HSA Reporting on W-2s

Ahhh January.  You’ve made it through open enrollment, the holidays and the first blast of cold weather.  Now it’s time to focus on the New Year!  Just as soon as you finish up those W-2’s, that is.

We often get questions this time of year about how health savings account (HSA) contributions are reported on the W-2.  Most employers know HSA contributions have to be included on the W-2 but they aren’t always sure where, how or which contributions to include.  If you’ve looked this one up before you know the answer isn’t exactly crystal clear in the W-2 instructions.  Don’t worry, ABGNCS can help!

Employers are required to report “employer” contributions to employees’ HSAs in Box 12 with the code W.  The catch is “employer” contributions include pre-tax employee contributions.  Why?  Because the IRS considers pre-tax salary reductions through a Section 125 plan to be employer contributions, even though they’re really employee contributions.  Confusing, right?  This is just a technicality because the funds have never been subject income tax. 

Bottom line… Box 12, code W = employer HSA contributions + pre-tax employee HSA contributions. 

The Author: Sadie Wuerflein, CFC

Account Executive - FSA/HRA/HSA

abgncs.com/HSAFSAHRA

swuerflein@abg-mn.com