topic My wife's W2 in box 12c (code W) shows the 1K that the employer contributed to her HSA but not the contributions that were deducted from her paycheck. What should I do? in Deductions & credits

My wife's W2 in box 12c (code W) shows the 1K that the employer contributed to her HSA but not the contributions that were deducted from her paycheck. What should I do?

newbis7 — Sun, 13 Oct 2019 22:32:35 GMT

Taxes are due in 2 days, and if the University has to redo her 2018 W2 (and probably that of all its employees), I'm sure it will take a long time. Should I just file the taxes as if the W2 is accurate and amend later if necessary? Or should I treat her paycheck deductions as "additional" contributions?

Re: My wife's W2 in box 12c (code W) shows the 1K that the employer contributed to her HSA but not the contributions that were deducted from her paycheck. What should I do?

macuser_22 — Sun, 13 Oct 2019 23:06:43 GMT

Per the IRS box 12 code W instructions:

https://www.irs.gov/pub/irs-pdf/iw2w3_18.pdf page 20

"Code W—Employer contributions to a health savings account (HSA). Show any employer contributions (including amounts the employee elected to contribute using a section 125 (cafeteria) plan) to an HSA."

You can enter additional HSA contributions in the interview.

Re: My wife's W2 in box 12c (code W) shows the 1K that the employer contributed to her HSA but not the contributions that were deducted from her paycheck. What should I do?

macuser_22 — Sun, 13 Oct 2019 23:05:51 GMT

Above answer edited to add IRS W-2 instructions.

Re: My wife's W2 in box 12c (code W) shows the 1K that the employer contributed to her HSA but not the contributions that were deducted from her paycheck. What should I do?

newbis7 — Sun, 13 Oct 2019 23:09:08 GMT

Thanks, but wouldn't the amount deducted from her paycheck for HSA contributions be included in "(including amounts the employee elected to contribute using a section 125 (cafeteria) plan) to an HSA."? She did not make any contributions on her own outside what she participated in through her paycheck.

Re: My wife's W2 in box 12c (code W) shows the 1K that the employer contributed to her HSA but not the contributions that were deducted from her paycheck. What should I do?

Critter — Sun, 13 Oct 2019 23:13:14 GMT

If the W2 is incorrect you need to have the employer fix it ... something you should have addressed back in January. Your other option is to use the work around above to get the return filed OR you can amend the return later if/when you get the W2 corrected.

Re: My wife's W2 in box 12c (code W) shows the 1K that the employer contributed to her HSA but not the contributions that were deducted from her paycheck. What should I do?

macuser_22 — Sun, 13 Oct 2019 23:34:55 GMT

@newbis7 wrote:

Thanks, but wouldn't the amount deducted from her paycheck for HSA contributions be included in "(including amounts the employee elected to contribute using a section 125 (cafeteria) plan) to an HSA."? She did not make any contributions on her own outside what she participated in through her paycheck.

Yes, that is what the IRS instructions say - to include employee contribution. Why did you leave this until 2 days (assuming that you filed and extension and owed tax that you paid with the extension)? If you are getting a refund then there is no late penalty - you just don't get the refund until you file.

W-2's should have been sent in January, 9 months ago - plenty of time to get it corrected.

Re: My wife's W2 in box 12c (code W) shows the 1K that the employer contributed to her HSA but not the contributions that were deducted from her paycheck. What should I do?

newbis7 — Mon, 14 Oct 2019 01:51:15 GMT

Thanks for the responses. I think I'll file and amend as necessary; I don't want issues with the state returns, and I think if I entered something that didn't match what's reported, it would just create more trouble. It's fair that one should contact the employer as soon as one sees a problem. But for someone who isn't a tax professional, a wrong box 12c isn't something that necessarily jumps out at you. The seasoned HR professionals didn't catch it, and I'm sure if any of the thousands of people who work there (many of whom probably have the same error) had caught it on theirs, they would have notified everyone and fixed it.

Re: My wife's W2 in box 12c (code W) shows the 1K that the employer contributed to her HSA but not the contributions that were deducted from her paycheck. What should I do?

BMcCalpin — Mon, 14 Oct 2019 21:11:56 GMT

Note that by not including your spouse's HSA payroll deductions in the W-2 Box 12 code W amount, that your spouse's employer may be overcollecting on your spouse's Social Security and Medicare taxes as well.

Well, let me put it this way: HSA contributions made through the employer (whether from the employer or through payroll deduction) are not subject to federal income tax OR Social Security tax OR Medicare tax. This the code W amount should have been removed from Boxes 1, 3, and 5 on her W-2 before it was even printed. How can you tell? You can't because unlike a 401(k) contribution that is removed only from Box 1, the HSA contributions are removed from all three boxes that show Wages. In short, you have to ask the payroll department.

In your case where payroll has apparently messed up on the Code W amount, there is a workaround if they removed the correct amount from Wages in Boxes 1, 3, and 5. In this case, you would go to Deductions & Credits->Medical->HSA, MSA Contributions and click Start or Revisit. Go through the HSA interview until you see this screen: "Did your employer tell you about any other contributions?"

Click "Yes" and you will see three additional lines appear. Enter the amount of your wife's payroll contributions that were NOT in Box 12 on the W-2 with a code of W on this line: "Employer and payroll contributions not reported in box 12 of your W-2".

But if your employer did not add your wife's payroll contributions to the code W amount NOR did they remove the same amount from Wages in Boxes 1, 3, and 5 (as I said, you will have to ask them), then they have really fouled up your W-2. And, unfortunately, filing your return with the W-2 information as is with the payroll amount added to "Employer and payroll contributions not reported in box 12 of your W-2" will make your federal income tax (and presumably your state income tax) correct, but the Social Security and Medicare tax collected will still be wrong and only your employer can fix this by updating their reports to the IRS and SSA (and refunding the difference to your wife). This is why getting a corrected W-2 is ultimately the right answer in this latter case.

Well, the first thing you want to do is to ask payroll (1) why did they not add your wife's payroll amount to the code W amount? and (2) did they remove the correct amount (employer AND payroll contributions) from Wages in Boxes 1, 3, and 5 on the W-2? Their answers will determine how you proceed.