Employer HSA Contributions do not appear on W-2

[GeorgeHarrison2]

I've run into a problem completing my taxes. Last year my employer contributed $1,000 to my HSA account but it was not listed in Box 12 of my W-2. I've asked them to issue an amended W-2 that contains the HSA contributions but they're refusing. This is the explanation I received: 

"The $250 per quarter contributions that [the company] makes are made post tax through accounts payable directly to the employee's HSA. As a result, it is then the taxpayers responsibility to report all contributions to the IRS. Our understanding is this is no different than if you made a contribution to your HSA with post tax dollars yourself." 

I'm not buying this. IRS publication 969 makes no distinction between different types of employer contributions,  only that employers "must report" contributions:

"Amounts you contribute to your employees’ HSAs aren’t generally subject to employment taxes. You must report the contributions in box 12 of the Form W-2 you file for each employee. This includes the amounts the employee elected to contribute through a cafeteria plan. Enter code W in box 12."

That seems pretty cut-and-dried to me. 

Can anyone shed any light on this? Should I continue to butt heads with my employer and/or file a complaint with the IRS to get a proper W-2 issued? Or is my company correct about me treating this like an HSA contribution I made myself? 

[MaryK4]

An employer's contribution (including an employee's contributions through a cafeteria plan) to an employee's HSA is not subject to federal income tax withholding or social security, Medicare, or railroad retirement taxes (or FUTA tax) if it is reasonable to believe at the time of the payment that the contribution will be excludable from the employee's income. However, if it is not reasonable to believe at the time of payment that the contribution will be excludable from the employee's income, employer contributions are subject to federal income tax withholding, social security and Medicare taxes (or railroad retirement taxes, if applicable), and FUTA tax, and must be reported in boxes 1, 3, and 5 (use box 14 if railroad retirement taxes apply); and on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return.
You must report all employer contributions (including an employee's contributions through a cafeteria plan) to an HSA in box 12 of Form W-2 with code W. Employer contributions to an HSA that are not excludable from the income of the employee must also be reported in boxes 1, 3, and 5. (Use box 14 if railroad retirement taxes apply.)

An employee's contributions to an HSA (unless made through a cafeteria plan) are includible in income as wages and are subject to federal income tax withholding and social security and Medicare taxes (or railroad retirement taxes, if applicable). Employee contributions are deductible, within limits, on the employee's Form 1040 or 1040-SR. 

[GeorgeHarrison2]

Thanks @MaryK4. Appreciate the response. But can you simplify it for me a bit? It sounds like you are saying that my employer's HSA contributions should indeed be included on my W-2. Is that the case? 

[DianeW777 · Accepted solution]

Yes. While employer contributions to an HSA may be excluded from the employee's income, all employer contributions, including those made by the employee through a cafeteria plan, must be reported in box 12 of the employee's W-2.

[GeorgeHarrison2]

Thanks Diane! 

[kfalls]

So are we supposed to add the employee contributions ourselves even though it is not listed on the W2?  My husband and I both have an HSA but his was listed in box 12c and mine does not appear. 

[BillM223]

kfalls

You say "mine does not appear". So, you are sure that your employer made contributions to your HSA but did not list them on your W-2? If so, then read the following:

There is a way in TurboTax to report employer contributions not reported on your W-2.

To do so, go back into the HSA interview, and 

• Navigate to "Did your employer tell you about any other contributions?" 
• Click on YES. 
• This will expose 3 new lines, the bottom of which says, "Employer and payroll contributions not reported in box 12 on your W-2". 
• Enter the amount here, if you have confirmed that it was not part of the code W amount.

@kfalls 

[carnes]

What impact does it have on the employee if they already filed taxes and  the HSA EE contributions were NOT listed on box 12c code w? We realized that our W2's only listed the ER's contribution however for the past 3 years it has not included the EE contribution and it should have. We will have to submit W2 corrections however I would like to know what the impact if any will the employee have to deal with in this case? Will they have to amend their taxes for previous years? 

[ThomasM125]

If there were contributions to your HSA account that weren't deducted from your wage income as reported in box 1 of your W-2 form, then you can add those in for the years they were made and it may entitle you to a deduction that may reduce your income tax and result in a refund. Also, if those contributions put you over the maximum contributions allowed in any year, you may owe a penalty for over contributing to your HSA account. So, it is recommended you prepare amended returns for the years involved to see if your tax changes. 

[carnes]

Thanks! The contributions were deducted from the taxable wage income. They were only missing from box 12, and they did not exceed the annual maximum, what would the impact be in that situation? 

[IsabellaG]

If the contributions were deducted from your taxable wages in box 1 of your W-2 , but were not reported in box 12, and you met the qualifications for an HSA:

 (HDHP, not covered by other health insurance, not enrolled in Medicare, not eligible to be claimed as a dependent on someone else's return) 

and otherwise all the rules were met, then there should be no tax change should you amend the prior year.

 But as  ThomasM125 recommended, it would be wise to prepare the amended returns to see if your tax changes.