HSA 5498 and W2 does not match

[jenn-lan]

I am in the process of figuring out what to withdraw for a newly discovered over contribution form 2018 and 2019.  This all came to light when I was trying to solve a mis-contribution for 2020 (i am no longer eligible but my employer still directly deposited to my HSA this year). When reviewing my taxes from 2018, I realize by W2 HSA contribution does not match my 5498 form.  My accountant reported by over contribution in my 2018 taxes based on my 5498 form. I have yet to get my 5498 form from my HSA for 2019, but from my calculation, my W2 will not match it. It appears my employer reports only the employee contribution and not the employer contribution with it.  My 5498 form obviously captures both my employee and employer contribution. When I withdraw my over contribution, I am basing it off of my 5498 form.  Will the IRS flag if there is no match between my W2 and what I take out via excess contribution?  I just want to take care of all these over contributions/miscontributions so it does not carry over. 

[BillM223]

First, box 2 on the 5498-SA often does not match the code W amount in box 12 on the W-2. So the IRS will not flag two different numbers as a problem.

The code W amount on box 12 on your W-2 includes what your employer contributed in 2019 PLUS what you contributed through payroll deduction in 2019.

Box 2 on the 5498-SA is

1. the sum of all contributions made in 2019 (both Code W and direct contributions)

2. any contributions that you made in 2019 for 2018

3. also includes any trustee to trustee transfers from an IRA to the HSA.

4. however, any excess contributions for 2019 are not included in Box 2.

So you can't compare the two without knowing if the other items come into play.

You should ask your employer for each year for which you have a question if they included the employer contribution AND your contributions made by payroll deduction in the amount with W in box 12 on your W-2.

If the employer did not do this, then you need to ask for a corrected W-2. 

If you have not yet e-filed your 2019 return, you have time to update your tax return. Note that there is no advantage to e-filing your return before January 27th (this year) because the IRS won't open e-filing until that date (except for some returns taken as tests). Once you submit for e-file, you can't fix anything on your return, and you would have to amend your return - a hassle when you could have just waited and fixed your return before e-filing.

As for 2018, if the code W amount did not include the employer contribution, then you should get a corrected W-2 and amend your 2018 return. Unfortunately, you can no longer withdraw excess contributions for 2018 (I think I spoke about this in another post with you), but it would get your 8889 and 5329 forms to match what they should be.

I am a bit concerned at this point that your accountant previously reported your contributions based on the 5498-SA. Was he/she aware that the box 2 amount may not be the code W amount? TurboTax uses the code W amount to determine your HSA contribution (plus whatever you contributed directly to the HSA outside your employer). 

At this point, because I cannot see your tax returns, I am concerned there perhaps you didn't even have an excess contribution in 2018, or that your employer incorrectly reported your Social Security and Medicare taxes (the code W amount should have been removed from Wages in boxes 1, 3, and 5 of your W-2, so SS and Medicare taxes should be less).

What you might do is get the corrected W-2s and perhaps consult with a different local tax pro who has a lot of experience with HSAs.

[dmertz]

To use Forms 5498-SA to determine your HSA contribution for a particular year you must get information from that year's Form 5498-SA and the previous year's Form 5498-SA.  For example, the amount contributed for 2018 would be the amount in box 2 of the 2018 Form 5498-SA plus the amount in box 3 of the 2018 Form 5498-SA minus the amount in box 3 of the 2017 Form 5498-SA.

[Anonymous]

it appears your accountant screwed up.  he should have gone by what is on the W-2, not the 5498.  the W-2 should show employee and employer contributions.   as long as the total on the  W-2 doesn't exceed the max for that year there is no excess to be withdrawn.     

I should also point out that if the employer will not deal with employee contributions, nothing prevents the employee from making his own contributions to the HSA.  they are reported on line 2 of form 8889.   employer contributions appear on line 9.   as long as the combined total does not exceed the max, there are no penalty taxes.  

[jenn-lan]

yea, it seems there are issues from multiple parties. my employer does not account for both employee and employer contributions. then my accountant went with the 5489. So not sure how to proceed with withdrawing since I did over contribute and now have on my 2018 tax forms that I over contributed. 

[inexcess41]

My employer gave me wellness incentives during the year that are significant in amount and are not included in the W-2 Box 12. I asked them about it and they said that those are employer contributions and are not required to be reported in the W-2. To add to this misery - my HSA administrator does not issue a 5498-SA till July. I know what the deposits are - just would like to have the document in hand while filing taxes! All this is intentional to drive people crazy!

[BillM223]

Contact your HSA custodian (or look at your statements online) and ask for the amount of contributions to your HSA - actual cash contributions, not things that your employer calls HSA contributions.

The amount of actual cash contributions to your HSA is what should be reported in box 12 with a code of W on your W-2.

You do not need the 5498-SA to file. You should be able to cross check the HSA transactions in your account with the code W amount. If they match, your W-2 is fine.

I suspect that there is a terminology issue in that your employer is calling things an HSA program or contribution when it's actually not. You sound like you have it in hand.

[noodad]

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@BillM223 wrote:

[...]

I suspect that there is a terminology issue in that your employer is calling things an HSA program or contribution when it's actually not. You sound like you have it in hand.

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My employer and my spouse's employer both offer "wellness programs" which include incentives (for example, for getting a physical or an eye exam), and in both cases they deposit that into their HDHP-linked HSAs. I thought that was indeed considered an employer HSA contribution?

[dmertz]

If it's included in the amount reported with code W in box 12 of your W-2, it's an employer contribution.  If not, it's a personal contribution.