an HSA should be entered on line 9 of the Form 8889 you attached to your federal tax return.  You did attach one, I hope...?

See  2016 Form 8889 - f8889.pdf and 2016 Instructions for Form 8889 - i8889.pdf.

Phew, yes! That ominous ellipsis had me worried. For the last two years I've done mine and my BF's taxes with FreeTaxUSA. That program asks about HSA contributions and I confirmed that they do fill out and attach an 8889 form for me. Still, I have a sneaking suspicion that our employer is doing something incorrectly in this area....I'll use my BF's docs as the example b/c I didn't have an HSA last year.

His 2016 8889 info:
-Line 2: -
-Line 9: 3,149. (This matches with the value in box 12 code W on his W-2 form)
-The confusion: Last year our employer contributed $200 to his HSA. He contributed the 3,149.

The $200 from the employer does not appear anywhere. For this situation shouldn't the form 8889 be filled out as such:
-Line 2: 3149
-Line 9: 200

If this is the case I think the W-2 is incorrect as well.

See the instructions for line 2:
"Contributions to an employee's account through a cafeteria plan are treated as employer contributions and are not included on line 2."

If the HSA contribution was done by payroll deduction, the W-2 has already subtracted that amount from gross wages so the 1040 line 7 reflects that.  One doesn't get to subtract again on form 1040 line 25. ;)

[Nothlit]

Any employer contribution to an HSA should be entered on line 9 of the Form 8889 you attached to your federal tax return.  You did attach one, I hope...?

See  2016 Form 8889 - f8889.pdf and 2016 Instructions for Form 8889 - i8889.pdf.

Phew, yes! That ominous ellipsis had me worried. For the last two years I've done mine and my BF's taxes with FreeTaxUSA. That program asks about HSA contributions and I confirmed that they do fill out and attach an 8889 form for me. Still, I have a sneaking suspicion that our employer is doing something incorrectly in this area....I'll use my BF's docs as the example b/c I didn't have an HSA last year.

His 2016 8889 info:
-Line 2: -
-Line 9: 3,149. (This matches with the value in box 12 code W on his W-2 form)
-The confusion: Last year our employer contributed $200 to his HSA. He contributed the 3,149.

The $200 from the employer does not appear anywhere. For this situation shouldn't the form 8889 be filled out as such:
-Line 2: 3149
-Line 9: 200

If this is the case I think the W-2 is incorrect as well.

MDM is correct about Line 2 correctly being zero. However, it sounds to me like Line 9 should have been 3349, not 3149. And Box 12 on the W-2 should have been the same (3349).

[geo_kale]

See the instructions for line 2:
"Contributions to an employee's account through a cafeteria plan are treated as employer contributions and are not included on line 2."

If the HSA contribution was done by payroll deduction, the W-2 has already subtracted that amount from gross wages so the 1040 line 7 reflects that. One doesn't get to subtract again on form 1040 line 25. ;)

MDM: OK, I'll have to do some additional research to find out for sure if my plan is a "Cafeteria Plan". If it is, this will make a lot more sense to me. And YES to your second point, thank you for stating this so plainly. It was causing me more brain ache than necessary.

MDM is correct about Line 2 correctly being zero. However, it sounds to me like Line 9 should have been 3349, not 3149. And Box 12 on the W-2 should have been the same (3349).

Nothlit: This is was I'm thinking too. I'll have to bring this up to my HR and payroll peeps.