Author Topic: W2 Box 12 Error. Is this even a problem?  (Read 633 times)

Dezrah

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W2 Box 12 Error. Is this even a problem?
« on: March 14, 2017, 10:31:47 AM »
My employer's payroll company has coded my HSA deductions under box 12 code DD.  My research shows this is technically incorrect since this code should be limited to the employee portion of health insurance premiums (under a cafeteria plan).  Right now it shows both my premiums and my portion of the HSA contributions.

Some internet searches show Box 12 code W should show both the employee and employer contributions to my HSA.  HR has said they don't do this because our company doesn't bother informing the payroll company about the employer portion of the HSA contributions; they just deposit it directly with the custodian.

A hand check shows that my FICA and FIT have been correctly calculated anyway, so this is not a problem.  I also have a tax document from my HSA custodian verifying the amount deposited by employer and employee (net, not separated), so I at least have some proof of what has gone in the HSA.

This seems to confuse TurboTax and screws up their records of my HSA basis, but otherwise my taxes are calculated correctly (I think). 

Is this a problem?  Should I insist my employer correct this?  Are there any potential repercussions if our taxes are otherwise calculated correctly?

Thank you for your time.

SeattleCPA

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Re: W2 Box 12 Error. Is this even a problem?
« Reply #1 on: March 14, 2017, 01:45:14 PM »
I think it might be a problem because that value in box 12 will limit the HSA contribution you can deduct  (that's why it's even there)...

And then the IRS will probably use it to check your return.


Midwest

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Re: W2 Box 12 Error. Is this even a problem?
« Reply #2 on: March 14, 2017, 02:01:23 PM »
Seattle - other than the overall limit on HSA contributions, what would be your concern?

If the OP is putting additional dollars into the HSA or exceeding the limit, I could the the issue. 

Dezrah - Are you the only one in your family with an HSA?  Are you planning on putting additional dollars in outside your employer?
« Last Edit: March 14, 2017, 02:05:07 PM by Midwest »

Dezrah

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Re: W2 Box 12 Error. Is this even a problem?
« Reply #3 on: March 14, 2017, 02:21:36 PM »
Both DH and I are on my employer provided HDHP.  My employer contributes to our HSA and we max out the difference through payroll deductions.  The HSA custodian shows the limit was achieved in 2016.  No contributions were made outside payroll deductions.

Box 3 and 5 (Social Security Wages and Medicare Wages and Tips respectively), has already properly deducted my health insurance premiums and my HSA contributions.

Here's the weird hypothetical going through my head: If I were the IRS, I would look at this W2 and think Dez had paid $X for health insurance.  However, a closer look at her paychecks reveals she only paid a lesser $Y amount for insurance.  Does this trigger an audit?  Penalties?  Even if there is no change in taxes owed/returned?

Midwest

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Re: W2 Box 12 Error. Is this even a problem?
« Reply #4 on: March 14, 2017, 02:26:48 PM »


Here's the weird hypothetical going through my head: If I were the IRS, I would look at this W2 and think Dez had paid $X for health insurance.  However, a closer look at her paychecks reveals she only paid a lesser $Y amount for insurance.  Does this trigger an audit?  Penalties?  Even if there is no change in taxes owed/returned?

If your employer was audited it might come up and you might get an amended w-2. 

If you received an amended w-2, it doesn't sound like your return would change.  If your return doesn't change, the amended w-2 wouldn't impact you.

If you want to test, put the HSA into the correct box for both w-2s, and see what happens.

PS - Your hypothetical gives the IRS too much credit.  They are overworked and understaffed.

To add - Are you an engineer?

Dezrah

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Re: W2 Box 12 Error. Is this even a problem?
« Reply #5 on: March 14, 2017, 02:58:32 PM »
To add - Are you an engineer?

Yes (lol), my crazy must be showing through. 

I've been compiling a lot of very formal calc packs lately.  Everything has to be very carefully formatted, referenced, diagramed, and coordinated or it risks being kicked back and holding up the project. 

Midwest

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Re: W2 Box 12 Error. Is this even a problem?
« Reply #6 on: March 14, 2017, 03:10:52 PM »
To add - Are you an engineer?

Yes (lol), my crazy must be showing through. 

I've been compiling a lot of very formal calc packs lately.  Everything has to be very carefully formatted, referenced, diagramed, and coordinated or it risks being kicked back and holding up the project.

No crazy, just seeing if my guess was correct for my amusement.  That's an engineer question. 

