My employee has my contributions to a Section 125 Cafeteria plan shown in Box 12 with Code W on my W2. When I enter my contributions this way, I am asked a number of questions regarding having an HSA. Since my employer does not offer an HSA and my insurance plan is not a HDP, my contributions calculate as taxable plus a penalty. I presented this to our payroll provider and they said that Code W is for reporting the FSA 125 contribution and not an HSA. Is this correct and how do I avoid paying taxes and the penalty?