Some people don't know what a w-2 is.  Your question is on the opposite end of the spectrum.


You know how to tell the accountants apart from the engineers don't you??


Engineers look at their own shoes when talking to you.  Accountants look at your shoes.

Joel

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Re: W2 Box 12 Error. Is this even a problem?
« Reply #7 on: March 14, 2017, 05:47:15 PM »
You know how to tell the accountants apart from the engineers don't you??

Engineers look at their own shoes when talking to you.  Accountants look at your shoes.

Ha. Being an accountant, I definitely think about things from a similar perspective as engineers.

My wife's properly coded the HSA contributions under the W code, however, the free tax filing website we use (FreeTaxUSA.com) adds those HSA contributions as ordinary income for some strange reason. So I had adjust my data entry on their website to make sure my 1040 was prepared correctly this year. Fun stuff.

SeattleCPA

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Re: W2 Box 12 Error. Is this even a problem?
« Reply #8 on: March 15, 2017, 08:10:03 AM »
Seattle - other than the overall limit on HSA contributions, what would be your concern?

If the OP is putting additional dollars into the HSA or exceeding the limit, I could the the issue. 

Dezrah - Are you the only one in your family with an HSA?  Are you planning on putting additional dollars in outside your employer?

My concern would be you have some chunk of the employee's wages (so money included in box 1 of the W-2) also included in the value shown in box 12W. I think in this case, the W-2 tells the IRS in essence you can't deduct money you've contributed into an HSA.

Midwest

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Re: W2 Box 12 Error. Is this even a problem?
« Reply #9 on: March 15, 2017, 10:02:51 AM »
Seattle - other than the overall limit on HSA contributions, what would be your concern?

If the OP is putting additional dollars into the HSA or exceeding the limit, I could the the issue. 

Dezrah - Are you the only one in your family with an HSA?  Are you planning on putting additional dollars in outside your employer?

My concern would be you have some chunk of the employee's wages (so money included in box 1 of the W-2) also included in the value shown in box 12W. I think in this case, the W-2 tells the IRS in essence you can't deduct money you've contributed into an HSA.

My assumption was that box 1 excluded the HSA.  Thanks for the clarification.

SeattleCPA

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Re: W2 Box 12 Error. Is this even a problem?
« Reply #10 on: March 16, 2017, 06:53:55 AM »
Seattle - other than the overall limit on HSA contributions, what would be your concern?

If the OP is putting additional dollars into the HSA or exceeding the limit, I could the the issue. 

Dezrah - Are you the only one in your family with an HSA?  Are you planning on putting additional dollars in outside your employer?

My concern would be you have some chunk of the employee's wages (so money included in box 1 of the W-2) also included in the value shown in box 12W. I think in this case, the W-2 tells the IRS in essence you can't deduct money you've contributed into an HSA.

My assumption was that box 1 excluded the HSA.  Thanks for the clarification.

Yeah, I think your assumption makes sense. I.e., the money shouldn't appear in both box 1 and in box 12W... but I think we see that regularly occurs. And with big payroll service outfits.

For the record, I don't *think* the money should appear both places. Either one or the other... not both.

Midwest

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Re: W2 Box 12 Error. Is this even a problem?
« Reply #11 on: March 16, 2017, 07:03:03 AM »
Seattle - other than the overall limit on HSA contributions, what would be your concern?

If the OP is putting additional dollars into the HSA or exceeding the limit, I could the the issue. 

Dezrah - Are you the only one in your family with an HSA?  Are you planning on putting additional dollars in outside your employer?

My concern would be you have some chunk of the employee's wages (so money included in box 1 of the W-2) also included in the value shown in box 12W. I think in this case, the W-2 tells the IRS in essence you can't deduct money you've contributed into an HSA.

My assumption was that box 1 excluded the HSA.  Thanks for the clarification.

Yeah, I think your assumption makes sense. I.e., the money shouldn't appear in both box 1 and in box 12W... but I think we see that regularly occurs. And with big payroll service outfits.

For the record, I don't *think* the money should appear both places. Either one or the other... not both.

Thanks for clarifying that.  I've never seen that one.  Learn something new everyday.

Moustaches

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Re: W2 Box 12 Error. Is this even a problem?
« Reply #12 on: March 16, 2017, 11:44:33 AM »
My W2 had an error too.  Notified my company CFO and gave me a bullcrap excuse about how the HSA provider will send the correct numbers out.  I entered the correct number into TurboTax manually.  Not too worried about it as the gross amount of wages was correct.
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